Software Development Outsourcing is an arrangement whereby a company contracts a software developing company to develop softwares for its use. In the modern world of globalization, outsourcing software development is the most ideal step for a company that needs specific softwares to optimize its operations. There are four types of software outsourcing contracts, they include:
1. Time and Material Contracts:
The unique feature of a time and material contract is that the customer pays the software developer per hour and per material used in the software development. This type of contract is usually used when the type of software project to be embarked upon is so large that the time within which such project is to be delivered cannot be estimated.
2. Fixed Price Contracts:
Another type of software development contract is the fixed price contract. The unique feature of this type of software outsourcing contract is that the customer pays a fixed one time price for the entire project to be handled by the software developer. This type of contract is very favourable to the company or customer requiring the software development service as they only have to pay an agreed price irrespective of the time or material that would be expended on the project by the software developer. This type of contract is usually used when the amount of time and material to be used for a project can be accurately estimated.
3. Revenue Share Contracts:
A revenue share contract is a type of software development contract that is used in the case of a software that is developed for commercial purposes. This is when the company requiring the software to be developed intends to sell it to others for profit. Under this circumstance, the software developer can reach an agreement with the customer in which no fees would be charged upfront however, both the client and the software developer would share equally in the proceeds.
4. Hybrid Contracts:
An Hybrid Contract is a type of software outsourcing contract that combines two of the above specified features. Take for instance, when a client pays a fixed price for a software project wherein once the project is completed both the client and software developer are expected to share revenue is a typical example of a hybrid contract.
ADVANTAGES OF SOFTWARE DEVELOPMENT OUTSOURCING:
1. Software Outsourcing saves cost:
One of the incredible advantages of outsourcing software development is that it saves costs. When software development is outsourced to another company, it saves the company requiring the services the extra cost that would have been incurred if such software were developed by amateur in-house staffs. The implication of outsourcing software development is that a company does not need to incur costs of hiring, training and maintaining expert employees for short term projects.
2. It saves time:
Another benefit of software outsourcing is that it saves more time. When expert software developers handle software development projects, they usually achieve the desired results faster than inexperienced in-house staffs. The incredible benefit of having software development outsourced is that the software developer works on developing the software round the clock while allowing in-house staffs to concentrate on other activities thereby saving the client’s time.
3. Enhances Accuracy and Efficiency:
When software development is outsourced to experts, it enhances accuracy and efficiency which may not be obtainable when such projects are left in the hands of in-house staffs that may not have the required skill level and competence for such projects. Software development that are outsourced are more efficient and more accurate when it comes to performing the functions for which they were developed.
4. Reduced Risk:
When a client company contracts out a software development project, such a client company reduces the risk that can arise when a software development project goes wrong. One of such risks is compliance. When software development projects are outsourced, it reduces the risk of non-compliance with industry standards in the development of software. Substantial non-compliance is a situation that may put a client company at risk in the form of exposure to sanctions such as fines and business restriction. Moreso, software projects that are outsourced would generally be suitable for the purpose for which they were developed compared to a software that was developed in-house that may suffer from inefficiencies that may compromise the very reason for which it was made.
Above advantages make Software Development Outsourcing become an unstoppable trend!
VietnamDespite being a moderately new concept that was started more than one decade ago, the software outsourcing industry in Vietnam has grown quite significantly.
Also, the government has implemented attractive policies to attract IT entrepreneurs along with substantial investments in the STEM fields to create robust and qualified technical engineers.The technology industries in Vietnam and subsequent outsourcing services have experienced remarkable growth over the last few years.
Also, the government encourages continued investment in software parks, dedicated tech zones and provides tax incentives for the establishment of IT firms.
Today, Vietnam is gradually developing its young workforce to obtain the necessary technical skills and easily compete with other Asian countries.
In comparison, India has an 80% retention rate, with many Indian skilled engineers willing to relocate outside the country to pursue IT careers abroad.Economic and Political StabilityVietnam is considered as the black horse within the software outsourcing industry, as it is one of the famous, most consistent and fastest growing BPO markets.
Hence, if they don’t have sufficient dedication and stronger work ethics, then they could end up losing out to their Indian counterparts.Lack of Soft Skills and Practice in EducationDespite all the extensive efforts to improve the Vietnam education system, the country still lags in overall soft skills and practice.
The software application development outsourcing market has outstretched from $45 billion to $85 billion in just the last five years.
These numbers significantly show that both startups and enterprise-level businesses are embracing the idea of outsourcing software development services through IT outsourcing companies with open arms.IT outsourcing involves farming out or sub-contracting certain IT functions to independent companies, third-party organizations or individual developers.
There is no need for an in-house team unless you want it -that is the beauty of outsourcing IT solution requirements to a software development company.
Let’s dig deeper into it and find out the many positive aspects of outsourcing software development services.Types of Outsourcing Software Development ServicesThe type of software development outsourcing is categorized by where the development is executed and is often location-based and relationship-based.
Broadly, there are three types of outsourcing agencies mentioned along with their advantages:Onshore outsourcingWhen you obtain software development services from a service provider outside your company but within the same country, it is known as onshore outsourcing.
If you choose onshore outsourcing, you are open to advantages as such:Easier to communicateNo cultural differenceSame time zonesEasily accessibleOffshore outsourcingWhen software development operations are performed in another country altogether is known as offshore outsourcing.
ou are aware that the IT sector is continually evolving.
Because it will often be difficult for you to meet all the requirements of the field and all the needs that you will have to face, calling on external IT skills would be a wise choice.
Indeed, using a software development company means choosing a trusted partner to help you achieve the success of your projects.
In general, software and IT, development companies are responsible for meeting your requirements.
We present below a summary of the progress of your future development project.
A computer development box worthy of the name makes it a point of honor to define your exact needs.
