Facts and Tips in International Software Outsourcing

Software outsourcing is a not-so-new commercial strategy utilized by various software manufacturing giants as well as several IT companies in order to reduce the overall cost in software development. It may be viewed as a strategic corporate expansion and re-structuring in order to achieve the best growth for a certain company by reducing the overall cost in software development. The main reason for this is 70% of software development costs are attributed to human resources costs. By reducing the cost of labor, a company would, in effect, reduce the overall overhead cost in software development. Nowadays, big companies located in the Americas and Europe has turned to their Asian brothers as their area of choice when it comes to outsourcing their goods. In 2004 alone, the global software sales reached 6,000 billion dollars of which sales of outsourcing has achieved 500 to 600 billion dollars. Subsequently, the sales of software outsourcing in 2005 eventually reached a whopping 1,000 billion dollars. Substantial growth of software outsourcing has brought great opportunities for those countries where the costs of human resources are relatively low, such as China and India. A company should outsource if the software development needs of a company are not that complicated. Smaller and less demanding projects can be outsourced as it will be a safer move in the future. There are companies that have IT departments yet they have employees that may not be eligible to do a certain IT task. The company can then start to outsource and hire qualified people abroad. A company with an existing product can also outsource if the product just needs to be updated. This way the in-house IT team can focus on in-house innovations and procedures. If the company wants to save money, they can try outsourcing people from another part of the globe at lesser labor. Software outsourcing abroad should start with scrutinizing the targeted partner carefully. They should come up with a comprehensive proposal that would attract many competitors. They can also ask for referrals when these companies bid. They should call at least one referral from each bidder so that they will know more about them. Their outsourcing partner should be the cream of the crop for them to come up with the best software. The company should know exactly what he looks for in a perfect outsourcing partner for software development. They should compare all the applications they receive and then see if any of them meet their criteria and guidelines. They will be spending quite a lot of money thus they need to get a good partner in this endeavor. The company should also ask code samples from all the candidates and then let independent experts of software review them. They would be able to determine which among their candidates are skilled to finish the job assigned to them. It must be put into clear writing the new outsourcing partners role while coming up with new software. This would safeguard the companys intellectual property rights as the owner. They must have a lawyer, preferably an expert in intellectual property, who would come up and evaluate a contract between them and the outsourced partner. In any organization, clear and good communication is essential for a project to be successful. They should assess if it is enough to contact their outsourced partner via email and phone. They must assess if it is necessary to meet personally for things to be discussed clearly. If the company wants a face-to-face meeting, they must choose a partner that has a branch where they can easily and speedily go to. The company should also do a market research prior to outsourcing a software development project which must be done by their software development division. They must gather data on the kind of software users want to have and use and the kind of data they can input. They should comprehend what users would do with the softwares output. They must understand the type of interface the users wish to utilize when they are using the software. These are the facts and tips to remember when software outsourcing abroad.