Outsourcing Your IT Software Project
Outsourcing all or part of software development is common practice. It needs to be monitored carefully to ensure not only cost effectiveness but also other important aspects such as customer satisfaction.
There are many different reasons for outsourcing:
- Specialised expertise
- Cheaper development costs
- Obtaining 24 hour support knowledge across different time zones
Why monitor outsourcing? Some concerns with outsourcing are: the service provider could cost more, take longer, have lower quality controls than the in-house development. Monitoring ensures that all parties work towards a common goal.
Common issues with outsourcing include increased time to market, increased defects and a reduction in customer satisfaction. However where cost of development is extremely important, sacrificing other measures might be a business decision.
Benchmarking of the outsourced components is mandatory. The measures could be slightly different if only part of the development lifecycle is outsourced. For example when part of project development is outsourced measures could be:
- Development productivity
- Defects delivered into phase after outsourced responsibility
- Local project manager satisfaction
To monitor your outsourced project, calculate your project baseline. This could be done using:
- The ISBSG Industry data.
- History of in-house development productivity. This would provide the strongest position of determining the most realistic value
- First year of service provider development productivity
This could be the basis on which your annual targets, bonuses and penalties are derived.
Keep in mind that the objective is not to send anyone broke but to provide real incentives for reasonable productivity improvements so that all the objectives of outsourcing are met.
A further extension to the agreement between outsourcer and service provider is for the service provider to be paid for each FP delivered. This may have the impact of only focusing on productivity and less on quality and customer satisfaction. For this to occur the service provider must have extensive experience and confidence on their productivity measures to agree to being paid per FP. Also the outsourcer should also have knowledge of the correct price/FP for their specific application at or least obtain the price/FP from specialist consultants that can undertake work to provide the answer.
Resources that can assist in the setup of a baseline and/or target measures are:
If you are considering outsourcing and need help, contact ISBSG so we can direct you to independent consultants that can work with you to ensure a successful outsourcing arrangement.