Outsourcing - to be or not to be?
Though for many companies outsourcing became very
habitual thing, for some enterprises it is still very
difficult to decide using services of some third-party
company or person.
1. First of all, why is it worth outsourcing?
There are several reasons for using out-side services:
someone can do something much better, than you (we
mean company) and it is cheaper to buy these services
than to make everything in the company.
Would Nike be as successful as it is now if it didn't
use cheap labor of local workers? Would you hire an
accountant, create a work place, pay taxes, if your
enterprise is not so big and your accountant works
efficiently two days per month? Most likely you would
buy services of accounting firm. Everything depends
on the tasks you need to accomplish. On the scale
there will be the cost, on the other - quality/speed/security.
Let's consider several situations
Situation 1. You are a big company. Every employee
has a computer. You need to automate work of many
divisions. You are worried about security; you want
to protect your information to the maximum.
Solution: First of all, you should worry about security,
consequently, the most responsible people - system
administrators should work in your company. They would
be responsible for undisturbed operation of your servers,
network, and e-mail. It is enough having in your company
a small IT division which would be engaged in adjustment
of computers, printers and other office equipment.
But probably it would be worth using services of local
IT company in case financial arrangements show that
it is really profitable. Is it worth hiring programmers
who would be developing software for your company,
for example, for accountants? It is worth, but only
if
- you are a software development company;
- you cannot buy ready software;
- you want to sell what your programmers would develop;
- you found a very talented manager who would be able
to organize the work of prospective development division;
- you don't know what to do with your profit.
Situation 2. You are a software development company.
Your software is popular, but the expenditures for
its development are still very high. You want to cut
down expenditures, speed up development of new versions
of the product(s). Or you would like to get new products
and increase expenditures not more than by 30% (or
less).
Solution: The biggest part of your expenditures is
salary and taxes. You can refuse current "expensive"
workers, hire a company with cheaper labor cost, and
leave in your company the most effective managers
who would be able to set tasks and control the process
of these tasks implementation.
Situation 3. You are a not very big company, selling
your products and services. You need a web site or
a software product, but the project budget is limited.
You turn to local software companies and understand
that their services are too expensive for you.
Solution: You can work with other companies (or freelances),
who can sell these services to you at a low price.
So, you decided to use software outsourcing services,
you need to accomplish several tasks then.
2. How can I choose the developer(s)? Russia, India,
China, or Western Europe?
Developers can be situated anywhere: in another city,
another region, or another country. We cannot tell
about advantages of any country except Russia.
It is well-known that there are differences between
Russian developers and developers from other countries.
The reason for differences is that historically computer
sciences and most of corresponding educational courses
have been mathematical in Russia: More attention is
paid to thorough study of math sciences and less to
natural sciences. This particularity derives from
the reason that in the main computer sciences in Russia
having been developed by mathematicians who traditionally
give preference to classical fundamental knowledge.
In Russian there are several cities in which universities
training highly skilled developers work: Moscow, St.
Petersburg, Novosibirsk, Tomsk, etc. Tomsk (where
Development for the Masses is situated) ranks among
five of them. There are 6 universities working in
the city, as a result of it young people make up the
5th part of its population. Almost 20% (100 000) of
young population have an academic degree in system
engineering, computer engineering, system design and
programming.
Level of Russian developers work payment depends
on:
- professional skills level; - specialization and
profession (salary of a tester differs greatly from
salary of an architect);
- distance from the capital (Moscow);
- the cost of living in other cities is much lower
than in Moscow.
Hour rate varies from $5 to $40 (4 Euro - 35 Euro).
Thus, if you decide to outsource some work to some
company, we recommend you to learn more about the
country in which this company works.
3. How can I keep control over the project if the
company developing it is situated too far (for example,
in another country)?
This problem can be easily solved by payment system.
First of all, divide the entire project into several
phases (especially if the project is big); then agree
with developers on terms and payment for every phase.
So, you will be able to avoid any problems: the work
will be paid for only when the work at a certain phase
is done. Consequently, the faster they the work and
the better quality of the work done, the better for
them and the sooner they will get payment.
4. What if there will be problems concerning intellectual
property?
In any case, the person or company that ordered site
design or/and development or software development
gets the intellectual property rights. But you still
need to discuss it with developers beforehand.
5. There can be communication problems, especially
if developers speak some other language.
Of course, there can be such problems. But the thing
is that developers rendering development services
for foreign countries know that communication problems
can appear and learn some foreign language. By the
way, in such companies necessarily work professional
translators. However, it is worth noting that communication
problems can appear within any company, within any
community, especially if people just do not want to
understand each other.
6. Time difference may become a problem.
Sometimes time difference between customer and developers
can be very sufficient. Nevertheless, we believe that
time difference can be a great advantage. For example,
if your company develops some project and you decide
to outsource some part of work, you can work with
the overseas team in shifts, so that programming goes
on 24 hours a day.
7. Is it profitable to turn to third-party developers?
The answer is: yes, it is very profitable. First,
using services of third-party developers you get high
return on investment. Second, you can reduce the need
to invest capital funds in non-core business functions,
so capital funds more available for core areas.
8. How skilled are the companies acting as third-party
developers?
Usually, such companies, especially if they work
with foreign companies, have sufficient experience
and skills which allows them to successfully operate
on the international market of programming and Information
technologies. You can view portfolio, clients list,
find out the rates and pricing, how the work process
is organized. Before signing the contract of long-term
relations with a software development company, give
some small project to this company and check the result.
If everything suits you, you can continue the relations.
About the Author:
Dev4Masses.com
is the author of this article and you can visit him
at his website for more information.
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