Some form of software development has been outsourced as early as the 1990s. This was during the dot-com period in the United States when many high-tech, usually Internet-related, companies were founded and flourished. The march of information technology (IT) continues to this day, with a very competitive and progressive global market churning out discoveries, developments and even far-reaching breakthroughs.
In the beginning, mostly U.S. companies were outsourcing only the more routine and simple software development tasks—software maintenance and testing—to foreign countries. Since the start of the 21st century, more countries have been outsourcing software development, such as the United Kingdom (second to the U.S. as a major outsourcer), some European countries, Japan, Korea and Australia.
In the past decade, the range of software and IT-related work that is outsourced has increased. In addition to software application programming, testing and maintenance, other offshored software work are in the areas of research and development, software architecture, product design, consulting, project management, mobile application development, and many more. In fact, some quarters believe that any type of software development work can be successfully and profitably outsourced despite perceived risks such as loss of control over critical work or risks to data security and intellectual property.
Risks such as those have been mitigated by putting certain best practices in place. Among these practices is for the company to only outsource projects to a business process outsourcing (BPO) provider with technical expertise and a good track record, one that will do a thorough analysis and make the effort to obtain complete understanding of the development requirements. Also important is that the BPO must ensure vigilant, regular project management and monitoring as well as quality control throughout the life of the contract.
Benefits of software development outsourcing
Companies that choose to outsource their software development do so for a number of reasons. The two most often cited benefits are:
- Cost savings. Labor costs outside developed countries are lower. A software developer in the U.S. or U.K. would have a much higher salary than one in the Philippines or India. The money saved on development costs can be used for other investments.
- Flexibility in skills, expertise and tenure. Companies may only need software development for specific purposes. They may not need these skills on a permanent basis. Instead of hiring full-time resources in a company for a particular project, outsourcing software development to an offshore BPO would achieve the same objectives without committing to long-term hires.
The global economy relies greatly on technological advances. Many high-tech companies are dependent on software development work. With competition always accelerating among market players in all industries, it would seem that software development outsourcing is here to stay.