All technology trends have their ups and downs. According to the Everest Group reports, IT Outsourcing market was growing a bit slower in 2012 than in 2011, and I doubt anyone finds it surprising.
Even though some companies are thriving (PGS Software revenue increased by 54% in the first half of 2012, compared to the same period last year) generally times are hard, and of all the types of outsourcing, IT services and software development are most volatile. In recent years, more companies went down this road than ever before. With time, the number of people who had bad run-ins with outsourced developers grows, and so does the elephant graveyard of projects killed by poor location decisions.
Some people take those fears too seriously. Several publications claim backsourcing will become one of the key trends in 2013. I even read an article by an IT manager of a major US company, who was claiming you shouldn’t really outsource your software development, as it’s too risky. Well, that’s exactly what you would expect him to say, just as you would expect me to debunk it.
Still, he had some valid points that I’m going to use in this article.
The truth is, outsourced software development done wrong might hurt you. But then, same goes for snowboarding, yoga, and pretty much anything else in this world. It doesn’t mean you shouldn’t do it. It only means you should do it right.
Having this in mind, let’s look at the top common fears related to the development outsourcing and see how we can overcome them.
If you imagine all the things you could possibly outsource, the easiest one would be digging a ditch. At any given moment, you see how many meters were dug out, and you know how much you saved per meter. Many BPO’s are just like that – they’re measurable and tangible.
It gets a bit harder when you outsource your Customer Service. You know your new outsourced helpdesk processed each call at 56% of the price, but the rest remains intangible. Are your customers just as happy as they were with your in-house service? If not, will your saving make up for their loss?
When you get to the software development, things start to look even more hazy. That’s because a brilliant programmer can push your project a week ahead in just a few hours, while a full team of mediocre guys might use up an entire sprint doing things that later have to be improved or replaced.
You know you pay $35 per hour here and $17 per hour there, but what you don’t know is how much real value comes from the $35 hour, compared to $17 hour.
I’ve seen this argument used against outsourcing time and time again. But in reality, this works in favor of outsourcing! After all, it actually increases your chance to find the key productive talent, as you’re not limited to your location or even your country. And if you’re dissatisfied, it’s usually much easier to hop on to a completely new team.
My advice? Shop around and pick teams that have the best talent, many successfully completed projects AND good value. Don’t simply go for someone who offers you less per hour. Dodgy savings and cutting corners led to many outsourcing horror stories that we never want to hear about again.
Some outsourcing companies are just like your local cable provider. They just love to sell you stuff or slap you with some hidden charges. According to an analyst from the Aberdeen Group, as much as 76% customers who used outsourcing ended up paying more than they expected.
The solution is easy. Just look for strong portfolios and credentials. Be sure others who made business with the outsourcing company ended up happy with the bill. Use common sense, like we all do when shopping on eBay. Would you rather buy a tablet from an esteemed PowerSeller or from a new guy with a dodgy profile and unrealistically low price?
Here’s one of the best outsourcing horror stories I know so far. A man outsourced his project to the offshore company and was supposed to get his first working prototype on a certain date. Nothing came, and he was left twitching his thumbs and looking at the blank inbox. He wrote several e-mails and got no answer. Then he started calling the company, but every time he faced the same “IT manager” who assured him everything was progressing well. He said they just needed a little bit more time. Our man could never convince the manager to let him talk to the developers directly.
Finally, some time after he had stopped payments, the IT manager confessed they had been running into big roadblocks ever since the beginning of the project, but he was just “ashamed” to admit they could not cope, so he said nothing. They hoped it’ll work out in the end, but it didn’t. So here you go, an unholy triad of bad outsourcing all in one example: language barriers, cultural barriers, bad communication with the devs.
Don’t just assume your specification will solve all the issues. Even if it’s 300 pages long, I’m sure there are many places where a developer needs to read your mind between the lines. Don’t think a modern methodology, such as Scrum, is enough. Of course, Scrum helps a lot in many ways, and it usually helps with communication – to a point. You’re going to get a workable prototype much faster, and you will get one on every major step of the way. Still, if the developer himself is poor, it’s a bit like a difference between getting a bad sandwich at your local deli, or an inedible meal after waiting an hour in an expensive restaurant. You might think you’re luckier in the first case, but you still end up hungry.
Bad communication kills more projects than anything else. Make sure the outsourcing provider you choose allows for a direct line to your team and frequent meetings – at least some of them in person. Sometimes it’s best to have a night out with the people who are going to work for you and see if you get along!
Also, in-house development does not automatically make you immune to communication errors. It sometimes even facilitates them! Just read this harrowing story to see how infighting and lack of communication between different teams and sometimes even single developers killed a multi-million dollar project.
Tossing the coin
Can outsourced developers fail to meet your expectations? Yes, but the same goes for in-house work, and outsourcing at least gives you more teams to choose from.
Are there communication challenges and other pitfalls? Yes, but they are all avoidable (you can take a look at how we deal with them).
Some sources claim as much as 51% outsourced projects fail. But it doesn’t mean outsourcing your development is like tossing a coin. If you choose the right partner with a credible track record, your chances are close to 100%.
If you make a poor location decision, it’s much, much less.
Leave that coin where it belongs. Choose well instead.