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Outsourcing to be or not to be?

Though for many companies outsourcing became very habitual thing, for some enterprises it is still very difficult to decide whether to use services of some third-party company or person or not.

1. Why is it worth outsourcing?

There are several reasons for using out-side services: someone can do something much better, than you (we mean company) and it is cheaper to buy these services than to make everything in the company.

Would Nike be as successful as it is now if it didn't use cheap labor of local workers? Would you hire an accountant, create a work place, pay taxes, if your enterprise is not so big and your accountant works efficiently two days a month? Most likely you would buy services of an accounting firm. Everything depends on the tasks you need to accomplish. On one scale there will be the cost, on the other — quality/speed/security. Let's consider several situations.

Situation 1.

You are a big company. Every employee has a computer. You need to automate work of many divisions. You are worried about security; you want to protect your information to the maximum.

Solution: First of all, you should worry about security, consequently, the most responsible people — system administrators should work in your company. They would be responsible for undisturbed operation of your servers, network, and e-mail. It is enough having in your company a small IT division which would be engaged in adjustment of computers, printers and other office equipment. But probably it would be worth using services of local IT company in case financial arrangements show that it is really profitable. Is it worth hiring programmers who would be developing software for your company, for example, for accountants? It is worth, but only if you

  • are a software development company;
  • cannot buy ready software;
  • want to sell what your programmers would develop;
  • found a very talented manager who would be able to organize the work of prospective development division;
  • don't know what to do with your profit.

Situation 2.

You are a software development company. Your software is popular, but the expenditures for its development are still very high. You want to cut down expenditures, speed up development of new versions of the product(s). Or you would like to get new products and increase expenditures not more than by 30% (or less).

Solution: The biggest part of your expenditures is salary and taxes. You can refuse current “expensive” workers, hire a company with cheaper labor cost, and leave in your company the most effective managers who would be able to set tasks and control the process of these tasks implementation.

Situation 3.

You are a not very big company, selling your products and services. You need a web site or a software product, but the project budget is limited. You turn to local software companies and understand that their services are too expensive for you. 

Solution: You can work with other companies (or freelances), who can sell these services to you at a low price. So, you decided to use software outsourcing services, you need to accomplish several tasks then.

2. How can I choose the developer(s)? Russia, India, China, or Western Europe?

Developers can be situated anywhere: in another city, another region, or another country. We cannot talk about advantages of any country except Russia.

It is well-known that there are differences between Russian developers and developers from other countries.

The reason for differences is that historically computer sciences and most of corresponding educational courses have been mathematical in Russia: more attention is paid to thorough study of math sciences and less to natural sciences. This particularity derives from the reason that in the main computer sciences in Russia having been developed by mathematicians who traditionally give preference to classical fundamental knowledge.

In Russia there are several cities in which universities, training highly skilled developers, work: Moscow, St. Petersburg, Novosibirsk, Tomsk, etc. Tomsk (where Development for the Masses is situated) ranks among five of them. There are 6 universities working in the city, as a result of it young people make up the 5th part of its population. Almost 20% (100 000) of young population have an academic degree in system engineering, computer engineering, system design and programming.

Level of Russian developers work payment depends on:

  • professional skills level;
  • specialization and profession (salary of a tester differs greatly from salary of an architect);
  • distance from the capital city (Moscow) — the cost of living in other cities is much lower than in Moscow.

Hour rate varies from 5$ to 40$ (4 Euro—35 Euro). Thus, if you decide to outsource some work to some company, we recommend you to learn more about the country in which this company works.

3. How can I keep control over the project if the company developing it is situated too far (for example, in another country)?

This problem can be easily solved via payment system. First of all, divide the entire project into several stages (especially if the project is big); then agree with developers on terms and payment for every stage. So, you will be able to avoid any problems: the work will be paid for only when the work at a certain stage is done. Consequently, the faster developers work and the better quality of the work done, the better for them and the sooner they will get payment.

4. What if there will be problems concerning intellectual property?

In any case, the person or company, that ordered site design or/and development or software development, gets the intellectual property rights. But you still need to discuss it with developers beforehand.

5. There can be communication problems, especially if developers speak some other language.

Of course, there can be such problems. But the thing is that developers rendering development services for foreign countries know that communication problems can appear and learn some foreign language. By the way, in such companies necessarily work professional translators. However, it is worth noting that communication problems can appear within any company, within any community, especially if people just do not want to understand each other.

6. Time difference may become a problem.

Sometimes time difference between customer and developers can be very sufficient. Nevertheless, we believe that time difference can be a great advantage. For example, if your company develops some project and you decide to outsource some part of work, you can work with the overseas team in shifts, so that programming goes on 24 hours a day.

7. Is it profitable to turn to third-party developers?

The answer is: yes, it is very profitable. First, using services of third-party developers you get high return on investment. Second, you can reduce the need to invest capital funds in non-core business functions, so capital funds more available for core areas.

8. How skilled are the companies acting as third-party developers?

Usually, such companies, especially if they work with foreign companies, have sufficient experience and skills which allows them to successfully operate on the international market of programming and Information technologies. You can view portfolio, clients list, find out the rates and pricing, how the work process is organized. Before signing the contract of long-term relations with a software development company give some small project to this company and check the result. If everything suits you, you can continue the relations.

By Development for the Masses, your Internet business solution company