A Guide to Start Software Development Outsourcing
The term “offshore” and “outsource” are not new but rather have surfaced for quite some time and are currently expanding. Particularly in the case of software outsourcing, the industry is undoubtedly growing globally – generating $88.9 billion in 2017(1). It is observed that companies are increasing productivity and improving standardization when they find the right offshore software development partner. The current situation in the US and Europe is the demand for competent workers exceeding the supply.
To adapt to such trend, more and more companies, not only the giants, are turning to outsourcing. Their aim is to meet the needs of a dynamic industry. So, what industries can gain the help from outsourcing? Here are some areas, to name a few, has recognized outsourcing as an ideal solution.
DECEMBER 12, 2018 | SOFTWARE DEVELOPMENT, AGILE, OUTSOURCING | Reading time: 8 mins
1. What Industries are Opting for Outsourcing?
1.1. Big Data
Data analytics has created a win-win situation for both companies and their end users. In that the former sells better and the latter gets what needed faster. Everyone wants their data analyzing software be delivered faster and better so as to win out competitors. Specifically, data solutions must be designed in a scale-able way that accommodates the public’s cravings for variety, volume, and velocity. The efficiency and sophistication of big data systems is growing at a staggeringly fast pace, making the competition fiercer. To succeed in this rapidly changing field, you need experienced and skilled software developers who can create high-quality solutions in the least amount of time.
Everyone wants their data analyzing software be delivered faster and better to win out competitors.
However, finding the right people to develop the right system is time-consuming. This is the case when you should look further to offshore outsourcing. It is considered a more effective and sustainable way of executing software development services. Offshore software development centers can quickly pull out engineers from their talent pools or recruit fast based on your needs. They can help you enjoy the benefits of the optimized recruitment process. Especially if your company is a non-tech company, the chance of obtaining more suitable candidates for your working framework and expertise will rise thanks to their experience in the industry.
1.2. Artificial Intelligence and Machine Learning
While Skynet, fortunately, remains in the realm of science fiction, Artificial Intelligence and Machine Learning has come into life. Significant advances in recent years have proven the potential of increasing profits and efficiency through the utilization of Artificial Intelligence (AI) and Machine Learning (ML).
On one hand, we have observed Machine Learning go mainstream on the company level by transforming business with intuitive, out-of-the-box Machine Learning experiences. On the other hand, we also see that Artificial Intelligence and Machine Learning receiving great attention from the industry level, ranging from financial service to healthcare and biotech.
Artificial Intelligence and Machine Learning has come into life.
A recent Gartner survey(2) showed that 59% of organizations are still gathering information to build their Artificial Intelligence strategies. Though it is doable, many companies might lack the necessary resources to execute this initiative. Outsourcing might be the answer. The list of the advantages you might get when opting for outsourcing could go on and on. The one reason that makes outsourcing an ideal choice is that it is a cost-wise and flexible solution.
1.3. Business Intelligence
Business Intelligence (BI) technology has appeared for quite some time now but its importance has been undoubtedly increasing ever since. Some companies would have sufficient resources to facilitate their own in-house Business Intelligence development team. This force would help them keep track and monitor business analytics. There are also other companies who need help from the outsiders.
A software outsourcing company can help you turn your data into useful information supporting your decision making process.
If you are the latter, you might want to find a software outsourcing company that knows how to build software with a focus on business outcome. The outsource software development company who has the ability to build Business Intelligence software under different circumstances, such as market characteristics, customer focus, economic value and so on, can help you turn your data into useful information supporting your decision making process.
1.4. Digital Transformation
As Joseph Pucciarelli, an IT executive adviser at IDC(3) has once said: “IT leaders who have not fundamentally changed their organizations to focus on digital will find that their business colleagues will turn to outsourcing to handle development needs.” Everyone is turning to “digital”. It is notable that 40 percent of all technology spending will go toward digital transformation, exceeding $2 trillion by 2019. Outsourcing is a great solution for improving quality, time and cost performance of your company digital transformation.
Outsourcing is a great solution for improving quality, time and cost performance of your company digital transformation.
By seeing how outsourcing brings numerous advantages to these emerging industries, you probably understand why it is a popular choice. The winning point is, therefore, who to cooperate with. This leads to the key question – how one can find the right outsourcing company?
2. Best Strategies to Select a Software Outsourcing Company
As any other relationship, there are many aspects to consider. One of the most important characteristics a right software outsourcing company should possess is to think long-term instead of exploiting short-term benefit. The ability to scale at ease is also a nice quality to have. The reason is that they have to ensure the capability to provide talents when needed. Another must-have item when looking for outsourcing companies is that they have financial stability to guarantee future growth.
There are many aspects to consider when looking for a software outsourcing company.
Though we cannot tell you who is the best outsourcing company for you, we can give you some strategies to select a right offshore partner.
When searching for a software outsourcing company, you should extend your view on those who share the same future vision. Additionally, you’d better not limit yourself with those who only focus on immediate benefits. Your partner should be on the same page with you in terms of developing strategic plans by working closely with your people so as to achieve the great product milestones together.
An ideal software outsourcing company should share the same future vision with you.
At the end of the day, keep in mind that the people you are going to work with must be those who value your success as they understand success is mutual rather than personal – your achievement is also theirs.
When you decide to go offshore, you would find it intimidating at first as your partner may come from a different continent with a different time zone. However, contrary to your common thought, time zone difference is actually an advantage. This is because your works are always taken care of as your outsource team would work while you sleep and vice versa. Therefore, a well-equipped partner with modern facilities and infrastructures is a great support. With the help of up-to-date telecommunication, you will be able to stay connected with your outsourcing team. By optimizing live video calls or internal communication portals, you and your partner can enjoy instant, at-ease communication with the ultimate purpose of enhancing an effective and efficient collaboration.
A well-equipped software outsourcing company is a great support.
On the other hand, don’t underestimate direct and in-person meetings. By visiting your outsourcing team, you have a chance to understand and engage with them, their working culture and their company. Once again, such effort is used to achieve a successful partnership.
Transparency is not only crucial to performance but also a key to sustainable growth. It helps prevent the unexpected as well as involve outsourcing companies in the plan at a deeper level, which enables them to effectively utilize their capabilities. A recent Deloitte report(4) on “Outsourcing transparency evolution” also supports this approach as it states that “A key to a successful outsourcing relationship is “outsourcing transparency,” which requires communication between the two parties on priorities and information requirements.” Notably, an important point is to always have direct management access.
2.4. Go Agile
Agile mindset has become popular in many industries, especially the ones that require a high level of complexity, collaboration, communication, quality and receptivity to change. As new product development process needs frequent adjustments, Agile working is an ideal option. Having an offshore software development partner who has adopted Agile successfully could help you get your product on the shelf faster.
Although outsourcing has its own pros and cons, with foresight, caution and careful research, you can minimize the potential risks and maximize the benefits gained from outsourcing.
Now, after having a checklist of how to select a partner in mind, you probably wonder where to find them. Fortunately, there are many countries and regions around the world have had outsourcing as one of the key businesses driving their economy. Most famous countries, to be named, are China and India, which have traditionally been the go-to countries for offshore software development outsourcing. However, higher costs are making these countries less attractive to companies in the US and Europe.
So what are the alternatives? As one of the fastest growing economies in Southeast Asia, it’s no surprise that Vietnam software outsourcing is being mentioned as the new promising solution for software development services. Global IT giants including Microsoft, Intel, Samsung, Cisco and many more have already been outsourced their high-tech operations to software companies in Vietnam.
3. Vietnam: The Next Offshore Software Development Hub
Recent years have witnessed a dynamic expansion of Vietnam as one of the fastest growing economies in the world. Hence, it has become a promising market with lots of potential. The economy is booming, especially software companies in Vietnam. Not missing out on globalization trend, Vietnam has opened and joined many regional and global economic partnership agreements as an effort of promoting foreign trade.
Global IT giants have already been outsourced to software companies in Vietnam.
Vietnam’s stable politics has paved the way for the booming economic growth. Being unified under one government party after the war, Vietnam is a secured and peaceful country. The country is welcoming international business and trade by issuing many laws and policies favoring foreign investment, as well as the enforcement and protection of intellectual property.
3.3. Government Investment in IT
Along with government’s decision to make IT the focus industry to lead Vietnam economy in the next decade, major government investment has been poured into upgrading IT infrastructure nationwide. One of the key drivers behind Vietnam’s expected growth is an increase in access to new technology. Having a young population and decreased connection costs, Vietnam Internet penetration rose by a double-digit percentage over the past several years.
DevDay Da Nang is a non-profit event dedicated to Da Nang IT community. It has gained the support of Da Nang authorities from the early years.
Vietnam Government sees the role of tech sector in the country’s economy and has heavily increased the investment toward technological infrastructure together with its diversifying and upgrading economy.
One of the reasons why the Asia Pacific region is an ideal outsourcing location for foreign companies is the cost effectiveness. Specifically, Vietnam’s labor cost is economical as it is listed in the region that has the lowest minimum hourly wage for IT-related workers. This makes Vietnam software outsourcing companies an affordable option for foreign companies compared to other regions such as Latin America and the United States (with the minimum hourly wage 1.5 times and 4 times higher than that of the Asia region, respectively)(5)
3.5. A Pool of Young and Thriving Talents
With a whopping 60% of its population under the age of 35(6). Vietnam has a remarkably young workforce. They are also well-educated and attractive to the technology sector as the nation’s education system has designed a curriculum that focuses on mathematics and science. According to the figures stated in “Future Data and Security Engineering”, there are more than 290 universities offering IT and telecommunication in Vietnam. The talent pool comprises not only Vietnam-trained youngsters, but also Vietnamese expatriates who return home after studying and working as programmers in the West. They not only bring back new technologies and valuable skill sets but also open up more opportunities for software companies in Vietnam – an increasingly popular offshore software development hub.
Vietnam’s software developers can adapt to change and drive themselves towards collaboration and innovation.
Additionally, Vietnam’s growing young population of engineers and entrepreneurs also has the ability to adapt to the ever-changing environment and drive themselves towards collaboration and innovation. This pool of young and thriving talents are open for enhancing critical thinking through practical working methodology and improving productivity.
3.6. English Language Skills
Though English is not considered as Vietnam’s second language, there is a rising number of English users. As Vietnam uses a Latin alphabet, it is less challenging for Vietnamese to learn English compared with other Asian countries. English is compulsory in schools and students have to prove their sufficient English language skills to graduate. As a result, most Vietnam software outsourcing companies have developers who can communicate in English, especially written communication.
3.7. Companies with Various Expertise
Vietnam software outsourcing companies often operate in different areas of expertise and work with clients from various industries. This is a big advantage as it is more convenient for clients to get their projects done at one place instead of having to separating them.
Like the streets that pulse with the never-ending energy of scooters, Vietnam is a country that is constantly in motion. Now is the time to ride that wave of energy, utilizing their youth, growth, and tech-savvy workforce to help your business thrive.
About Axon Active
Axon Active is a Swiss-owned and Swiss-managed offshore software development and testing firm. We have used Agile working from our early days to be more adaptable to change and improve our performance. In our 100% English environment, our talented software developers do their best to deliver better products to our clients.
Axon Active – one of the most trustworthy software development outsourcing companies.
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(1) Statista Global Outsourcing Market size 2000-2017
(2) Gartner Top 10 Strategic Technology Trends for 2018
(3) State of the CIO by Beth Stackpole – Winter 2018
(4) Deloitte – Outsourcing transparency evolution | How information transparency creates value across the extended enterprise
(5) The Accelerance 2018 Guide to Global Software Outsourcing Rates
(6) The 2014 Viet Nam Intercensal Population and Housing Survey – Population Sex-Age Structure and Related Socio-Economic Issues in Viet Nam