Outsourcing made right is very hard by Ivar Jacobson

Outsourcing is not new, we have done outsourcing for decades.  The only thing that is new is that we are now buying software from companies located in different parts of the world.  These companies have different business culture and their employees speak other languages. 

Let’s not make any mistake: outsourcing done well is very hard.  It is much harder to be successful with outsourcing than to develop the software ourselves.   So why do we then do it?  Because we don’t have the needed competencies or resources ourselves or because we believe we will get the job done for much less money. Unfortunately, many companies discover far too late that they have made themselves fools and don’t get what they had hoped to get.  Since they have given up their own resources they have no easy way forward. And of course they cannot admit it. There is a new trend arising.  Outsourcing companies take back its software development.  We have got insourcing.

However, some companies are successful with outsourcing.  Thus outsourcing will continue to be important, but it won’t be the silver bullet it has been for the past couple of years.  There is no magic. 

Actually outsourcing software is quite similar to building your own home with subcontractors.  The most obvious thing to do is to create a competitive environment.  You want to have alternatives and not be stuck with one vendor – a vendor that may want to give you a low price for the first order and then lock you in for the future.  Competition as we all know is not just about money, but also about quality (in a wide sense) and schedule.  In summary what you want is good software, quickly and at low cost.

In my next column/blog I will give concrete advices on how to succeed with outsourcing.  Until then a few words about project managers.

You will need a strong and competent project manager to succeed with outsourcing.  This person needs a very solid and modern background from the entire lifecycle of software development including maintenance.  If you don’t have such a project manager, don’t even bother to outsource complete software products.  Many vendors will happily tell you that you don’t need to worry, since they have it.  That is a dream scenario for those vendors.   If you don’t have that strong project manager you need to get someone from outside.  Hire someone from a company that won’t be involved in the bidding and that won’t get a kick-back from any of the candidate vendors.  That someone should also understand the basics in negotiations.  You can be sure that the bigger software vendors have experts in negotiations, and, they will know when they are dealing with pigeons.

 The only way to succeed in outsourcing is that you will have to be smart.  Very smart!

1 Comment
  1. Kmilo | September 11, 2008 at 9:26 pm Reply

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    Are you talking about the broad definition of outsourcing or only offshoring ?