The global outsourcing market stood at a resounding $88.9 billion in value as of 2017. An interesting insight on this market are the major segments of this market. Out of this huge number, approximately $64.3 billion was spent in IT outsourcing. Even in the IT outsourcing segment, 64% companies worldwide spent on software development; this simply makes software outsourcing the poster-boy of a highly lucrative market worldwide.
Software development has definitely become the need of the hour for many small, medium and large scale businesses. That said, there is a clear differentiation between how the small and medium scale businesses outsource their software development and how their large scale contemporaries do the same. Does it have anything to do with the complexity, vendor size and budget of the outsourcing projects? For sure, but that is not at the core of the entire comparison. The major cause of difference is the strategic outlook.
Most of the small and medium scale business think that getting the cheapest possible technology that ‘does the job’ is the best they can do and that is where they miss the bull’s eye. Technology in large and software in specific, are not cost overheads; they are investments. Think about it this way – you will be using the same software with new data and technology updated timely, for years; using the same software you will simplify and automate many processes and cut costs heavily over the years. Every penny that is saved after the software comes into picture, is that return on your investment. Simply said, in order to avail the long term benefits of your software outsourcing, you have to treat your software development outsourcing process as a strategic process.
Strategy is not just a fancy word out of management books. It is a clear way to get the competitive advantage. Here is how you can align your software outsourcing process with your business strategy:
1. Understand the life-cycle stages of your business. The business can be in any of the life cycle stages: Launch, Growth, Shake-Out, Maturity and Decline. On every stage of the business’ life cycle, your goals will change – for instance developing strong brand equity to cashing out from archaic products. Strategy building has to be done on Corporate, Business and Implementation level. That is how you will know what will be your larger needs on every stage and what should you expect from your software development company.
2. Invest in long term outsourcing partners. Investing in long term business relationships is not about occasional emails, dinners or corporate gifts. It is built on consistent performance, reward sharing and transparent communication. It is very easy to choose the vendor offering the ‘best price’; but how do you define the best price? One which saves some money in the short run or one which saves large money in the long run? There might be many a software development company offering custom software development services; your job as a business is to choose the one that will be with you in the long run. Biggest of brands, working with the same ad agencies for over half a century, have learnt that investing in such long term relationships has a huge impact on the outcome of the projects. Same applies to software development services.
3. Get organized with the Goals, Corrections, Pivots and Rewards. When the software outsourcing process becomes strategic, there should be precisely defined set of goals. These goals shall go over the long run and make the organization more efficient; the same goals should be broken down in the shorter run and every project undertaken should be a reflection of the same. Now, to get the best results, any company would go through a learning process understanding the unique needs of your business. Gradually, the iterations will decrease as the cohesiveness between you and your outsourcing partner increases. In some projects, you might even have to pivot, in order to stay abreast with the technological trends; but as far as it is still in line with your strategic goals, it will be easier to embrace the change because it will have a clearly defined purpose, a precisely defined long term goal.