Precautions for Outsourcing Software Jobs

Outsourcing software jobs is certainly a viable business solution for all types of industries. Software plays an integral part in many different industries and because software is constantly evolving and developing it isn’t always feasible to employ an in-house software staff capable of meeting complex software needs. Companies may find the ability to outsource software projects while still maintaining a certain degree of profitability; however, there are a few caveats to doing this. Outsourcing software jobs is a sound business practice but care should be taking to avoid certain pitfalls often associated with outsourcing work. Taking a few precautions can prevent the company from making mistakes while outsourcing such as outsourcing the work to individuals ore companies who lack necessary qualifications, making fatal scheduling errors and spending too much money to outsource the project.

Properly Screening Outsourcing Candidates
One of the most common mistakes made in outsourcing software projects is delegating the project to an individual who lacks the necessary qualifications and capabilities to complete the project efficiently. Companies who regularly outsource work may establish working relationships with individuals they are confident will perform well but before these types of relationships are established it will be necessary to carefully screen each potential candidate before outsourcing a job.

There are precautions companies can take when they are considering outsourcing a software project to ensure the candidate they select is well qualified to complete the project. The following are a few of the basic precautions companies should take:

• Describe the project sufficiently in job advertisements
• Review applications and resumes carefully
• Schedule interviews with qualified candidates
• Ask interview candidates to provide a list of work references
• Verify each reference and check the validity of work history

Establishing Schedules When Outsourcing
Another mistake often made by companies who outsource is to fail to establish a firm schedule. This may not be especially harmful when the schedule of the project is flexible but it can be a serious mistake when the schedule of the project is not flexible.

Finding a candidate who is qualified to handle outsourcing work is important but it is also important to find a candidate who is available when you need someone to complete the work. This is a significant point because some candidates may be well qualified but if they are not available when you need them they are not an ideal candidate to complete the project.

It is best to discuss scheduling upfront when screening outsourcing candidates. This is important because it can be costly to spend time finding a candidate only to find out they are unavailable towards the end of the screening process.

Spending Too Much Money on Outsourcing
One final mistake companies often make when outsourcing is spending too much money on outsourcing. This includes money paid to the individual or firm to complete the work as well as money invested in finding the most qualified candidate.

One precaution to take when considering outsourcing is to investigate all of the costs associated with outsourcing and establish a budge for having a particular project completed as an outsourcing endeavor before beginning to search for potential candidates. Doing this will enable companies to evaluate whether or not outsourcing is a wise decision from a financial standpoint before they invest too much in the process.

When evaluating the costs associated with outsourcing a software project it is important to consider a number of factors. First evaluate the amount the client is paying for the completion of the project. Next assess the in-house effort which will be required for this project including management and recruiting candidates to complete the project. Determine the percentage of the budget which will be consumed by these efforts. Now it is time to look at the remaining budget and determine how much can be invested in outsourcing the project while still remaining profitable. The fees paid to the independent contractor or consulting firm should not be so high that they do not enable the company to profit from the project.

Understanding Outsourcing

Outsourcing is a term which has received a great deal of attention lately. Despite the increasing trend in companies relying on outsourcing there are still some who do not clearly understand what is meant by the term outsourcing. This article will examine some of the key elements of outsourcing to help the reader develop a better understanding of the concept of outsourcing.

Outsourcing Defined
What is outsourcing? This is the most basic question many have about the subject of outsourcing. They are not yet interested in more complex aspects of the issue because they have not yet grasped the most basic understanding of the process. In the simplest language outsourcing is when a company delegates the completion of certain tasks to an individual not employed by the company directly. This individual may be an independent contractor or an employee of another company who is subcontracted to complete these tasks. In exchange for the individual’s services, he or his company receives monetary compensation.

This description of outsourcing makes it far easier to understand the concept. Most people incorrectly assume outsourcing only applies to situations where large corporations have products manufactured overseas by a subsidiary and don’t realize examples of outsourcing can be seen just about everywhere in corporate America.

Domestic Outsourcing
Domestic outsourcing refers to outsourcing where both the primary company and the independent contractor or subsidiary are located in the same country. One of the main reasons for outsourcing is to reduce costs but it is not always necessary to outsource work overseas to reduce costs. Cost savings will be discussed in greater detail in the section on the benefits of outsourcing but essentially outsourcing results in a savings as a result of a reduction of labor costs.

Overseas Outsourcing
Overseas outsourcing is the type of outsourcing most people already understand. This is where large corporations such as Nike, and even some smaller companies, employ manufacturing plants overseas in third world countries to upsize their profits. This is significant because their costs including wages, materials and building lease would be considerably higher in the United States than they are in these other countries.

Benefits of Outsourcing
Now that you have a clearer understanding of the concept of outsourcing, you might wonder why companies would go to the trouble of outsourcing certain tasks. Outsourcing is popular because there are a great deal of benefits to the companies who outsource the work. Some of the benefits include:

• Reduced labor costs
• Increased workforce
• Greater flexibility

One of the main reasons companies resort to outsourcing is it can significantly reduce costs. In the case of overseas outsourcing of manufacturing tasks, costs can be cut dramatically because there are lower wages and costs associated with managing and maintaining the manufacturing plants. However, companies also enjoy a cost savings when they outsource tasks domestically. Reduction of labor costs is the primary source of savings in this case. Independent contractors hired on a contract basis for the purpose of completing specific tasks are often not given benefits such as social security, Medicare and workers’ compensation.

Another benefit to outsourcing is enjoying a larger workforce without actually hiring additional employees. Companies who maintain networking relationships with qualified individuals have more opportunities open to them because they are able to rely on these individuals to assist them if they acquire large or complicated projects.

Finally, outsourcing gives a company a great deal of flexibility. Companies who have a significant workload and backlog of work where the majority of the employees are highly utilized might be hesitant to compete for new work because they do not have a great deal of employee availability. However, with a network of individuals to rely on if the need to outsource arises, the company has more flexibility in pursuing new work.