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OUTSOURCING
Offshore outsourcing to South Africa could reduce your project costs by 30-70%
27 FEBRUARY 2023   |    MARKUS VAN AARDT

For all the benefits of operating a company in first-world economies, the high cost of skilled technical labour can be a significant expense. Over decades organisations have relocated high cost business units to lower cost regions, most notably in the areas of manufacturing, call centres and information technology. South Africa has provided reliable partners in offshore delivery to multinational corporations for decades, and in the areas of vehicle manufacturing and call centre operations, the country has shown its strength.

Custom software, for its part, can also be produced in various different ways. Traditionally, large organisations were able to have this done by their own programming teams. Over time this results in ever-growing engineering teams to build new systems and maintain older ones. This became expensive cost centres to many organisations, with little flexibility.

Along came Outsourcing. Outsourcing is used by organisations to expand capacity or deepen capability to deliver software solutions. In basic terms, third party providers develop systems against specification for organisations as their clients. Organisations have been making use of this engagement model for decades to address different challenges, or create various benefits to them.

Here are five of the most important reasons it became so popular, and why more organisations make use of the approach. Outsourcing is no longer a tool for large corporations, and is increasingly becoming an option for even SMEs to grow their technological capabilities.


1. Reduced cost

When calculating the lifetime cost of permanent employees, from recruitment, on-boarding, training and eventually retirement, human resources remain a major long-term expense to organisations. Although many organisations argue that people are their biggest asset, they may also be one of your most expensive liabilities.

Outsourced software development rates may vary from very low to prohibitively expensive. However, when considering that some of these resources are required for very short periods of time (weeks or months, in most cases) it is often far cheaper than employing them fulltime.

Also remember that most outsourcing projects are executed as fixed term or fixed scope engagements. This puts some limit on the time and effort, which translates into limited spending.


2. Quicker time to market

One of the key value propositions of outsourced service providers is their ability to deliver quickly. This is achieved through having access, directly or indirectly, to technical specialists that your project may require. Since the sourcing of specialists now lies with the service provider, it is no longer your responsibility to manage. Engineers should start with delivery within weeks, if not days, since they start the project with the right people from Day 1.

Secondly, fixed term and cost project incentivises the provider to deliver quicker, as it translates in lower cost and higher profits. The quicker they can deliver your project and move on to the next, the better outcome for both parties.


3. Lack of in-house capacity or experience

Large or complex projects often require a significant number of engineers, or engineers with specific experience. Often organisations have access to neither of this, which makes it harder to execute the project properly, in time or within budget. By bringing in third party service providers to provide either capacity or experience, the responsibility for both is translated from you to the service provider. More often than not, since the right outsourcing providers have seen it all before, quality and speed are baked into the service.

Another thing to remember with outsourced development consultancies is that most of them provide a complete engineering team for each project. This means that the team may consist of a Software Architect (or Technical Lead), a number of Programmers, a Software Tester, a Scrum Master or even a Project Manager. Even though some of these roles may be performed by the same individual at different time of the process, the value obtained from these providers is a rounded service offering that ensures highly skilled engineers and resources that will support the project throughout the software development life cycle.


4. Focus on your core business

If you run a non-technology company, chances are good that you know more about your business, products and market than software development. After all, you are probably not a software engineer to begin with. Probably the same goes for the most of your executive team. In these cases, companies who have been highly successful in employing outsourcing focused on their core business and capabilities, and left the technologies to specialists. After all, if you're an Olympic athlete you'll be better off trusting a orthopaedic surgeon to perform a knee replacement than buying some textbooks and trying to do it yourself with a series of YouTube videos.


5. Direct access to innovation

Unless you are in the business of creating ground-breaking technologies, you are probably not the authority on innovative software technologies. And that's OK. You can hire specialists for that. Outsourcing partners often have access to, and are experienced in innovative technologies that can help your organisation take the next step forward. Oftentimes companies who are specialists in their areas, like financial services, are leading the market for their products - as the rightly should be. However, this does not guarantee that they will be able to hold the same position in other areas of their business, like running canteens or cloud architectures. Even if their internal engineering teams are the best in the business, it rarely happens that they are the leading innovators of all technologies available to them. World-changing technological innovation usually happens outside of normal organisations, as it is imagined and realised by large companies like Google or Apple, or smaller start-ups and technology specialists that focus on technology innovation, rather than your company's internal political powerplays.



BONUS: Location independent engineering

If you made it this far, I would like to add a bonus point to the list: If 2020 taught slow moving companies one thing, it is that remote working is not the beginning of the end as was feared for decades by middle managers, but a new way of running modern businesses. By allowing (and even embracing) a remote workforce companies now have access to resources globally. Until now, companies employed people from its local region and often had to make do with what was available to it. Now, organisations can access the best possible resources from anywhere in the world. What you probably don't realise is that many outsourcing service providers have been doing it all along, and already have access to those resources, which can seamlessly integrate into your next software development project.


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