Software Outsourcing Strategies to Make the Most of 2019

November 28, 2018

By Mike McAuliffe

For many companies, the last quarter of the year is the time when annual budgets and general goal setting is finalized for the coming year. Usually, IT leaders have three “knobs” they’re turning:
  1. A prioritized list of major initiatives to pursue. 
  2. An operating budget.
  3. For some, a capital expenditure plan -- often allocated by a major proposed project.

As in years past, companies are being asked to maximize the value of every dollar spent on IT.

Invariably – digital transformation, scaling, and innovation equates to new software development that expands market share or increases productivity. Software development outsourcing may already be a strategy you have used in the past… maybe your company is using it right now. As you look toward 2019, we want to challenge you to think more fully about the use of software outsourcing as a core strategy for 2019.

Let Organization Goals Guide You

Most companies will spend a lot of brainpower and time to clarify their enterprise goals for the coming year. In their recently published Annual State of DEVOPS Report, the Devops Research Group reminds us that company goals will often be expressed in measurable terms such as:

  • Profitability
  • Productivity 
  • Market Share
  • Number of Customers
  • Operating efficiency
  • Customer satisfaction 
  • ...and so on.

Action Item: What are your company’s top goals? What software should be produced to enable – or accelerate those goals? Make a spreadsheet to map this out. Try to quantify exactly how software can positively affect objectives.

A Strategy to Mitigate 2019 Hiring Challenges

There’s no silver bullet in 2019 that will make the US labor shortage disappear. The demand for IT talent is high. When you post job openings – you’re competing with dozens, perhaps hundreds of other companies in your area. If you’re trying to replace a software developer, are you prepared to spend more – perhaps SIGNIFICANTLY more than what the prior employee cost you?

Action Item: Have you carefully considered the opportunity for cost savings by software development outsourcing? Start by reading our article on The True Costs of an In-house Developer. Evaluate for yourself how a strategy of outsourced software development could create a real cost savings opportunity for you in 2019.

A Strategy to Gain Expertise

As you look into 2019 – hopefully you’ve done a critical evaluation of the knowledge gaps in your current team.

Do any of these resonate with you?

  • You see a unique opportunity to beat out our competition by exploiting new-to-us technology. It might be something as cutting edge as IVR or IOT. Maybe it’s just adding new functionality to your website which is beyond your team’s technical expertise.
  • You’d like to learn to exploit DevOps. But – there is insufficient expertise in your team to serve as the subject matter experts. You just don’t know how to get started.
  • You need niche expertise. It could be technical programming language expertise, or it could be experience inside a particular functional niche (eCommerce, for example). The need for expertise is important, but probably not a skill you need long-term

 One of the great benefits of an outsourcing strategy is you can partner with a software development firm with technical or functional expertise you don’t have. We have partners across the world that specialize in topics such as IVR, Blockchain, mobile development, and more. DevOps experience – and, yes, DevOps Certified programmers are readily available when you use a software development outsourcing partner.

Action Item: Evaluate for yourself what expertise would you love to access in 2019 – but can’t within the skills of your employees. Check out any of our resources to see what we have to say on that topic.

A Strategy for Scale and Flexibility

Scale

Every manufacturing company uses strategies to scale production output up or down. Likewise, your company should be able to expand or contract the “production of software code” in a scalable manner.

No executive wants to hear that company growth is hindered by a insufficient software skills or capacity to produce software. Business demands can change quickly, and even with all the powerful tools and hiring options available, it takes time and energy to recruit and train new employees. Recruiting fees up to 30% are often required to hire new developers for your company. This assumes of course, that you can even find qualified software engineers to hire, due to scarcity. Good developers are hard to find – and no one wants to make a bad hiring decision.

Certainly, it’s a problem when you cannot increase the size of your programming staff to keep up with demand. Worse, what happens when business conditions create a reduction in current need for staff?

When you use global software factories, you can easily add team members to “scale up” your capacity. In fact, many companies that provide outsourced software development have “players on the bench”, shadowing other already-engaged developers. This bench strength means that a qualified developer can provide a backfill if a team member is down due to illness or otherwise becomes unavailable.

Conversely, when you need to reduce your usage of outsourcing talent, this is accomplished quickly and easily. Then your costs reduce immediately.

Action Item: Do you have an acceptable strategy for scaling (up or down) software development capabilities? Consider using software outsourcing as a powerful scaling strategy.

Skill Pool Flexibility

Needs for software development can change “horizontally” as well as “vertically”. Sometimes the need for developers simply expands – or contracts in terms of sheer numbers. Other times, the skill composition changes. A change in requirements means you need to ramp up Java coding, but perhaps de-emphasize some Ajax development you planned on. One thing is for sure in IT – requirements will change and you need a strategy to be a flexible and responsive as possible to those changing requirements.

Software outsourcing not only increases your ability to quickly expand and reduce development team size, it also allows you to easily change the mix of needed skill-sets. 

Action Item: Think about the combination of technologies and languages that could possibly come into play in your projects next year. Do you have a strategy to adapt to a change in needs that translates into a change in software languages or other technical attributes of the system? How could outsourcing benefit you?

A Strategy to Manage Margins

As you can see, outsourcing strategy is not just about costs - but cost is NEVER irrelevant. Successful practitioners of software development outsourcing know that outsourcing allows companies to control costs and protect margins. We like to say “IT is not an expense - it is an investment”. With software outsourcing, you get maximum results for each development dollar invested...and that means you are successfully managing margins.

In addition to getting higher return on your IT investment dollar - you gain the ability to control margins by leveraging a remote development team.  This eliminates fuzzy overhead costs associated with in-house staff and gives you complete visibility - and control over your spend… because you control the spend, you control the margins.

Action Item: Examine your company’s planned commitment to spend money for software development.  Then - read our article on “How Much Does it Cost to Hire a Programmer”. What opportunity to manage margins do you see for your company - if you build a software development team offshore rather than with in-house staff?

A Strategy to Onboard and Manage Successfully

Maybe you have have already run the numbers, done your analysis, and you believe software development outsourcing needs to be part of your technology strategy. But - you’re not sure how to get started.  Maybe you’ve had a prior attempt to utilize outsourced developers - and it didn’t go so well. Accelerance has advised hundreds of clients on selecting and onboarding the right outsourcing partner-team. And - we don’t stop there… we can work with you over the life of your software outsourcing relationship, to ensure continued success.

Action Item: Read our 15 Key Risks to Software Outsourcing. Then, check out our Coach Services and see how we can help you have a successful outsourcing strategy...whatever stage of the process you are in.

We Know Outsourcing

As a company, our mission is to help your company with better planning, better partner selection and better results from global software development teams. Accelerance is the only advisory company that travels the world to identify, assess and verify the capabilities of the top software outsourcing companies on the planet. These companies have resources to support your goals and initiatives in the coming year. We have established global relationships to help you match your needs to the right outsourcing partner.

  • Off shore partners in Europe and Asia with proven capabilities
  • "Nearshore" partners in Latin and South America. These companies also have solid expertise in emerging technologies with the added benefit of adjacent time zones to your company.

Action Item: Please contact us. The outsourcing experts at Accelerance can help you identify proven strategies using software outsourcing - and connect you with partners to make you wildly successful with your software development in 2019! 

We’ve investigated 8,000 software companies around the world so you can outsource with confidence.

Want to know who to trust? Talk to us.

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