Companies may find the ability to outsource software projects while still maintaining a certain degree of profitability. However, there are a few caveats to doing this. Outsourcing software jobs is a sound business practice but care should be taking to avoid certain pitfalls often associated with outsourcing work.

Taking a few precautions can prevent the company from making mistakes while outsourcing such as outsourcing the work to individuals ore companies who lack necessary qualifications, making fatal scheduling errors and spending too much money to outsource the project.

Properly Screening Outsourcing Candidates

One of the most common mistakes made in outsourcing software projects is delegating the project to an individual who lacks the necessary qualifications and capabilities to complete the project efficiently.

Companies who regularly outsource work may establish working relationships with individuals they are confident will perform well but before these types of relationships are established it will be necessary to carefully screen each potential candidate before outsourcing a job.

There are precautions companies can take when they are considering outsourcing a software project to ensure the candidate they select is well qualified to complete the project. The following are a few of the basic precautions companies should take:

1. Describe the project sufficiently in job advertisements

2. Review applications and resumes carefully

3. Schedule interviews with qualified candidates

4. Ask interview candidates to provide a list of work references

5. Verify each reference and check the validity of work history

Establishing Schedules When Outsourcing

Another mistake often made by companies who outsource is to fail to establish a firm schedule. This may not be especially harmful when the schedule of the project is flexible but it can be a serious mistake when the schedule of the project is not flexible.

Finding a candidate who is qualified to handle outsourcing work is important but it is also important to find a candidate who is available when you need someone to complete the work.

This is a significant point because some candidates may be well qualified but if they are not available when you need them they are not an ideal candidate to complete the project.

It is best to discuss scheduling upfront when screening outsourcing candidates. This is important because it can be costly to spend time finding a candidate only to find out they are unavailable towards the end of the screening process.

Spending Too Much Money on Outsourcing

One final mistake companies often make when outsourcing is spending too much money on outsourcing. This includes money paid to the individual or firm to complete the work as well as money invested in finding the most qualified candidate.

One precaution to take when considering outsourcing is to investigate all of the costs associated with outsourcing and establish a budge for having a particular project completed as an outsourcing endeavor before beginning to search for potential candidates. Doing this will enable companies to evaluate whether or not outsourcing is a wise decision from a financial standpoint before they invest too much in the process.

When evaluating the costs associated with outsourcing a software project it is important to consider a number of factors. First evaluate the amount the client is paying for the completion of the project.

Next assess the in-house effort which will be required for this project including management and recruiting candidates to complete the project. Determine the percentage of the budget which will be consumed by these efforts.

Now it is time to look at the remaining budget and determine how much can be invested in outsourcing the project while still remaining profitable. The fees paid to the independent contractor or consulting firm should not be so high that they do not enable the company to profit from the project.

Cost

Cost is the main reason that most companies take into consideration when outsourcing a project. Software engineers outside of the developed countries are compensated much less than their counterparts in developed countries. The average salary for a software engineer in India is $10,000 per year. The saving in salary can be passed on to the client. There are some reports (http://news.com.com/The+end+of+Indias+offshore+dominance/2010-1022_3-5668292.html) that salaries in India are rapidly rising. Maybe in a few years the cost benefit of outsourcing will not be so obvious. However, there are many other important advantages to outsourcing that one should consider.

Time

There may be few people in the company with the right skills to complete a particular project. In this case the project is in risk of not meeting its deadlines. The company could company hire more skilled people (either full time staff or contractors) and management. However, this would be expensive and after the project is finished you may not need the extra manpower. Outsourcing could be a solution. There are many outsourcing companies with many different specializations. The right company could provide the skills and manpower necessary to meet any strict deadlines.

Skills

An outsourcing company could provide the client with skills that the client does not have. For example, maybe the client wants some software coded in a particular technology but the client does not understand the technology. The outsourcing company could provide these skills to the client. However, bear in mind that if you are outsourcing a project outside of your companies skillset, this could pose problems with standards and maintenance later on.

Empowers Individuals in the company

Because the offshore company will now be doing the ‘grunt work’, this leaves more time for individuals within the company to concentrate on ‘higher’ tasks, such as gathering requirements, design and management. The smart individual will find herself leading others, rather than general maintenance and development work.

Pitfalls of Outsourcing

Needs constant management

This is the number 1 reason why outsourced projects fail. You need a good manager, a leader who is in constant communication with the offshore vendor. The leader needs to understand the requirements, and each and every day make sure that the offshore vendor also understands the requirements. The client should make sure that standards are being met by viewing code, looking at latest builds, viewing the bug tracker, viewing language resource files, etc. A lack of constant management generally means the project will get out of control.

Increase in frustration

An increase in frustration in the company could arise for a number of reasons:

- Time difference: Usually, there is about a half day difference between client and offshore vendor. This makes communication very difficult. A question could be asked on Monday, answered on Tuesday, a response requested on Wednesday, and a reply on Thursday. To solve this problem, schedule weekly meetings. If a difficult problem arises – schedule an extra meeting to discuss. Any decent offshore vendor should understand the need for good, timely communication and be willing to meet on your schedule.

- Low quality: If the offshore company produces low quality code or architecture, this will definitely increase frustration within the company. This needs to be solved by having all people who will be responsible for maintaining the code/architecture involved early on in the project. Code reviews need to be done frequently. If frequent meetings/code reviews/reviews with customers are not done, then the chances are you will receive a product that does not meet requirements, is poorly written, is not maintainable (or only by the same offshore vendor – fees will increase for sure), and is not scalable to your liking.

- ‘This isn’t what I need!!’ – If the customer is only shown the product at the end of the development cycle, chances are this is what you will hear! Generally, customers are not very good at describing exactly what they need. Sometimes, it is because they do not know themselves what they need. The earlier you can show the developing system to the customer, the better. Only then will you discover that maybe the requirements weren’t clearly communicated.

Be warned that the offshore vendor is easily made a scapegoat. Disgruntled employees will jump at the chance to blame the offshore company for any mistake made. The employee should be reminded that nobody is perfect. If a mistake is made by the offshore company you could empower the employee to find out the reason for the mistake, and ask him/her to strive to solve the problem by working with the leader and the offshore company.

Testing more difficult

Generally, the testing phase in an outsourced project is more difficult than an in-house. If you test a piece of software that was developed offshore in-house (and you certainly should) and find a problem, this needs to be communicated to the offshore vendor. This could cause problems as the offshore vendor might not be able to reproduce the problem. It could be easily fixed if only they could see the machine that it happened on. Or maybe the problem isn’t properly communicated. The ‘Entering the testing phase’ page will help you have a smoother testing phase.

Company Morale

Choosing to outsource a project instead of developing in house could affect company morale. Employees could feel that their jobs are threatened. If jobs are at risk, then the employees should know as soon as possible to reduce the spread of bad morale. Likewise, if jobs are not threatened, then the employees should be told of the change, and that not only are their jobs safe, but the employees will be given the chance to do a higher level of work. See ‘Introducing Outsourcing to your company’ for tips.

According to “Infopark” Chairman of the Board, Vladimir Bas’ko, “by partnering the Ukrainian Outsourcing Forum ‘2007 we get an opportunity to present Belarus IT potential at the international arena better. In 2006 such Belarus companies as EPAM Systems, IBA, Intetics Co., ScienceSoft participated in the UOF 2006 and noted a due level of the event. This year we hope to involve a larger number of participants form Belarus in order to give a better presentation of Belarus IT Outsourcing and BPO services market.

Ukrainian Outsourcing Forum is a business-forum aimed at boosting software development and outsourcing services market in Central and Eastern Europe.

The Conference held within the Forum will include several sections dedicated to the following subjects:

• Global marketing of outsourcing services;

• Regional software development centers in Ukraine;

• Embedded Firmware programming and Hardware Design in Ukraine;

• IT professionals market. Search. Training. Education.

• The best outsourcing solutions,

• Software quality. QA and testing. Independent testing;

• Business Processes Outsourcing (BPO).

The Forum will feature an exhibition of the services and solutions by the leading Eastern European IT outsourcing companies.

Also, within the Forum there will be held the “Ukrainian IT Matchmaking Event 2007″ that will allow participants to organize business meetings, acquaintances, company presentations and find partners. On-line meetings scheduler allows viewing the Forum participants’ profiles and set the meeting in advance.

In addition, the Forum participants will be offered a floor at the following Round-table Discussions: “Ukraine, The IT First Nation” and “Ecosystem of Software development industry”.

The third day of the Forum will be dedicated to acquainting the Forum guests with the sights of Kiev, the capital of Ukraine and one of the oldest cities in Europe.

About Ukrainian Hi-Tech Initiative:

Ukrainian Hi-Tech Initiative (www.hi-tech.org.ua) is a leading alliance of Ukrainian software development companies involved into outsourcing, offshore software development, IT projects development and deployment as well as BPO services outsourcing. Ukrainian Hi-Tech Initiative is the organizer of the annual Ukrainian Outsourcing Forum (www.outsourcing-forum.com.ua) – IT Business Forum aimed at covering and promotion of Ukrainian software development and outsourcing services market.

Ukrainian Hi-Tech Initiative objectives are:

• expansion of international contacts and relations for collaboration in the area of software development

• formation of positive image of Ukrainian software development on the global markets

• search and selection of the partners, providing IT outsourcing and BPO services in Ukraine

• organization of meetings between Ukrainian and foreign companies

• formation of investment into Ukrainian software development industry

Infopark – Belarus association of softawre development companies.

Scientific technology association “Infopark”, uniting software development companies of Belarus Republic, was founded in December 2001 by the government decision in order to improve organizational, economic, and social conditions for the Information Technology research, development and export. With these views the association members get a number of privileges.

Currently the association unites 57 software development companies with different types of ownership, employing more than 8 thousand of IT professionals, which amounts to more than 70% of all software developers in Belarus.

Among “Infopark” members there is an absolute majority of well-known leaders in local IT industry: Closed JSC “BelHard Group”, Closed JSC “International Business Alliance” (IBA), “EPAM Systems”, Closed JSC “NauchSoft”, JSC “System Technology” and others.

Forum Partners:

Information partner – American Chamber of Commerce (ACC)

Partners: Infopark, Silicon Taiga, eSP Consortium

Sponsor – Cross Border Projects (CBP)

Golden Sponsor – Microsoft

General Media Partner – “Kompyuternoye Obozreniye” (Computer Review)

Specialized Media Partner – “Computer World”

Media Partners: “Cnews”, “Outsourcing”, “developers.org.ua”

Official Internet Partner – “ProIT”

So if they cut the San Jose jobs they are damned by those saying they are outsourcing. If they don’t cut the San Jose jobs they go out of business thanks to the German competitor. What exactly are they suppose to do?

By the way; by accepting the Indian offer they lose 3 software engineers, but keep 11 others employed; sales, support, etc.

~~ Larry Elder — “The Larry Elder Show”

When Outsourcing Is Not a Great Plan

Outsourcing can definitely be profitable for a great deal of reasons. Numerous companies enjoy advantages such as lower labor expenses, bigger workforces, access to industry experts and extraordinary flexibility because of outsourcing. At any rate, in spite of the glaring advantages to outsourcing there are a few situations when outsourcing is not a great plan. Though there a number of scenarios where outsourcing is a sensible business opportunity there are other scenarios where outsourcing is not the best idea. In these situations it is best to control the job in-house rather than attempting to force an outsourcing situation to work out.

When Outsourcing Is Too Expensive

One of the main advantages of outsourcing is lower expenses. In a great number of cases outsourcing results in lower labor expenses because expenses such as social security, health care and workers’ comp are eliminated. In addition, the increased proficiency resulting when tasks are outsourced to industry experts can also result in cost trimming.

In spite of these numerous opportunities for expense reductions, there are many situations where outsourcing might actually be the more costly alternative and it may also lead to a monetary loss instead of a gain. This may also include a situation where the expense of outsourcing to a tremendously specialized freelancer exceeds the budget for the project. Fees for freelancers with immensely specialized degrees or areas of knowledge are frequently quite costly. An additional possible instacne is one where discovering an freelance worker experienced enough to finish certain tasks would be too costly of a procedure.

“The other part of outsourcing is this: it simply says where the work can be done outside better than it can be done inside, we should do it.”

~~ Alphonso Jackson — Secretary of the United States Department of Housing and Urban Development

When Outsourcing Causes You to Lose Command

Even when tasks or projects are outsourced the business accountable for the work likes to continue to handle the job and keep close tabs on the progression of tasks. It is extremely important for the business to proceed to control the job even after it has been outsourced because they are the ones who are ultimately accountable for the successful fulfilment of the work. Whenever an freelance worker or business wants to deny the company access to project files or documents, outsourcing is a bad plan. The business who has the vested concern in the result of the project should at no time be excluded from participating in making decisions concerning the project.

Prior to outsourcing a job or task care ought to be taken to lay out criteria for the managing of the project. Depending on the length and complexity of the job it may also be smart to schedule regular meetings to supply updates on the progression of the job. During this period the contractor ought to supply the employer with all information needed to assess the progression of the job and affirm it is still on track for completion by the specific deadline.

When Outsourcing is Not Permitted

Occasionally outsourcing is not a great plan merely because it is not permitted by contract requirements. A few project contracts may possess stipulations stating the labor cannot be outsourced to an freelance worker or to another business. Inserting such a clause into a contract agreement is well within the rights of the customers. When they employ a specific business to finish a task or project, they expect all work related to the task or project to be completed by members of that business unless they stated otherwise when negotiating the agreement. Breaching the agreement documents in this circumstance is not a great idea. The business could be penalized by the customer. Penalties may include withholding payment or refusing to grant future projects or tasks to the business.

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~~ Alphonso Jackson — Secretary of United States Department of Housing and Urban Development

Those who are thinking about software outsourcing portions of labor for the first time may be feeling overcome and wavering about the idea of relying on some person outside the company to finish labor related tasks. The uneasiness with deciding whether or not to outsource labor stems chiefly from ignorance about the process of software outsourcing. This article will serve as a shepherd to those who are looking at software outsourcing for the first time and will supply information on how to choose experienced candidates, establish project requirements and enforce a deadline for project fulfilment.

Choose Experienced Candidates Carefully

One way to greatly simplify the process of software outsourcing is to give particular consideration to selecting an experienced prospective candidate to finish the outsourced tasks. This is extremely important because software outsourcing the project to an person who is experienced to finish the tasks and motivated to do a great job will make the software outsourcing endeavor much more likely to be successful.

To discover the proper candidate for the job, submit advertisements detailing the project requirements and preferences and carefully look over each application which is submitted. Immediately ignore applicants who are not experienced enough for the job. Then look over the applications of experienced candidates carefully and choose a small faction of the most favorable candidates. Next interview each of these candidates and certify their references and passed work experiences to discover more about these candidates and their abilities and work standards.

After interviewing these candidates it is time to make a choice about hiring one of the final candidates. Do not be glum if not any of the final candidates seemed suitable for the job because you are under no obligation to employ any of them. You can continue your search for an experienced candidate by placing your job ad again and soliciting new responses.

Establish Exact Requirements

When software outsourcing a project or tasks, it is very important to clearly specify the project requirements. This is absolutely critical because it is vital for the contractor to completely grasp the tasks which are being outsourced to guarantee he is fulfilling all of the requirements and finishing the work in a sufficient manner.

Failing to establish specific project requirements and goals can lead to a vast array of problems when software outsourcing a project. The contractor may feel as though he has completed the project as it was outlined but the employer may not agree. When this happens there can be detrimental delays until the issues can be fixed agreeably. In the instance that this is not possible it might be necessary to engage the help of a arbitrator to assess the agreement documents and the work produced to decide if the agreement terms were met.

“Outsourcing and globalization of manufacturing allows companies to reduce costs, benefits consumers with lower cost goods and services, causes economic expansion that reduces unemployment, and increases productivity and job creation.”

~~ Larry Elder — “The Larry Elder Show”

Enact A Firm Deadline

Another very important component of software outsourcing is establishing a firm deadline for the project. This is important to refrain from misunderstandings and to prevent late submissions of work. Setting milestone goals is also important because it gives the employer the power to assess the progress of the contractor during different stages of the project and to guarantee it is proceeding according to the timetable.

Ideally the deadline should be determined before the candidate is selected. This is extremely important because this enables the employer to certify that the contractor is available for the duration of the project. The schedule should be discussed early in the process of selecting a prospective candidate to refrain from selecting an ideal candidate only to discover htat he is unavailable when his services are required.

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~~ Alphonso Jackson — Secretary of United States Department of Housing and Urban Development

Is Software Outsourcing the Answer to Your Software Problems?

Figuring out whether or not software outsourcing is the answer to your software problems is not necessarily a tough question to answer but it is a question which involves careful consideration. There are a series of questions which ought to be be asked to help judge whether or not outsourcing is a smart choice in a individual circumstance. Examples of some of the questions which ought to be asked are:

* Are there in-house staff members experienced enough to solve the software problem?

* Do present workloads allow in-house staff members to toil on this problem?

* How costly will it be to outsource the work?

* What are the advantages of outsourcing the problem?

* What are the major disadvantage to outsourcing the work?

This article will examine each of these questions and supply understanding into how these questions can be used to help make this extremely important choice.

The Capabilities of In-house Staff Members

“Outsourcing and globalization of manufacturing allows companies to reduce costs, benefits consumers with lower cost goods and services, causes economic expansion that reduces unemployment, and increases productivity and job creation.”

~~ Larry Elder — “The Larry Elder Show”

Many software problems demand immensely specialized experience to fix the issues. It is frequently the case that a company’s in-house staff members do not possess the capabilities of fixing these software issues. When this occurs software outsourcing to a professional is the undeniable choice. Even so, in situations where the in-house staff members are experienced enough to fix the problem, the issue of whether or not to outsource becomes more complex.

Those tasked with determining the choice frequently weight the options by taking into account the expense of software outsourcing versus the speed at which the problem would be fixed in both cases. If there is an authority freely obtainable to tackle the problem it will most likely be solved comparatively swiftly. That said, if in-house staff members are currently overburdened, they may not be able to make this problem a high priority.

The Workload of In-house Staff Members

The workload of in-house staff members usually comes into question when looking at whether or not to outsource a certain software associated job or tasks. In the former segment we discussed the value of software outsourcing when the in-house staff members are not experienced enough for certain tasks. Even so, this is not many times the circumstance. Frequently in-house staff members are perfectly capable of accomplishing a job but they are not able to do so because of their present workload. In a circumstance when all of the in-house staff members are unavailable to take on additional tasks, software outsourcing again becomes a sensible choice.

“The other part of outsourcing is this: it simply says where the work can be done outside better than it can be done inside, we should do it.”

~~ Alphonso Jackson — Secretary of the United States Department of Housing and Urban Development

Will Software Outsourcing Save Money?

One of the primary factors companies think about when they contemplate software outsourcing is whether or not they will save money by software outsourcing. Hiring an authority on a contract basis can definitely be costly but it is frequently a profitable investment especially for highly specialized jobs. The cost of software outsourcing is normally higher in terms of the hourly pay of the staff member but overall the total exspense may be lowered. When contemplating jobs performed by in-house staff members it is extremely important to understand the price of the work includes the staff member’s hourly wage, the cost of benefits such as social security, Medicare and workers’ comp and resources such as office space, hardware, office supplies and additional incidentals. After factoring in all of these expenses it becomes crystal clear that software outsourcing isn’t always the more costly selection.

An additional aspect to think about when calculating the costs of software outsourcing is how rapidly the problem can be solved by outsourcing as opposed to handling the problem in-house. This will hang on on the capabilities and availability of the in-house employees. If there is not a capable employee readily available it may take considerably longer to handle the problem in-house.

The Advantages of Software Outsourcing

At last, the advantages of software outsourcing have to be considered in choosing whether or not to outsource certain tasks. We have previously touched on a few of the advantages of software outsourcing but for the benefit of completeness we will incorporate a list of a few of the most significant advantages below:

* Decreased labor expenses

* Access to industry experts

* Flexibility in scheduling

* Increased manpower

With so many advantages it is totally clear that software outsourcing can be a sensible solution to many software problems. The bottom line in choosing whether or not to outsource a certain software problem frequently involves comparing the advantages of outsourcing to the costs of software outsourcing.

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~~ Alphonso Jackson — Secretary of United States Department of Housing and Urban Development

Precautions for Software Outsourcing

Software outsourcing is definitely a feasible business solution for all types of industries. Software plays an fundamental part in many diverse industries and because software is continuously evolving and developing it isn’t many times practical to engage an in-house software employee capable of meeting elaborate software needs. Companies may discover the power to outsource software projects while at the same time maintaining a reliable degree of profitability; that said, there are a few caveats to doing this. Software outsourcing is a sound business procedure but care ought to be taken to elude definite pitfalls repeatedly connected with software outsourcing. Taking a few precautions can stop the company from making mistakes when software outsourcing such as outsourcing the labor to people or companies who lack important qualifications, making lethal scheduling errors and paying too much money to outsource the work.

Correctly Screening Software Outsourcing Candidates

One of the most frequent mistakes made in software outsourcing is delegating the work to an person who lacks the imperative qualifications and capabilities to finish the job efficiently. Companies who constantly outsource jobs may establish powerful relationships with people they are extremely confident will perform well but prior to these types of relationships are dependable it will be absolutely critical to carefully vet each prospective candidate prior to outsourcing a job.

There are precautions companies can take when they are considering outsourcing software outsourcing to guarantee the prospective candidate they choose is highly experienced enough to finish the job. The following are a few of the fundamental precautions companies have to take:

* Describe the job more than adequately in job advertisements

* Scrutinize applications and resumes warily

* Schedule interviews with only highly qualified candidates

* Ask all interview candidates to supply a list of job references

* Verify each job reference and check the validity of job history

“Outsourcing and globalization of manufacturing allows companies to reduce costs, benefits consumers with lower cost goods and services, causes economic expansion that reduces unemployment, and increases productivity and job creation.”

~~ Larry Elder — “The Larry Elder Show”

Establishing Schedules When Software Outsourcing

An additional error commonly made by companies who outsource is to fail to lay out a rigid, firm and hard time schedule. This may not be especially dangerous when the time schedule of the job is flexible but it can be a serious danger when the time schedule of the job is not flexible.

Uncovering a prospective candidate who is skilled to handle outsourcing jobs is extremely important but it is also very important to find a candidate who is readily available when you want someone to complete the job. This is a notable point because many candidates may be highly experienced but if they are not readily available when you require them they are not an model candidate to finish the job.

It is best to discuss scheduling upfront when screening software outsourcing candidates. This is very important because it can be costly to spend time uncovering a prospective candidate just to discover they are unavailable towards the end of the screening process.

Paying Too Much Money For Software Outsourcing

One last error companies frequently make when software outsourcing is paying too much money for software outsourcing. This includes money paid to the person or company hired to finish the job as well as money invested in discovering the most experienced candidate.

One safeguard to take when contemplating software outsourcing is to research all of the expenses connected with software outsourcing and organize a budget for having a certain job completed as an outsourcing endeavor prior to starting to search for prospective candidates. Doing this will empower companies to appraise whether or not software outsourcing is a smart choice from a monetary perspective before they lay out too much money in the process.

When evaluating the expeditures connected with outsourcing a software project it is extremely important to think about a number of factors. First evaluate the amount the customer is paying for the fulfilment of the job. Next evaluate the in-house labor which will be imperative for this job including managing and recruiting candidates to finish the job. Judge the portion of the budget which will be consumed by these efforts. Now it is time to closely look at the remaining budget and conclude how much can be invested in outsourcing the job while at the same time remain profitable. The fees paid to the independent contractor or consulting company ought not be so high that they do not enable the company to profit from the job.

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