OUTSOURCING OVERSEAS AND ITS EFFECTS ON THE DEVELOPMENT PROCESS
Sam Eiring
Outsourcing Software Development “Outsourcing Software Development involves
shifting of software development activities by a company to third party service vendors or software firms that may be located in offshore destinations.” (www.cyfuture.com)
Outsourcing began in the late 1990’s when the cost of IT development skyrocketed because of the hype of the internet.
Outsourcing
Advantages/Disadvantages Uses for Outsourcing Outsourcing at Thomson Reuters Steps to Begin Outsourcing Cost Savings Hidden Costs
Advantages
Can save money and time Get access to specialized labor at low
costs Cut Human resource costs Software research at lower rates Reduce training costs Allows ability to provide product support
24 hours
Disadvantages
Must have very specific requirements Loss of managerial control Many hidden costs Threat to security and confidentiality Possible loss of flexibility Language barriers Difference in time Initial Cost
Uses for Outsourcing
Specialized Development Teams Specialized Testing Teams Support services
Call CenterDesktop SupportHelpdesk
Expanding workforces
Multi-Source Outsourcing
Multiple teams with specialized tasksCan gain access the best developers of each
taskLowers Risk of FailureCan use trained testing expertsAllows the company to use smaller outsourcing
markets○ Lowers cost
Not a single contractCreates independence between testing and
development
Outsourcing at Thomson Reuters Location: Bangalore, India This is an in house form of outsourcing
The facility was set up as a sister companyAt the beginning there were 10 developers
and one manager overseas and a Team Liaison in the office
The employees have been an expansion to the company
Overseas Employees Divided assigned to a specific team in the office
Training at Thomson Reuters There are Cultural Differences classes held
for both employees overseas and in house.Teach the differences between different cultures
Brought overseas employees to the US to have face-to-face meetings and training
Ratings of Overseas teams for each projectSurvey covering different aspects of the project
Culture Calculator
Overseas Employee Rating FormWork Request WR12345
Assigned To: Name
Feedback Given By: Name
Date mm/dd/ccyy
Areas of Observation Rating Comments Areas for Improvement
Analytical skill
Coding skill
Testing skill
Process compliance / follow BDSG standards
Communication skill
On time escalation of issues
Quality of deliverable
Time management skill
Task management skill
Productivity
Responsibility / commitment
Rating scale: 1=Low, 5=High
Overseas Employee at Thomson Reuters Since they are in house they are treated
the sameTime reportingThey do not have any technical differences
Some Issues they haveSpecific InstructionsLanguage BarrierTime Difference
Steps to Begin Outsourcing Imagine a Software development Partner
Draw up what your ideal partnership Selecting your International Outsourcing
PartnerRequest referralsContact each potential PartnerPick a partner who uses the same
Development Process Ask for Code Samples
Helps determine the skill level
Steps to Begin Outsourcing Protect your rights
Use a LawyerSecurityDeadlines
Good CommunicationFace to Face communicationEmailPhone
Signing a Contract
Identify security requirements Require your partner to provide a 3rd
party security audit Allow the right to perform process
audits. Set turn around times Require Documentation for all steps of
development
Cost Savings with Outsourcing
Overseas help does not need:HealthcareSocial securityPensionPaid Time offBonusesOffice SpaceComputer and Software Licensing
Cost Savings with OutsourcingBenefit Median Amount % of TotalBase Salary $80,765 71.2%Bonuses $1,999 1.8%Social Security $6,331 5.6%401k/403b $3,145 2.8%Disability $828 0.7%Healthcare $6,103 5.4%Pension $4,138 3.6%Time Off $10,186 9.0%Total $113,496 100.0%
Overseas Developer = $20/hr x 40hr wks = $40,000
Hidden Costs
Initial Costs:Research to find a partnerTrainingSetting up a process to manage and send
work to your outsourcing partner Contact Liaison Errors from Overseas Developers
Conclusion
Advantages/Disadvantages Uses for Outsourcing Cost Savings Hidden Costs Outsourcing is Different for each
company It is a long term investment It is a constant improvement process
References Miller, Brett. "Selecting a Custom Software Development
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Palisade : Controls for Outsourcing Software Development. Oct. 2004. Web. 5 Feb. 2010. <http://palisade.plynt.com/issues/2004Oct/software-outsourcing/>.
Berg, Ryan. "Guest View: Addressing security in outsourced applications - SD Times: Software Development News." SD Times: Software Development News. Software Development Times on the Web, 15 Aug. 2009. Web. 5 Feb. 2010. <http://www.sdtimes.com/GUEST_VIEW_ADDRESSING_SECURITY_IN_OUTSOURCED_APPLICATIONS/By_Ryan_Berg/About_OUTSOURCING_and_SECURITY/33685>.
References Mullaney, Jennette. "Software development trends in 2008:
Outsourcing, agile development." Software quality management, testing and QA resources - SearchSoftwareQuality.com. 26 Dec. 2007. Web. 5 Feb. 2010. <http://searchsoftwarequality.techtarget.com/news/article/0,289142,sid92_gci1287341,00.html>.
Filev, Andrew. "Adopting and Benefiting from Agile Processes in Offshore Software Development." MSDN: Microsoft Development, MSDN Subscriptions, Resources, and More. July 2006. Web. 5 Feb. 2010. <http://msdn.microsoft.com/en-us/library/bb245671.aspx#jour8adopt02>.
Kielpikowski, Bob. "Outsourcing At Thomson Reuters." Telephone interview. 19 Feb. 2010.
References "Salary Wizard - Java Developer." MySalaray.com.
Mar. 2010. Web. 04 Mar. 2010. <http://swz.salary.com/salarywizard/layoutscripts/swzl_salaryresults.asp?hdSearchByOption=0&hdSearchByOption=0&hdKeyword=Java%20Developer&hdJobCategory=IT05&hdZipCode=&hdStateMetro=&hdGeoLocation=U.S.%20National%20Averages&hdJobCode=IT10000289&hdJobTitle=Java%20Developer&hdCurrentTab=&hdNarrowDesc=IT%20--%20Computers,%20Software&joblevelcode=>.
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