Offshoring Your Software and Web Development?

Source: Offshore software

By Marty R. Milette

Introduction

Software development, including stand-alone applications, network applications and web-based sites and business applications can now be done easily and inexpensively offshore. The focus of this article to discuss some of the background behind outsourcing and offshore software development, and why you may wish to consider offshore software development for your future projects.

Here's what we'll look at:

• Outsourcing, offshoring and body shops and the differences
• Myths about offshore software development
• Global factors impacting the software development industry
• How the offshore software development process works
• Benefits of offshore software development
• Best types of projects for offshoring
• Mitigating the risks of offshore software development
• Why offshore software development in Russia?
• Action Plan: Your first offshore software development project

Outsourcing, Offshoring and Body Shops and the Differences

Outsourcing

Unless you've been hiding under a rock someplace, you have no doubt heard of outsourcing - and, have very likely been directly affected by it. Perhaps your job was 'outsourced'. In some cases - you become the 'loser' - having your job given to some local competitor - in other cases, you may have become the 'winner' - being able to continue the work you've always done, but under your own company now separate from the company you formerly worked for.

Offshore Software Development or "Offshoring"

The term "outsourcing" can also be extended - in cases where the work is now to be done outside the borders of your own country. A new, and popular term for this is called, "offshoring".

Outsourcing or offshoring in their own rights are not 'bad' or 'evil' - they are simply a way companies can gain two benefits that may be critical to their survival:

• Leverage cost reductions - by taking advantage of lower offshore labor rates or economies of scale for both local and foreign firms, and;
• Core competency focus - meaning that companies outsource work outside their area of core expertise. For example, if your company makes tires - does it make sense to develop a huge IT shop that develops complex software and web sites? No - you focus on what you know best, which is to make tires, and let outside experts take care of the IT problems.

Offshore Software Development, or OSD, is not new. Companies throughout North America have been using developers in Israel and India for over 20 years with excellent results and high ROI.

Although you may not hear much about it - many of products developed and marketed by some leading American companies are, in reality, developed abroad, or developed by foreign workers employed locally.

What has happened in the past five years that has really brought these issues to the forefront is the incredible popularity and ubiquity of the Internet and general telecommunications infrastructures even in 'developing countries'. This has served as 'the great enabler' of a new 'global economy' - making it almost effortless to both buy and sell products and services electronically.

"Body Shops"

The term "body shop" refers to a local firm whose working staff are temporarily imported foreigners - usually working on some form of 'temporary' or 'short-term' visa, like the American H1-B class of visa.

Body shops have in many cases earned the reputation similar to the old 'sweat shops' - where foreign workers are made to work extended hours for much lower pay then comparable local workers.

In theory, there are regulations in place to ensure that 'body shop' employees are paid typical local salaries for their work, workers enter the country legally, and receive the same benefits as local workers - however, in reality, there are enough loopholes in the laws so that this is seldom the case. Hence these shops operate locally, but at significantly lower prices than local shops.