The first of a two-part series, this article describes a survey on Midwest IT leaders’ opinions of offshore outsourcing possibilities. The study will be described, along with the first four of the study’s eight significant conclusions, in this article. The final 4 of the series’ 8 key conclusions will be presented in the second piece, along with some concluding remarks.
Despite an ever-growing backlog of projects and directives to maintain or lower headcount and personnel costs, senior IT leaders are under increasing pressure to generate high-quality Staff Augmentation Software Development. Outsourcing software development work to local or offshore vendors has become a well-liked substitute for recruiting staff in this “do more with less” climate for a variety of reasons. The flexibility and cost savings that come with using temporary workers are among the most important of these. However, there are drawbacks to outsourcing application development, and IT managers’ perceptions of the significance of these issues influence their future hiring decisions.
Software programming has become increasingly popular among IT executives over the past ten years, in part because these regions have a large population of highly qualified workers and hourly rates that are typically about one-third lower than those for American contractors or the fully-loaded cost of full-time employees.
Software development directors are carefully evaluating the complete range of employment options, including people, U.S.-based outsourcing providers, and offshore resources, in their continual effort to meet ambitious departmental and corporate goals. In the end, they look for the best resource allocation that generates a large amount of work, on schedule, with a high level of quality, and within a set budget.
The following research topics were examined: – Whether Staff Augmentation Software Development size affects the staffing mix among various resource alternatives; – Attitudes and trends in the use of offshore software development resources; – Attitudes and trends in the relative popularity of the leading offshoring count; – Perceptions about the quality of work produced by employees versus outsourced personnel; – Key factors influencing decisions about the utilization of each staffing alternative.
The personnel responsible for hiring software developers at technology organizations where software development was essential to the basic goal of the firms were the target audience for this study. CEO, president, CTO, director or vice-president of IT, and director or vice-president of software development were among the positions held by interviewees. The headquarters of the respondents were situated in Minnesota’s Minneapolis/St. Paul metropolitan area. Telephone interviews were done with 49 people from IT organizations with up to 500 full-time equivalents from a pool of 250 randomly chosen firms (FTEs). The average number of FTEs working on development projects was forty among respondents (40).
In-depth interviews took place in September 2007. During the interviews, the research’s sponsor was not mentioned.
Finding #1: Those with larger software development groups rely on outsourcing more often than companies with smaller software teams. How much a corporation uses outsourced resources depends in part on the scale of its software development operations. In comparison to companies with greater development demands, smaller organizations, on average, use people for a bigger portion of their development work. Smaller businesses use contractors for 13% of their software development resource demands, whereas companies with 100 or more full-time software developers (FTEs) use 23% contract workers.
Finding #2: Organizations are using overseas workers more frequently for outsourcing than they are onshore contractors. Companies use more offshore resources than contract workers stationed in the United States, regardless of the size of the organization’s software development team. 47% of resources for outsourced software development are headquartered in the United States, while 53% are offshore.
Finding #3: Deliverables produced by employees are thought to be of the greatest quality. Respondents were asked to rate how satisfied they were with the quality of the deliverables made over the previous 24-month period by employees, U.S. contractor resources, and offshore resources. The notion of a fairly direct inverse link between work quality and the location of the staff from company headquarters indicates that employees are regarded to do the highest quality work, followed by U.S. contractors, then overseas outsourced resources. The inference is that managers of software development sense a significant loss of control over remote workers and that, as a result, work quality declines.
With an average rating of 3.6, respondents rated these initiatives as highly successful, with 65% of managers indicating they had experience working in this setting. Only four (13%) of the 32 managers who responded described their level of success as low or very low, while 17 (53%) said their efforts were highly or very highly successful.