Software Outsourcing: Here or There?

Outsourcing soft­ware has been con­sid­ered the most cost-ef­fec­tive and ef­fi­cient method of soft­ware de­vel­op­ment for some time. Many or­gan­i­sa­tions have even be­gun re­ly­ing on out­sourced teams based in other coun­tries. There is no deny­ing the ap­peal of this op­tion. Outsourcing has many ad­van­tages, and off­shoring ap­pears to main­tain these and then some. Namely, be­cause labour costs are much lower in coun­tries such as India, off­shore out­sourc­ing typ­i­cally un­der­cuts lo­cal out­sourc­ing. There are some hid­den caveats to off­shoring, how­ever, such as time­zones and long-dis­tance com­mu­ni­ca­tion. Both of these are com­monly seen as down­sides. Though, per­haps, small down­sides. Whichever op­tion you choose or plan on choos­ing, re­mem­ber Moore’s Law.

The soft­ware de­vel­op­ment process is it­self in a con­tin­ual state of change as de­vel­op­ers adopt new tech­nolo­gies and busi­ness prac­tices. This ar­ti­cle ex­am­ines out­sourc­ing as a method of de­vel­op­ing soft­ware.


The com­mon per­cep­tion is out­sourc­ing saves money based on labour ar­bi­trage. External de­vel­op­ers are cheaper than in­ter­nal ones, and off­shore de­vel­op­ers are cheaper than lo­cal ones. In both of these cases, qual­ity and/​or con­trol is some­times be­ing sac­ri­ficed in ex­change for these sav­ings. Many or­gan­i­sa­tions, how­ever, choose to out­source (especially off­shore) any­way, be­liev­ing the eco­nomic ben­e­fits out­weigh any ac­com­pa­ny­ing detri­ments.

The eco­nom­ics be­hind out­sourc­ing, how­ever, are far less straight­for­ward than a sim­ple labour rates com­par­i­son sug­gests. Internal de­vel­op­ers, for ex­am­ple, are gen­er­ally more ex­pen­sive, but they are prob­a­bly also more aware of the or­gan­i­sa­tions needs and goals. Ultimately, labor ar­bi­trage” in soft­ware de­vel­op­ment is a myth.

Peter Vaihansky, Americas for First Line Software Pro, ar­gues liken­ing lo­cal and off­shore (as with in­ter­nal and ex­ter­nal) can be like com­par­ing ap­ples and or­anges. You might only be pay­ing $20/hr, but how much value are you get­ting per hour? How quick and skilled are your off­shore de­vel­op­ers? Are you get­ting strong peo­ple on your team, or in­ex­pe­ri­enced ones with ques­tion­able skill lev­els and dis­cre­tion? One $100/hr de­vel­oper may pro­duce more value for you and your or­gan­i­sa­tion than five $20/hr de­vel­op­ers. The point is, by off­shoring your soft­ware de­vel­op­ment you take on­board cer­tain risks, os­ten­si­bly in the name of sav­ings. The prob­lem is, the eco­nom­ics of out­sourc­ing are far less straight­for­ward than is com­monly as­sumed. There is no one size fits all. And some­times, sav­ings in terms of labour costs are paid some other way, such as in­ex­pe­ri­ence.

Accuracy and Efficiency

We’re only hu­man, and we’ll make mis­takes; how­ever, be­cause of strict dead­lines, pro­gram­mers some­times don’t have the lux­ury of be­ing able to check for er­rors. To be suc­cess­ful, de­vel­op­ers (and de­sign­ers) must walk a tightrope, bal­anc­ing speed and ac­cu­racy. Focus too much on speed and your ac­cu­racy may slip, lead­ing to mis­takes. Conversely, fo­cus too much on ac­cu­racy, and you may miss dead­lines. And then there are time­zones and long-dis­tance com­mu­ni­ca­tion. All of these fac­tors can af­fect ac­cu­racy and ef­fi­ciency, as well as speed.

The Next Step in the Evolution of Software Development Process

Just like tran­sis­tor tech­nol­ogy, soft­ware de­vel­op­ment has evolved, with ad­vanced, lo­cal de­vel­op­ers now ca­pa­ble of de­liv­er­ing com­pet­i­tive re­sults. WorkingMouse is one of a new breed of ag­ile and in­no­v­a­tive soft­ware de­vel­op­ers. These de­vel­op­ers rely on new and im­proved tech­nolo­gies and busi­ness prac­tices, as well as the rich hu­man cap­i­tal avail­able in Australia and other ad­vanced coun­tries, to over­come higher labour rates.

At WorkingMouse, for ex­am­ple we have our Innovation Platform, which uses code­bots to write code. This al­lows us to de­liver pro­jects quicker and cheaper than most other teams, in­clud­ing off­shore. The use of code­bots helps with ac­cu­racy, ef­fi­ciency, and speed, as the ma­jor­ity (92.86% to be ex­act) of our code is writ­ten by bots. Because of this, we can ef­fec­tively mit­i­gate the rate of hu­man er­ror in our pro­jects. This in turn has en­abled us to com­plete pro­jects with great ac­cu­racy and ef­fi­ciency. Well known pro­gram­mer and au­thor of C by Example, Greg Perry said computers are fi­nite ma­chines; when given the same in­put, they al­ways pro­duce the same out­put.” I feel this state­ment sums up ex­actly why self-writ­ten code is the fu­ture. Unlike the hu­man brain, the com­puter is able to re­peat the same task time and time again in a flaw­less man­ner. Few out­sourced pro­gram­ming firms can claim that level of con­sis­tency and ef­fi­ciency.

With tech­nolo­gies such as our Innovation Platform, it’s un­clear if the sav­ings found in off­shore de­vel­op­ment off­set the po­ten­tial detri­ments.

If you want to read more on out­sourc­ing, check out Eban’s ar­ti­cle on The Key to a Successful Relationship with Your Software Outsourcing Company.


Eban Escott

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