As a consequence of increased globalization and rapid technological changes over the past decade, many companies have started to outsource their software development, or at least consider the option. We look at some of the main pros and cons below:
Access to a larger talent pool
Generally the largest companies with strong reputations in their respective industries will attract the bulk of the talent. Tech giants like Google and Apple are very good at attracting “the best”. However, it is extremely rare for all of the most talented individuals in a particular market or industry to work for the same company. This enables a company outsourcing software to gain access to a more global talent pool
When it comes to undertaking completely new software projects that are unlike anything that you have done in the past, or if this is the first time your company is investing in software, it can be much cheaper and faster to look at outsourcing options rather than setting everything up in-house. A good outsourcing company will also have robust systems and processes in place to ensure the project is delivered on time, within budget, and to the agreed specifications. Outsourcing also helps to keep your business and its resources focused on what it is already doing best.
Increased Complexity & Bureaucracy
Although in theory outsourcing R&D should be an efficient process, the opposite can occur if expectations are mismanaged, differences of opinion arise about the nature and quality of the work taken place, or if the requirements of the project change once the development is underway. Therefore, it is essential to ensure that both parties have complete clarity on the project before it begins.
Often the most complex projects to outsource are the ones that are already significantly underway, as staff currently involved with the project will have to explain every element of it in great detail to the company who will be taking over. Your company will likely utilize different methods and may measure progress in a different way to the outsourcing company, which can also present issues. The best way to address this is to discuss your requirements and the work already carried out in great detail with the company who you plan to outsource to. The company should have a process to go through all of this with you.
Limited understanding of your Product/Company
Although outsourcing companies typically specialize in one particular industry, market or niche, it is often very difficult for them to have the same level of understanding of your product and market that you do.
Trust and Confidentiality
Management of intellectual property, and the leakage of information to other sources and/or your competitors can be easier to manage, and less likely to happen when all of your software development occurs in-house. Before choosing a company, do your due diligence – look at their track record and check their policies on protecting your intellectual property, and what their policies and procedures are if these policies are breached by their staff. If outsourcing to a company based in another country, make sure you are aware of their laws with regards to how information about the R&D project will be handled and stored. It is worth seeking legal advice if you are unsure.