When outsourcing, customers typically take the...
Outsourcing software development: companies VS freelancersUntil recently, 82% of US companies employed offshore vendors to reduce software development & maintenance costs. This year, major Western companies will make considerable changes to their outsourcing contracts & focus on the quality of the end product. We’ve mentioned the quality issue because there two ways to outsource software development: you can hire a freelancer or entrust your project to an offshore company. Self-employed developers dwell on Upwork, Freelancer.com and other on-demand work platforms. Their hourly rates depend on several factors (such as expertise, portfolio quality, customer reviews and the market they come from).
Here’s why NOT hiring a freelancer is the best decision you can ever make:
- Complicated management. A freelancer doesn’t typically have the necessary knowledge and skills to carry out the entire project on his own. Thus, you’ll have to employ several freelance IT specialists, manage their performance and make sure they cooperate on the project. By keeping your team intact, you decrease the quantity of bugs by at least 19% and are 30% more likely to stick to the budget. Setting up a dedicated team is quite a challenge – especially if your developers live in different time zones, have never met each other and (most likely!) aren’t good team players (they chose to be freelancers after all);
- Meeting financial & time requirements. 10% of all IT projects run over time, and outsourcing mobile and web software development is no exception. Why does it happen? Software engineering is a complex process subject to numerous pitfalls. It requires great expertise, flexibility and creativity. If you partner with a company, your project is most likely to meet financial goals and keep its value. Even if the project runs late, you are protected by the contract, so it’s the vendor who pays penalty fees. Working with a freelancer is all about risks. Although you may insist on signing a formal contract, most freelancers prefer verbal arrangements. Such partnership is always built on trust, so there’s no guarantee that your project will be delivered on time (if at all);
- Cultural differences. In case you think you can easily build solid business relationships with a person who has a totally different mindset, here are some sobering stats for you. Poor communication causes 28% of IT outsourcing failures. 19% of the companies who took part in the 2014 Global Outsourcing Survey (Deloitte) listed “incompatible culture” among the biggest challenges of working with an offshore vendor. And we’re talking about companies now! If you hire a freelancer, you’ll have to handle all the communication on your own (with no interpreter, manager and other employees).
Offshore software development: barriers to success & ways to overcome themIf you trust your software development project to an outsourcing company, you may face similar challenges (poor management, exceeded budget, prolonged deadlines and, finally, cultural misfit). However, you can successfully overcome them on a “corporate” level:
- Choose the most appropriate pricing model (Dedicated Team, Time & Material or Fixed Price). The choice depends on several factors, including project size, goals and estimates. A good vendor will offer you a free consultation and explain what pricing model would suit your project best;
- Find an offshore company with headquarters in the United States or Western Europe. In this case, your contract is regulated by the international commercial law. Also, such companies are most likely to use the project management tools and methodologies you implement within your own enterprise;
- Hire developers from a country with similar mindset. As of 2015, Eastern Europe, Asia and Latin America are the most popular & cost-effective outsourcing destinations. Hourly rates aside, what is the best direction for you? Notable experts on cultural psychology (including Geert Hofstede, the former IBM employee) tried to answer the question and came up with curious results. Hofstede, for example, developed the cultural dimensions theory. He discovered direct correlations between IT project failures and cultural compatibility. Here’s an example. When Richard Feynman, a Nobel-winning physicist, was investigating the explosion of the Challenger shuttle, the NASA engineers told him the probability of the engine failure ranged from 1-in-200 to 1-in-300. The head of NASA, however, said the failure rate had been estimated at 1-in-100000. That’s the MUM effect at its best (the reluctance to deliver bad news to your boss which often results in attempts to “soften” it in this or that way). According to Hofstede, developers from the regions with higher Power Distance Index (Asia and Africa) will never tell you that project deadlines are unreal or how to outsource mobile app development right. That’s why you get bad coding, exceeded budgets and diminished value. Vendors from Eastern Europe, on the contrary, find no difficulty in saying “no”. It doesn’t mean they simply abandon your case; instead, they offer alternatives & are generally more open to communication.
How to find a software developer?
- Study ratings. There are many online platforms that rate software developers from all over the world. Such rankings can be commercial (platforms charge listing fees or make money on advertising) or independent (made up by IT bloggers and customers). Websites like Clutch.co and AppFutura, for example, offer large databases of mobile and web development companies, marketing agencies and service providers. All the entries are arranged by categories (expertise, location, etc.), so your search will be quick and convenient. The Crunchbase platform lists innovative enterprises (with focus on startups). Here’s how to select a vendor on Crunchbase: choose the company type and fill in the search form. The platform offers access to vendors’ catalog, latest news and investment history. The sources we’ve mentioned base their ratings on customer reviews, so developers who receive negative feedback cannot make it to the top;
- Surf the Web. Type the magic keywords and choose several developers from the search engine results. Sure, you cannot judge vendors by the ranking itself (it’s not a SEO company we’re looking for, right?). That’s why you should study the websites paying attention to expertise, case studies, testimonials, design and content quality;
- Talk to fellow businessmen. According to the recent study conducted by American Marketing Association, 64% of marketing executives believe word of mouth to be the most effective form of advertising. Make some inquiries! Your colleagues who had positive outsourcing experience might recommend you a good vendor.
How to select a reliable vendor?
- Contact several outsourcing companies you’ve found on Clutch/on the Internet/through referrals. It may be a direct phone call, email or request for quotation;
- Evaluate the reply time & quality of information a vendor provides you with. Don’t forget to sign a non-disclosure agreement;
- Pay attention to managers’ communication skills and command of English;
- Check the vendors’ online presence. Are they good at blogging? Do they post comprehensive & reliable articles on the subjects within their expertise? How often do they update their corporate blog? What about websites like Quora? And yes, it won’t hurt you to study social media accounts of your potential partners (including photos) to make sure they are real people & the very people you’re going to work with;
- Well, now you’ve got enough information to make a sound decision & find a company you can trust!