Wind the clock back 30 years and ask: "Will the existing manufacturers move their factories off-shore?"
Only if they want to remain globally competitive.
The same applies to software developers. Many have already moved offshore, if the number of phone calls and emails we get per week offering this service at ridiculously cheap rates is any indication.
The question for you as a business owner or project sponsor needing a custom application developed is, does it matter to you?
The answer is, it does... and it doesn't. Sorry. Here are three scenarios as examples.
Scenario 1: If the developer you use has figured out how to harness cheap overseas development capability, then you are likely to get significant additional development for each dollar you spend. You win, they win, good outcome.
Scenario 2: If the vendor or developer is trying to do it for the first time or with a new offshore provider and haven't figured out how to manage them properly yet, chances are that whatever has been specified (by you) is exactly what is built, regardless of whether it actually makes sense or not. And chances are you haven't specified it in enough detail and in unambiguous enough language to get it right first, second or even the third time. So even if they are half the cost, three lots of rework will end up costing you more. Not to mention your time spent clarifying what you really need, rather than what you asked for.
Scenario 3: If the vendor you choose hasn't chosen to use off-shore labour (either because they have tried it and it hasn't worked for them, or they have heard all the horror stories and aren't that brave) then you are likely to get far more flexibility in specifying your requirements with a local team who can interpret what you have asked for. But you pay a premium for it. Again, you win, they win – but you spent more.
Your job as the project sponsor is to quiz the vendor or developer on their use of off-shore development teams. If they claim to use them, you definitely need to get references, case studies and ask them questions about how they ensure that the developers build what is needed, not just what is specified. And ask them about whether the testing is done locally. And who pays if the local testing uncovers misunderstanding in interpreting specifications.
In our view, it makes sense to send chunks of very well defined functions using commonly used technologies off-shore, and keep anything that is ambiguous or requires RAD (Rapid Application Development) approaches locally.
The skills of teams of thousands of cheap developers in the developing nations are improving at a rate of knots and it is inevitable that more software development projects will go off-shore. The winners will be the software development houses that work out how to manage them.
David Markus is the founder of Melbourne's IT services company Combo. His focus is on big picture thinking to create value in IT systems for the SME sector.
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