While outsourcing is becoming the popular route to develop apps, it is a double-edged sword that has its ups and downs. Many enterprises take the plunge into the world of outsourcing without a proper understanding of the benefits and risks. Such companies often act in haste and repent at leisure.
Here is a run-down of the major benefits and risks or challenges associated with outsourcing the app development work, as the first step towards deciding on outsourcing.
PROs: Outsourcing Delivers Cost Advantage
The major raison d’etre for outsourcing is cost savings. Outsourcing the app development work to a third party provider often results in reduced costs compared to undertaking the development work in-house. Despite the need for frequent updates to keep the app up-to-date, app development is a dedicated project, outside the scope of the daily routine of the in-house IT team. Indulging in the app development process in-house would require gathering dedicated resources and fresh talent, all involving sizable capital investment. A third-party outsourcing partner comes with up-and-running infrastructure, and app development is their core focus rather than a distraction from their core activity. They invariably pass on the resultant cost-savings to the enterprise.
The cost benefits of outsourcing become even more profound when outsourcing is combined with offshoring. Offshoring the development work to a third party in India, East Europe, or some other third-world country ensures the delivery of high-quality app at a fraction of the cost it takes to develop the app in-house and considerably less compared to entrusting a local outsourcing party. The low wages given to the developers employed by the outsourcing partner aren’t necessarily exploitative, as it corresponds to above-average wages in tune with the third-world country’s cost of living.
The average cost of building a standard app is anywhere between $150,000 and $450,000, with almost half of this cost going to deploying the required infrastructure and features. Outsourcing the app development process reduces the total cost of app development to anywhere around $10,000 to $80,000.
Outsourcing Delivers Accelerated Time to Market
The benefits of outsourcing extend to much more than cost savings. Often, cost savings is accompanied by accelerated time to market. A competent outsourcing partner would have at their ready disposal a talent pool of highly seasoned and experienced developers, who would be able to accomplish the most challenging of tasks in double quick time, without slowing down for guidance, get trained on a new technology, or even indulge in trial and error. Also, the outsourcing partner agrees to complete the project in a time bound manner, without any hold up due to sick leaves, key talent putting in their papers or any other disruptions.
The fast turnaround perfectly suits today’s fast-paced business environment, where the ideal time to roll out an app is always yesterday. A recent survey reveals over 40% of respondents quoting the time taken to develop an app in-house as anywhere between six months to one year, completely unacceptable in today’s fast-paced world.
Outsourcing Enhances Quality of Work
Outsourcing generally enhances the quality of the apps, with the client leveraging the outsourcing partner’s talent pool, rich experience, knowledge, and the latest infrastructure readily, in a highly scalable manner. The outsourcing partner has an extra motivation in delivering high-quality work, which serves as the best advertisement of their skills, and the major source of repeat orders and referrals.
A related advantage is the transfer of risk. An outsourcing partner assumes all risks associated with the project. The partner guarantees delivery on time and on the budget, with penalties for delays. The client also has the option of terminating the contract if things go wrong, rather than be stuck with a dud project.
With outsourcing, the company pays for the result. Developing the app in-house means the company pays for the effort, with an uncertain result.
CONs- Risk of Leakage of Sensitive Information
For all the benefits of outsourcing, it also comes with significant downsides. Involving a third party and external outsourcing partner into the mix comes with the risk of leakage of confidential information. A successful app requires close integration with the business process, for which the outsourcing partner requires first-hand information on the nitty-gritty of the business. The outsourcing partner also gets their hands on sensitive information regarding the customers of the business.
The antidote to such risks is a strong non-disclosure agreement and IP protection agreement, backed by appropriate legal and organizational measures.
Challenges of Expectations Mismatch
While an outsourcing provider may be technically competent and roll out apps in a time-bound manner, there is an inherent risk of an expectation mismatch. There is always a risk of the development team executing do something different from client expectations. Worse, the development team may not gather requirements clearly enough and effect an inherent flaw in the app design, which may be difficult to rectify at a later stage.
A seamless and robust communication system mitigates such risks. An open communication style, clear points of contacts, and a culture of accommodation are indispensable for outsourcing to succeed. A thorough requirements analysis, backed up by solid documentation and a detailed description of the product requirements is another essential requirement.
However, the best of communication systems come to naught if the stakeholders are not there to communicate. A flowing schedule, with a readiness to be available round the clock, is an essential ingredient for success.
Outsourcing May Result in Loss of Flexibility
Scope creep has almost become a way of life in today’s highly fluid business environment. Requirements change by the day, and a new app may require co-opting changes right through the gestation lifecycle, and even afterward. An outsourcing project goes according to the laid down upfront agreement, with limited scope for flexibility. Renegotiation the contract to co-opt changes midway may be expensive, and anyway impractical.
The solution is to co-opt a partner who understands the business and is flexible to accommodate changes as it is realistically possible. Accelerated time to market anyway reduces the need for such sudden changes. Again, while outsourcing offers a ready access to skilled talent without the associated HR costs, it is still a challenge to identify a good partner and make sure the partner can walk their talk.
Successful companies put their heads down and work diligently to overcome the challenges, and in the process reap the best of both worlds. Roping in a sound partner who is competent not just on the technical side, but also experienced and versatile enough to understand the nitty-gritty of the business, helps.
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