IN BUSINESS, outsourcing involves the contracting out of a business process to another party. The concept “outsourcing” came from American Glossary outside resourcing and it dates back to at least 1981, which mean to use outside resources and experts to develop software. With the advancement of the communication methods, tools and techniques, outsourcing the software development jobs is becoming trend in the developed countries. There are many factors that could force an individual/firm for outsourcing. However, saving cost, focusing on the core competencies, avoiding HR/recruitment related issues and other overheads are the main factors.
When Outsourcing Software Development Projects can be beneficial there are some key factors that play an important role for its success.
Six top vendor (service provider) counties were selected from Elance (Worlds Leading Marketplace for Outsourcing Digital Jobs) to evaluate the on the bases on these factors. Here is the outcome:
Exchange Rate and Tax Exemption
When a company or an individual outsource a software project, “Saving Cost” is one of the highest priorities. When it comes to the cost saving aspects, exchange rate plays a vital role. Higher the difference in Exchange rate, more beneficial outsourcing be. Among the six top outsourcing destinations including (India, Pakistan, Philippines, Romania and Bangladesh), vendors from United States/Australia/Europe can take a huge benefit. A comparison chart is drawn below.
Internet/Voice/Data Rates
When it comes to the offshore software development internet plays an important role and of course cost of doing business in the offshore country heavily depends upon the quality and charges of the internet. Below is the internet cost comparison chart.
Cultural Compatibility between Offshore teams and Clients
In 1970s Geert Hofstede and his team conducted a survey to compare different cultures based on dimensions (Power Distance, Individualism, Masculinity, Uncertainty avoidance, Long Term Orientation, Indulgence). By comparing 6 top services providing countries at Elance.com with United States (Top buyer country on Elance.com). We see very interesting results. So, before choosing your offshore team/developer compare the dimension of the culture you give most value to.
Availability of experts and experienced manpower
According to the online survey (bloomberg.com), software engineers in Pakistan earn approximately 5.5 times more than the average salary in their country. This is one of the reasons; this professional is very high in demand in the Pakistan. As, IT industry has unlimited capacity so everyone belongs to Software Engineering profession somehow manage to get job. Here is the comparative income chart among the in-demand outsourcing destination countries.
Software Engineers/Population ratio is very high in Romania. Pakistan and Philippines stands at 2nd and 3rd respectively. Table shown blew depict the results.
Gazette and public holidays
Imagine a situation where you have outsourced a project, you have major deployment and on a same date there is a public holiday in your offshore development teams country. Following chart shows the Annual public holidays observed in a top offshore service providing countries. So, before you choose your offshore partner, consider this aspect too.
So, before you choose your outsourcing partner please do check the all these(or the ones you give highest priority too) aspects as well on top of the vendors company/individuals portfolio, track records, working sample, communication tests etc.