Offshore software development — Key things to consider!
Off shore development is a common phenomenon in the IT Industry since quite some time now. Popularly known as “Outsourcing”, Off shore development is only getting more widespread then ever before. It is estimated that the global market size of outsourcing Industry in 2019 was 92.5 Billion US Dollars (A whopping increase of 8% as compared to 2018. (Source: Statista)
Initially started as a cost saving instrument by most companies in the West, off shore development now offers multiple other advantages and opens an organization to skilled talent across the world
As more companies across the world are now contemplating to use off shore development to supplement their software development activities, it is important to know certain parameters that should be considered while going off shore or choosing an offshore development partner
Cost and the Return on Investment
Cost was the main reason why off shore development initially started and it is a statistic worth knowing that more than 59% companies still outsource to reduce cost. (https://www.yourteaminindia.com/blog/outsourcing-facts-statistics/). However, looking only at cost reduction is a myopic way of looking at it. Organizations should look at the actual they are able to generate with the cost incurred. When we talk about the other parameters, we would talk about their impact on the returns to understand both cost and return together
Communication
Communication with the off shore development is one of the key parameters since if the in-house team and off shore team are not on the same page, then it will be difficult to reap full fruits of the investments done. While the language barrier is an important issue, but it is certainly not the only issue. Communication encompasses a larger range of modalities that need to be handled such as the team structure considering both teams, differences in time zone, right set of collaboration tools and more importantly keeping it simple to be clear enough. If the communication is not correct and complete, then the off shore team might face understanding issues which might lead to lower output, delayed deliveries and impact on the top line.
Cultural Fit
Cultural fit is one of the most under rated factors when it comes to decide on off shore development. Rightly so, because most of the limelight is taken by higher order factors like cost and skill set. However, on shore and off shore employees will interact with each other on a daily basis. Since communication is the key to successful on time delivery, the cultural alignment of both teams becomes an important factor for success. It might happen that you have a star off shore team that comes in your budget, but is that is not culturally aligned, chances that you will leverage the skill to the most are less and will impact your business seriously.
When we talk about cultural fit, a key factor is also the realization of each other’s culture and respecting it. Suppose you have a off shore team in India, then giving them the customary Diwali greetings will bring you closer to them if not more.
Skill set: Flexibility and Stability
Skill set is one of the key reasons for which organizations choose to go off shore. Organizations are able to the leverage the skills available anywhere in the world provided it fits their budget and are no longer dependent on local skills. Also, organizations should see that the off shore partner can offer multiple skill set which might be required in future (not required immediately) without any high ramp up time. This is a key advantage since a contrary approach of adding an in-house talent would mean incurring sufficient training costs. Attrition at the off shore organization is also an important parameter since any resource moving out would be impacting the project schedule and delivery. The off shore partner should be a able to provide the replacement resource of similar caliber in a reasonable period of time.
While we talk about skill set, one of the side topic is the synergy in the development practices and methodologies used by both teams. A major difference would mean an initial training and amalgamation period which would be counter productive considering the basic reason of going off shore.
Legal and Intellectual Property
If one wants to achieve the desired results from the off shore team , the in-house team will have to share good amount of details with them. That would also mean sharing some of the intellectual property information. Of course, this should be a clause in the Non-disclosure agreements etc, but the track record of the off shore company in this aspect should be checked to ensure they have not been into any such legal issues in the past.
Service Level Agreement
As we have seen while going off shore looks very lucrative in terms of cost and the sheer range of skill sets such a setup offers, it also comes up with its own set of challenges in effective communication, establishing a cultural fit, flexibility, having a strong off shore leadership team, protecting intellectual capital. To mitigate the impact of these challenges, it is imperative that a comprehensive service level agreement is designed that factors in the potential service failure points and has punitive actions against non-compliance.
All in all, in today’s global, rapidly advancing and price competitive world, going off shore is not a luxury but a necessity to be agile, optimize cost and leverage global talent. Organizations should be clear of their reasons to take this decision which will enable them to prioritize which among the above factors are important for them in which priority so that they can make an informed decision to realize maximum returns by going off shore.
