Outsourcing - Application Development Pro & Con

Outsourcing - Application Development

Many businesses deliberate the option of outsourcing their application development efforts to third party providers.  There are some valid arguments on both sides to consider for software and systems management and how best to provide this service to the business.  The following are some pros and cons to consider while evaluating outsourcing options for your application development work:

PRO CON
Outsourcing the development work can be less expensive in many cases, because third parties often utilize overseas resources that have lower overhead and salary expenses.  Businesses should weigh all the costs of application development in house – such as benefits, salaries, office expenses and development software.  With those costs in mind a more accurate comparison to outsourcing can occur. Language barriers can pose a problem when attempting to deliver an application or modification to an application using an outsourcing provider.  Businesses must have extremely comprehensive documentation that outlines the development requirements in full detail.  Before sending any application development to a third party, businesses should either perform this extensive documentation work themselves or have a highly skilled business analyst and project manager put together this information.  Frequently the outsourcing provider can offer these services using persons who can bridge any language barriers that may exis
Delivery of the completed project work can be done in relatively short order when compared to in house efforts.  Because many of the outsourced companies have tools available to make the development work much easier, and a significant knowledge base to utilize, the time for the development work is reduced substantially.  Much of this is contingent upon having prompt delivery of the requirements in order to perform the work. The quality of the work is solely contingent upon the completeness of the requirements documentation.  Developers who may have never worked on your software will not know the business rules or design standards that are used unless they are explicitly provided in the documentation.  Businesses should discuss the quality assurance rules and practices surrounding the development work and how quality will be judged.
Third party outsourcing providers can provide scalability that may not be available in house.  Often the internal application development staff is overwhelmed with requests and deadlines to meet, and the turnaround on delivery can take substantially longer than the business requires.  With the utilization of an outsourcing provider for some or all of the application development, development work can move at a reasonable pace for the business needs. Businesses will need to consider the connectivity requirements for any third party outsourcing providers.  This can include intranet access, off-hours conferences and meetings, security clearance and delivery mechanisms for the software.  This should be factored into the total cost of the project.
Specialized development work, the cost to contract a single developer who has the niche skills needed can be significant for businesses.  Through the use of outsourcing resources, the specialized work could be provided by the third party with reduced expense requirements when compared to a contracted or hired developer.  

How is your organization handling application development?  Is the vendor aligned to your organizations goal and thus forming an extension of your organization or is merely a supplier? How does the outsourcing align with the organization and do the processes and procedures support this engagement?

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David Peterson

David G. Peterson is a business consultant and author of Handling the Remedy. He has extensive international experience managing projects and operations for large financial institutions. He has worked in North America, Europe, Middle East and Asia skillfully managing business and technical requirements, core systems enhancement and support, merger and acquisition integration's, business process reengineering, off-shoring and outsourcing.