Complete guide to outsourcing software development
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This guide outlines the benefits and strategies for outsourcing software development, highlighting cost reduction, flexibility, and expertise in regions like Eastern Europe. It discusses the choice between freelancers and companies, emphasizing hourly rates and project management differences. Additionally, it addresses common outsourcing challenges and trends, providing tips on selecting the right development partner.
Complete guide to outsourcing software development
- 2. Agenda Why outsource software development? Top outsourcing destinations Freelancer or company? Developer & freelancer hourly rates Tips on how to choose the right company And more! All rights reserved © 2016 R-Style Lab
- 3. Did You Know that… This year, the global tech market will grow by 5.9%? In 2016, businesses and government will spend $ 450 billion on outsourcing? 80% of all IT projects are global? All rights reserved © 2016 R-Style Lab
- 4. When to Outsource? You want to reduce software development costs • You cannot afford hiring in-house developers Your project is of temporary nature • Your employees lack certain skills required for the project You need an on-and-off development team All rights reserved © 2016 R-Style Lab
- 5. Why Outsource? Cost reduction (lower hourly rates, no office space and recruiting expenses) Financial flexibility (“fixed price”, “time and material” or “dedicated team”; easy staffing) Focus on your core activities (let the pros do their job) Full control (you monitor KPI, track employees’ performance and receive reports on a regular basis) All rights reserved © 2016 R-Style Lab
- 6. Top Outsourcing Destinations 46% 21% 17% 10% 6% Asia Eastern Europe South America North America Other All rights reserved © 2016 R-Style Lab
- 7. Medium Hourly Rates (companies) 0 50 100 150 200 250 300 From ($) Up to ($) USA Western Europe Eastern Europe Asia South America All rights reserved © 2016 R-Style Lab
- 8. Why Outsource to Eastern Europe? Expertise Developers from Belarus, Ukraine, Czech Republic are highly valued by Venture Beat and StackOverflow Reasonable hourly rates $20-50 per hour (rate in Eastern Europe) compared to $50-99 in Western Europe and $100-250 in the USA Western mindset According to Geert Hofstede’s cultural dimensions theory, US businessmen are more likely to establish beneficial business relations with Europeans Effective cooperation Better English speakers compared to Asians, universally approved project management methodologies All rights reserved © 2016 R-Style Lab
- 9. Freelancers or Companies? Freelance is the fastest-growing labor market in Europe. Why US enterprises employ freelance developers? Lower hourly rates All rights reserved © 2016 R-Style Lab
- 10. Freelancer Hourly Rates (Eastern Europe) 0 5 10 15 20 25 30 Bulgaria Russia Belarus Romania Macedonia ($) All rights reserved © 2016 R-Style Lab
- 11. Freelancers VS Companies: Benefits Working with a freelancer Outsourcing to a company Cost reduction Cost reduction Increased value (full-cycle product development) High-quality product Financial flexibility (variety of pricing models - fixed price, time and material or dedicated team; free consultation on which to choose) All rights reserved © 2016 R-Style Lab
- 12. Freelancers VS Companies: Challenges Working with a freelancer Outsourcing to a company Complicated management Higher costs (include testing and support; outsourcing software development to a company is more beneficial in the long run) Cultural misfit (and no manager to handle the problem) Projects exceed budget & run over time All rights reserved © 2016 R-Style Lab
- 13. How to Choose the Right Company? 1. Study independent developer ratings on platforms like Clutch.co. 4. Evaluate the reply time, accuracy of English & quality of information they provide you with. Make your choice! 3. Study their websites. Pay attention to design and content quality. Contact the vendors 2. Choose several companies with reasonable hourly rates, desired expertise and favorable reviews All rights reserved © 2016 R-Style Lab
- 14. Why Outsourcing Projects Fail? 16 9 9 15 13 0 5 10 15 20 Unclear scope Poor Management Poor Communication Cultural misfit Provider's poor performance (%) All rights reserved © 2016 R-Style Lab
- 15. Outsourcing Challenges & Ways to Overcome them Poor performance & prolonged deadlines Trust your project to an experienced manage Unclear scope & exceeded budget Choose the right pricing model (fixed price, time & material, dedicated team); define the scope & possible changes to the project Cultural misfit Partner with developers from Eastern Europe Poor communication Contact the vendor to evaluate the reply time, command of English, willingness to help and quality of information Legal issues Find a company with headquarters in USA or Europe + sign an NDA All rights reserved © 2016 R-Style Lab
- 16. Outsourcing Trends 2016 Quality-centered approach Contract renewal; dedicated team is king Development for IoT Focus on interoperability & security Data analysis By 2018, IoT devices will generate 403 ZB of data per year Cloud computing Growing demand for enterprise software; lack of developers Eastern Europe on the rise Between 2014 and 2018, Belarusian IT outsourcing market will grow by 17.78% All rights reserved © 2016 R-Style Lab
- 17. Sources: http://r-stylelab.com/company/blog/it-outsoursing/outsourcing-software-development-trends-for-2016 http://r-stylelab.com/company/blog/it-outsoursing/offshore-web-development-extra-services-and- benefits-for-startups http://www.gartner.com/newsroom/id/2550615 http://r-stylelab.com/company/blog/it-outsoursing/top-reasons-why-startups-should-outsource-web- development http://www.lessonsoffailure.com/developers/real-reason-outsourcing-fails http://r-stylelab.com/company/blog/it-outsoursing/global-delivery-is-the-future-of-outsourcing http://r-stylelab.com/company/blog/it-outsoursing/freelancers-or-companies-how-to-outsource-software- development-right http://techcrunch.com/2010/04/17/should-tech-startups-outsource-product-development/ HEAD QUARTERS 425 Market Street, San Francisco, CA, 94105 +1 888 414 6445 [email protected] DEVELOPMENT FACILITIES 76A Masherova Ave, 220035, Minsk, Belarus +375 17 306 48 42 +375 29 348 44 44 All rights reserved © 2016 R-Style Lab