Outsourcing software development benefits and risks
Software Development

The Third Way – does it work for outsourcing?

date: 5 October 2009
reading time: 3 min

At a seminar I attended last week, I got talking to Tomas, the managing director of another software development outsourcer.

The conversation turned to customers and he mentioned to me that clients seem to be increasingly using him as a ‘bodyshopping +’ service, where customers although requesting the development of a piece of software, in practice seem to just want a couple of extra programmers to use for the development of the software, as they see fit. He seemed rather ambivalent about this. Although I didn’t say so at the time, I couldn’t help but feel that Tomas’ willingness to go along with this approach will end in disaster for him and his customers. Here’s why: there are two ways to manage outsourcers.

First you may just want to use the outsourcer increase your head count so you can still retain very tight control over the project. Second, you may want to let the outsourcer manage the project based on your specification and let the outsourcer take responsibility for delivering the software on time. What Tomas has become embroiled in is a mix of both approaches. Companies and outsourcers that have tried this, either by design or by just falling into it, have generally found it frustrating and somewhat risky. What often happens is that the customer is not comfortable trusting the supplier so ends up micromanaging the outsourcer’s staff. However it remains unclear to them that the customer wants a pure body-shop service, as the customers still expects timely delivery of software and some consultancy. With decisions around methodologies and timescales taken out of their hands it is hard for the outsourcer’s staff to deliver exactly what the customer wants on time and both the outsourcer and customer ends up frustrated.

For these reasons, this is an approach which should be avoided. In short, while compounding the disadvantages of both the outsourcer management approaches I outlined earlier, it offers the benefits of neither. In my experience the second approach is the best way to go: you are able to make the best use of the specific skills and experience of the outsourcer, which incidentally you are paying for. The outsourcer will also provide software development and quality assurance resources but the resources are almost hidden from the customer.

Perhaps most importantly this approach will free up more of your time: your outsourcer should deliver per specification, on time and to budget with minimal involvement of your in-house team’s time. Giving the supplier more freedom and dividing clearly responsibilities between on-shore and offshore team can benefit everyone. The supplier tends to take ownership of the project which makes it more likely to get the most out of the relationship.

One caveat however: customers will benefit more from this management approach if their outsourcing partner is a mature software house. If so, it will already have proper processes in place and experience of running projects for remote clients. I hope Tomas’ contracts don’t end it tears, but I suspect they will. However, hopefully in the long run both he and his customers will learn that a better management approach.

In the meantime I hope any IT managers or CIOS reading this will think about how they manage their outsourcer and whether it is a constructive method that is giving them the best value for money. Your outsourcer probably has some fantastic skills – make the most of them and remove some of your headaches.

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