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Digital Transformation

The Pros And Cons Of Software Development Outsourcing During A Digital Transformation

Way of doing business has changed a lot in the last decades. From controlling the market with monopolistic tactics and strategy it has shifted to adding more value to customer services and products. This shift has forced organizations to change the way they operate, and become more collaborative, multi-directional and have better engagement models. Today, through digital transformation organizations are making more and more use of AI, Robotics, IoT and other disruptive technologies to stay ahead of competition by providing better services to customers and widen their customer base.

Digital transformation takes place throughout an organization. It is not like an event, but like a continuous and evolving process to gain maximum benefits. Digital transformation improves organization-wide efficiency, productivity, and eventually profitability. It makes brands more credible and stable. To reap all the benefits not only carrying out digital transformation is necessary but maintaining it viable and sophisticated is also very important. As the need for organizations to digitally transform their structure intensifies it is very important to understand what company management needs to do and what they need to avoid before stepping into technologically enhanced ecosystem.

The biggest dilemma that management faces before starting digital transformation is whether to outsource the software development part or get it done with the in-house team. Both these choices do not come without cons. Developing and making an in-house team work for the organization requires technical expertise and a good understanding of available technologies and their merits and demerits. It also demands a very clear picture of what a company wants to look like after digital transformation. If the company chooses to outsource, losing control over the process at any point of time appears as very imminent.

Let us here discuss what are pros and cons of outsourcing in digital transformation, here are few pros of outsourcing.

Tap quality professionals – In an IT department, it is mostly not possible to gather a team of top-quality professionals for the job from current team. Even if an organization finds few resources, they would be spread thin over digital transformation task due to burden of existing work. Organizations not having an equipped IT department may find it extremely challenging to build a team from scratch to do digital transformation. But if an organization outsources its software development it is much easier to have a team full of top-quality professionals to do the job.

Fill technological gaps –

During digital transformation companies may need special skills and expertise for a short period of time. Hiring one or more resources to fill the gap may prove costly and time consuming whereas with outsourcing organization can easily get the skills for required duration to keep the process going smoothly.

Quick time to market:

The outsourcing firm can manage and optimize workflows based on best practices.

Higher chances of success –

In software development outsourcing, organizations get services of consultants and managers who have already carried out digital transformation of various companies. Their experience of various domains and multiple technologies help organizations mitigate risks of failures and overcome obstacles easily. Some outsourcing companies may even provide industry-specific experts who are invaluably helpful in getting the task done by avoiding missteps and unforeseen complications.

Cost-effective –

Outsourcing is cost-effective even if an organization hires the best. Outsourcing saves cost by allowing flexibility in the team composition as and when needed. It also saves valuable time and cost by allowing easy scalability. Team size can be scaled up and down according to the plan without wasting time and money. Outsourcing started as a way to save money in software development but these days it is more of getting higher engineering talent on most innovative technologies and industry-specific expertise.

Brand credibility – Customers rely on brands because of security. If organization outsource its software development work, it can trust that system follows security protocols and policies designed to protect customer privacy and money. To make it doubly sure organizations can have an agreement with vendor that would shift the burden of penalties and losses over vendor if there is any breach or system falls short of any security or policy standards.

But there is flip side of outsourcing too, these cons shall also be considered before going for outsourcing during digital transformation.

Below standard coding – It is quite a common problem that many organizations have faced in outsourcing. However, even having an in-house team does not guarantee code quality. While choosing the vendor proper research shall be done about the status of the past projects and opinion of their previous clients about their work quality.

Improper documentation – Absence of proper and clear documentation before development process begins leads to subpar work. Proper documents shall be created, and it must be ensured that vendor and client both see exactly similar picture about work to be done.

Motivation –

It is assumed that outsource team would not have similar motivation like that of in-house team to make the project successful. However, this cannot be general as outsource team do have strong motivation to make every client permanent by delivering quality work and draw business from him in future as well.

Communication and control –

If an organization loses control over the vendor during the project it may pose a risk of failure. An organization should also ensure that vendor is not working with too many contractual, part-time or freelancers as their loyalty are always low which may prove fatal for the project at times.

• Low-quality code and documentation:

If the outsourcing firm lacks rigorous quality controls, the code and documentation its workers produce might be subpar.

Organizations going for digital transformation shall always weigh pros and cons of outsourcing before taking a step. Outsourcing undoubtedly makes development easier and maximizes chances of success but in few cases, it may not prove as beneficial as expected. Outsourcing is a strategy, like other successful strategies it works well for most but may not work so well for few. Proper research about the vendor and its past work and experience can help in avoiding pitfalls that may come with outsourcing. Having a very clear picture about what organization needs and expects to get from vendor is also very important step that helps in avoiding hiccups associated with outsourcing.

Digital transformation does not stop at development or delivery of software. It continues to grow and must evolve to stay viable and productive. While considering whether to outsource or not, organizations shall also peek into the future that how they are going to handle the support part that software will need to keep them competitive. Refinements and enhancements are aways needed with technology and if it has become an integral part of business delaying these enhancements can prove costly for overall business.

Avoid falling for every technology that has surfaced. The technologies that align with business objectives and help in improving customer satisfaction are best even if they are not so new. In many cases companies adopt too latest technology which is yet to be tested in real-life environment for a sufficient duration and pay the price. Selecting a quality vendor and having an open-minded discussion with experts help in choosing the most suitable and reliable technology and tools.

Digital transformation is like an investment which will pay in future in different ways. Making smart investments is expected from organizations to achieve business objectives from digital transformation.