The decision to outsource is never taken lightly as there are significant ramifications both for, and against the process. SOLTECH functions as an outsource partner for a number of its clients where it was felt that the importance of remaining focused on their core market competence was greater than developing in house software application development competence.
As technologies have become more all-encompassing, so they have become more complex, and the task of building these complex subsystems in house has become a substantial undertaking. Many organizations prefer to outsource.
Organizations that outsource are typically considering the following
- Cost savings. – The lowering of the overall cost of developing the software or service. When considering software, the total costs is substantially higher than the initial cost of development. SOLTECH is able to provide guidance in quantifying these costs.
- The service to the business. – Will developing software distract resources from the more important tasks of delivering the core capabilities of the business ?Newspapers are filled with stories of companies taking charges against the inability to deliver product as a result of a software system failure.
- Cost restructuring. – Outsourcing enables the reclassification of costs from fixed to variable, and also reduces the costs of changing headcount profiles. If a company needs to slim down fast, its inherently easier to deal with outsourced resources than it is to deal with internal full time resources.
- Improve quality. – When faced with underperforming subsystems, outsourcing enables a step change in quality through contracting out the service with new service level agreements defining where the quality of service should be.
- Knowledge – Outsourcing enables the company to benefit through fast acquisition of knowledge and intellectual property that may take far longer to build internally. This creates competitive advantage and shortens time to market.
- Contract – Outsourcing provides a legal basis to ensure performance. This is not the case with internal services that provide no guarantees.
- Operational expertise – Outsourcing provides access to best practice that would be too difficult or time consuming to develop in-house.
- Staffing issues – Outsourcing provides ready access to a talent pool without the associated problems of finding and interviewing multiple candidates.
- Capacity management – The risk of managing capacity is borne by the supplier.
- Catalyst for change – An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change agent in the process.
- Reduce time to market – Acceleration of the development process, coupled with access to skills and domain knowledge by the supplier results in better product arriving at the market sooner.
We should be talking.