- \n
- Such companies don\u2019t work according to strictly defined procedures and processes in contrast to big corporations. An insufficient number of employees makes them focus on solving on-going problems.<\/li>\n
- Due to constant dealing with everyday things, a tech team isn\u2019t flexible enough to take care of few projects at a time or change technology over and over again.<\/li>\n
- Lack of in-house specialists forces companies to look for employees with startup experience what is really challenging. For instance, there are about 48% of employees with startup experience in Silicon Valley, and still, they have a deficit of workers mainly in IT field (Joint Venture<\/a>).<\/li>\n<\/ol>\n
Software outsourcing – a perfect solution for startups and SMBs<\/abbr><\/h2>\n
According to studies conducted on startups from Silicon Valley (Joint Venture<\/a>) finding an in-house programmer with startup experience takes about up to 20% of all the time dedicated to a particular project. The biggest difficulty is a financial issue since the average rate of a mobile programmer in U.S. is 118000$ per year – it is insuperable for a startup that isn\u2019t making money or being financed.<\/p>\n
It happens very often that software outsourcing is the only solution for startups that need a prototype of an app which is affordable.<\/p>\n
Rates of developers from Wroclaw are much cheaper: exemplary, at Zaven<\/a> you can outsource an MVP for Android and iOS for 25000-35000$.<\/strong><\/p>\n
![\"MVP](\"https:\/\/zaven.co\/blog\/wp-content\/uploads\/2016\/12\/wroc-1-730x432.png\")
<\/a>Source: data of ANTAL International<\/p><\/div>\n
Motivations for software outsourcing<\/h2>\n
Conducted analyses (ABSL<\/a>) show that since 2012 Western European tech companies have been using multi-outsourcing eagerly. Almost 54% of them have entrusted their projects to more than one IT services providers. What\u2019s more, about 57% of companies have been outsourcing to a vendor for 2-3 years.<\/p>\n
Reasons for \u2013 Why do startups and SMBs<\/abbr> decide to Outsource Software?<\/h3>\n
- \n
- Reduction of software development costs (Germany, Sweden, Denmark, UK)<\/li>\n
- Availability of human resources in in-house IT and other business projects (Germany)<\/li>\n
- No inland IT talents (Norway, UK)<\/li>\n
- Need to focus on retaining and developing the company (Sweden, Denmark)<\/li>\n
- Have to increase the quality of in-house development (UK)<\/li>\n
- Need to hand in the projects on time (Sweden, Norway, Denmark, UK)<\/li>\n
- High costs of in-house programmers\u2019 employment (all of the researched countries)<\/li>\n
- Human resources needed to retain and develop projects or fix errors (all of the researched countries)<\/li>\n<\/ul>\n
Reasons against \u2013 Why do companies are afraid of or don\u2019t want to choose the IT Outsourcing?<\/h3>\n
- \n
- Need to have the project under control in 100 %<\/li>\n
- Fear of unforeseen expenses<\/li>\n
- Fear of eventual risk of working with a foreign developer<\/li>\n
- No need for outsourcing, good in-house team<\/li>\n
- Negative experience with outsourcing<\/li>\n
- Feeling that one\u2019s company isn\u2019t big or experienced enough to outsource<\/li>\n<\/ul>\n
How to find the best IT Partner?<\/h2>\n
When one\u2019s got to a conclusion that IT outsourcing is what he\/she needs, the next step is to choose the right software vendor.<\/p>\n
What are the most important factors that should be considered when choosing the appropriate region for Outsourcing?<\/strong><\/h3>\n
- \n
- Cultural proximity (Germany, Sweden)<\/li>\n
- Accessibility of desired IT resources (technology) (Sweden, Germany, Norway, Denmark)<\/li>\n
- Geographic proximity \u2013 nearshore development (Germany, Sweden, Norway)<\/li>\n
- No language barrier (Sweden, Norway, Denmark)<\/li>\n
- Competitive rates \u2013 offshore development (Denmark)<\/li>\n
- Political and economic stability of a selected country (Germany, Norway)<\/li>\n
- Transparent and not requiring any participation of third parties legal system.<\/li>\n
- Possibility of R&D (Sweden)<\/li>\n<\/ul>\n
What are the most important factors deciding about choosing an outsourcing partner? <\/strong><\/h3>\n
- \n
- Experience with similar projects<\/li>\n
- Positive references from akin companies<\/li>\n
- Attractive development rates \u2013 offshore development<\/li>\n
- Success in prototype\/pilot\/MVP project<\/li>\n
- Flexible contract agreements (Sweden)<\/li>\n
- Representative in a homeland of the company<\/li>\n
- Innovative and flexible business model (Norway)<\/li>\n<\/ul>\n
How do startups look for an IT partner?<\/strong><\/h3>\n
- \n
- Looking on the Internet, through the search engine (Germany)<\/li>\n
- Asking friendly companies about legit IT provider (Norway)<\/li>\n
- IT partners found them (Denmark)<\/li>\n
- Through an ITO consultant (Sweden)<\/li>\n
- On their own, through researching the market (others)<\/li>\n<\/ul>\n
Let\u2019s talk money!<\/h2>\n
Recent research of ITO <\/abbr>market (ABSL<\/a>) show that companies were working together on such technologies like: ASP.NET., mobile development, enterprise, SaaS. What\u2019s more, most of them (about 36% of German companies) have hired teams of 3-5 people.<\/p>\n
What was the average expense of outsourced projects?<\/strong><\/h3>\n
![\"Value](\"https:\/\/zaven.co\/blog\/wp-content\/uploads\/2016\/12\/wykres_1-730x486.jpg\")
<\/a>Source: ABSL<\/p><\/div>\n
How much can be saved on an IT project? Vendor vs. in-house development.<\/h3>\n
![\"Savings](\"https:\/\/zaven.co\/blog\/wp-content\/uploads\/2016\/12\/wykres_2-730x539.jpg\")
<\/a>Source: ABSL<\/p><\/div>\n
IT Outsourcing consequences<\/h2>\n
It turns out that almost 78% of companies using Software Outsourcing also plan to carry on such a cooperation in the next 1-2 years (ABSL<\/a>).<\/p>\n
Are you satisfied with IT outsourcing?<\/h3>\n
![\"IT](\"https:\/\/zaven.co\/blog\/wp-content\/uploads\/2016\/12\/wykres_3-730x593.jpg\")
<\/a>Source: ABSL<\/p><\/div>\n
Finding the right IT outsourcing company to work with on a project happens to be the biggest challenge for startups and SMBs<\/abbr>. Quite often, inexperienced entrepreneurs choose a vendor that they have little in common with and consequently bringing a project to the end is impossible.<\/p>\n
What is it that makes it hard to succeed?<\/strong><\/h3>\n
- \n
- Communication problems with project management and programming work<\/li>\n
- Lack of competent project managers on a vendor side<\/li>\n
- Cultural and language barriers impede passing down ideas or requirements of an outsourced app<\/li>\n<\/ul>\n
Nearshore development or offshore development<\/h2>\n
Because of low costs of services and a big number of programmists, India is the number one when it comes to IT outsourcing. But, what\u2019s interesting, India is said to be the worst place to outsource a software to for startups and SMBs<\/abbr>. Bad quality of services and huge cultural and language differences make it practically insuperable to bring a project to an end and consequently companies are made to engage a project manager<\/strong>. Due to that, the costs of such an outsourced project increase drastically and then it turns out that most startups (that are in the initial phase of development) cannot afford it.<\/p>\n
Instead of choosing offshore development \u2013 it’s IT outsourcing to a global client (the whole world), for example to India from American or Australian company \u2013 you can choose nearshore development. It\u2019s IT outsourcing to nearby countries, often the ones sharing a border together, having the same time zone, similar cultural habits or economic links (Wikipedia<\/a>). For instance: to Poland from any other European country. Thanks to that you can avoid unnecessary communication problems that can be costly.<\/p>\n