Return to Archive Runtime - The Software Outsourcing Newsletter for Executives and Investors from Accelerance and Steve Mezak In this issue: How many software companies are using offshore software developers? The latest Sand Hill Group survey has some interesting answers to that and other questions about offshoring. What’s Really Happening with Software Offshoring After performing the first definitive study of offshoring initiatives at software companies back in 2003, Sand Hill Group has gone back to the well to find out how things have changed since then. The new study report, "Software’s Offshoring Leaders", is available for purchase and download at the Sand Hill Group web site. I recommend the report especially if you are trying to decide if offshoring makes sense for your company. By the way, Accelerance does not benefit financially if you purchase the report. The study concludes: The question for software companies is no longer "Are you offshoring?" That has been replaced by concerns over how and where. Over fifty people, including forty-five senior software company executives responded to the survey. Over 80% of the companies responding are presently practicing some kind of offshoring activity and another 4% are planning to do so in 2006. Two thirds of the respondents believe that offshoring is now business as usual. "Software’s Offshoring Leaders" uses the word "offshoring" to cover both contract offshore outsourcing and the use of captive operations in an offshore location. The respondents include large companies and small startups so the results give a good cross section of the software industry. I like studies like this because they give you real world data. The Sand Hill study is not a theoretical, ivory tower discussion but reports what software companies are actually doing. "Software’s Offshoring Leaders" has a more narrow focus but reminds me of the book "Good to Great" by Jim Collins. In "Good to Great", Collins analyzes the activities of companies that had good performance for fifteen years, followed by really great performance for the following fifteen. "Software’s Offshoring Leaders" is not nearly so long or deep in its analysis, but it does contain over 40 pages of solid information about the how, what and where of offshoring today. The first part of the study contains these five key findings: Finding 1: Offshoring is Now Business As Usual As mentioned earlier, over 80% are already outsourcing. What impact will this have on the software industry? Will the stragglers catch up? Will there be anybody left developing software in the United States anymore? Finding 2: Offshoring Leaders Emerge What characteristics distinguish the leaders from the followers? Is reducing costs still the main reason to go offshore? Finding 3: Reality Sets In Offshoring is business as usual, but it still isn’t easy. How are companies coping? Will India continue to dominate as the offshore destination or will software companies go elsewhere? Finding 4: The Vendor Market Evolves Rapidly Are software companies still setting up captive operations? How are vendors adjusting? Will the tier one vendors from India continue to dominate mindshare or will new leaders appear? Finding 5: Offshoring’s Future Impact The study predicts the impact offshoring is making on the software industry over the next ten years. The findings are followed by trends, strategies and challenges supported by a comprehensive set of quotes from the respondents. You may not agree with all the viewpoints or conclusions, but the facts are hard to dispute. The 2006 study also does an excellent job of comparing the results to what respondents said in 2003. Almost all have changed in significant and interesting ways. The most dramatic change is a 75% reduction since 2003 in the number of respondents that think process certification (like CMMI) is an important factor in choosing an offshore vendor. The full report of the "Software’s Offshoring Leaders" study is for sale on the Sand Hill Group web site. Click the link to read more information about the study and to download a report preview. How about participating in a new outsourcing survey of your own? Have you decided to outsource and just need a good vendor? Do you need to switch from your current offshore vendor? Accelerance has just launched the first new Outsourcing Jumpstart service. You will be able to select your pre-qualified outsourcing vendor by country, technology or both. I need your help to determine which countries and technologies are most important to you. Click here to take the quick four question survey: http://www.Accelerance.com/osjs_survey.htm The survey is anonymous so no one will contact you, unless you request to be notified when a new version of the service is available. A report of the results will be in a future issue of Runtime. If you want to find a great outsourcing vendor quickly then use the new Outsourcing Jumpstart service from Accelerance. You get contacts with five excellent software development teams and a downloadable guide to help you make your final choice. Outsourcing Jumpstart is offered at a low introductory fee for a short time only. See if this service is the right size for you: http://www.Accelerance.com/services.htm *** The Runtime Bottom Line: Use of offshoring and outsourcing has become business as usual in the software industry according to the new "Software’s Offshoring Leaders" study published by Sand Hill Group. Now you can use the new Outsourcing Jumpstart service from Accelerance to quickly join the trend and get started with your own outsourcing. Until next time, Steve Mezak Accelerance, Inc. Risk-Free Outsourcing http://www.Accelerance.com 213 Garcia Avenue Half Moon Bay, CA 94019 1-650-712-8990 Contact me by email (c) 2006 Accelerance, Inc. All rights reserved. You are free to use material from the "Runtime" eZine in whole or in part, as long as you include complete attribution, including live web site link. Please also notify me where the material will appear. The attribution should read: "By Steve Mezak, CEO of Accelerance, Inc. Please visit the Accelerance web site at http://www.Accelerance.com for more information and resources on outsourcing and creating great software."