Offshore development is a agreement between the overseas client and the local development company to perform an activity in which the overseas clients gets benefit of reduced cost, quality product and focus on business development.
India has been a leader and a keyword known for offshore development services. Overseas companies across world try to identify India as an option to their high cost manufacturing cost.
The concept of taking internal company functions and paying an outside firm to handle them. Outsourcing is done to save money, improve quality, or free company resources for other activities. Outsourcing was first done in the data-processing industry and has spread to areas, including tele- messaging and call centers. Outsourcing is the wave of the future.
Outsourcing in today's world is seen as a strategic management option rather than just a way to cut costs. It helps achieve the companies their business objectives through operational excellence and an edge in the market place. Every company today, has one or more of its services outsourced so that it can focus more on its core competencies. Outsourcing's emerging power as a business tool of unique versatility and flexibility is undoubted.
Resources of the companies need to be focused on core business functions so the non-core functions need to be outsourced. Outsourcing gives you the right combination of people, processes and technology to operate effectively in the Global market place without burdening your time and budget.
This is the reason why more and more companies are showing interest in outsourcing there activities to various offshore locations.India is certainly one of the preffered destinations for organizations world over. Learn more about why is outsourcing to India beneficial.
Key Benefits of Software Outsourcing
- Cost Efficiency:Labour cost savings may reach up to 90% for routine low-level tasks as compared with in-house development in North America and Western Europe.Significant reduction of development time and, thus, speed-to-market becomes invaluable advantage in a present-day competitive environment.
- Availability of Trained IT Staff:Immediate access to a large pool of best industry talents allows overcoming hiring gap for IT professionals in the developed countries.
- Flexible Manpower Utilization:By using outsourcing model company cuts down its housing, recruiting and training expenses.
- Development Risk Minimization:Proven development process and quality management system.
- No Up-Front Investments:No up-front investments on the customer's part.
The benefits gained by the client on a short-term basis would be:
- Ability to focus resources and attention on core business initiatives.
- Reduction in headcount and attrition rates in the outsourced function.
- Re-skilling of remaining staff with better and more marketable skills.
- Refinement of project management, risk management, and service delivery skills.
- Implementation of demand management and service delivery disciplines.
- Optimization of systems management and support processes.
- Access as needed to specialized resources.
- Typical long-term benefits include:
- Predictable results-based expense for the outsourced function over the life of an outsourcing agreement.
- Joint and proactive problem solving and innovation.
- Superior management of the business application portfolio.
- Enhanced career opportunities for client staff, based on sophisticated.
- Management, contracting, and outsourcing integration skills.
Half of all the fortune 500 companies today target offshore software development in India. The core reason for preferring India, as an offshore development partner, to other competing destinations in offshore IT Outsourcing business is a vast pool of educated human resource combined with world-class quality offerings and ever encouraging Government policies for the IT sectors.
Guidelines for software development outsourcing
The documents that are inevitable for a successful deal in software outsourcing to India are the following:
- Requirement Specification documents.
- The Proposal Analysis document.
- The Contract Execution document.
- The Software Development Plan.
The Requirement Specification document for software outsourcing to India contains,
- The aim: This document furnishes the basic objective, along with details regarding the industry & software development team. This facilitates fast & simple inferences about your software project to find the well defined offshore software solutions required.
- The goals: Goals are set to bound a race. It is actually a list of the required outcome to fit various stages in the true solution and, must be specified clearly.
- The consistency factor: Issues dealing with compatibility has to be approached at the initial stage of a project & steps are to be taken to avoid complications. These issues come up when the software that is under development forms a part of the existing software or hardware system.
- Prominent characteristics: The diversified features involved in the projects must be identified and defined, so that those involved in the development process, will clearly understand the various modules in the process.
- Issues related to "look and feel": The way in which the people visualize the finished product is subjective and cannot be well defined while developing e-commerce solutions. The revival of user interface in later stages will prove to be expensive, costly and will cause delay in delivery. Therefore, this must be clarified in the initial stages itself.
- Support and maintenance: Round the clock support has to be imparted to software applications that are being developed as a part of the contract. Your outsourcing company must be maintained in such a way that its excellent communication network is widely known.
- Complete Documentation: The whole development activities involved, including logic & coding must be documented. A detailed user manual has to be prepared; if one is dealing with upgrades of software applications.
- Terms and conditions: As this is a contract it is necessary to furnish all terms and conditions, lest it leads to controversies in future. The people involved in this deal can make inquiries in accordance with the completion of the document.
The Proposal Analysis document is actually a refinement document usually proposed by the vendors of India. This consists of the compromises and fade-offs made, so that the final output comes out in accordance with your requisites. Time related matters like the winding time for the project development are fixed before the commencement. This stage also witnesses, boith parties making their views crystal clear to each other, about their ideas, capabilities, risks, etc. This document furnishes:
- The overall scope: This entails the picture of your software applications from the service provider's viewpoint, i.e. how he has perceived your project and your requisites. It may also contain the views, limitations and suggestions from the part of the provider.
- Payment criterion: The payment amount depends on two factors namely time and money. Our offshore software development firm in India follows the payment models are : (a)In India the provider charges for the man-hours spent on software development.(b)Both the outsourcing firm and the client agree on bulk payment for the completion of the entire application. Most of the firms handling software outsourcing in India follow this method.(c)Both agree to pay at various deliverable stages.
- If the proposal is accepted by the client, the next step is to execute the contract. The Contract Execution Document includes all the details about the Intellectual property rights, delivery date, deliverables, and responsibilities of each party, terms and conditions concerning nondisclosure, payment terms, and functional specifications provided by the client.
The project manager (preferably the vendors) maintain the basic project development plan. Both the parties must sign this document before software outsourcing to India. This consists of three steps which are explained as follows.
Software Development Outsourcing Plan
A detailed plan of the offshore software development outsourcing gives an indication that your work is being executed finely.The software development outsourcing plan may contain the details of the human resources involved, their skill sets and the time of completion of work at each stage.
This software development outsourcing plan reveals the complexities and basics that may occur in the course of the project development and will help corrective measures to be taken, if required.
Software Development and Design Specification
Software development and design specification is peculiar to software development outsourcing companies in India. The vendor after creating a whole range of diverse alternate sophisticated design must, give the client an exposure to these designs. Later the provider can carry on the application design process and mould the design specification.
The Software Design Specification followed by the software development outsourcing firms in India are discussed under the following titles.
- An overview
- Requisites for the system
- Naming conventions and Database conventions
- Diagrams and Parameter passing
- Design priorities
- Programming tools
- Handling errors
- Storage and description of data records.
Quality Assurance Plan
The quality assurance plan goes along cycles like Alpha criteria, Beta criteria, Final code submission criteria, Acceptance criteria and Alpha entry. Some of the salient points of the Quality assurance plan are as follows.
- The vendor agrees on an alpha entry criterion
- The vendor supplies quality assurance for Alpha submission
- The QA engineers follow the acceptance test plan and report bugs to the software development engineers.
- QA engineers further continue regression testing to ensure fixing of bugs
- The incorporation of minor feature enhancements in the software, as agreed by the client and the vendor is done.
- Final Code Submission, where both client & vendor agrees up on the final code submission.
- Acceptance testing, the client performs acceptance testing of the software as specified by the QA test plan.
- Operation guarantees the client a warranty period of technical support, which depends on the size of the project (normally 30 days).
- Maintenance - Separate contracts are given for fulfilling requirements of the software application development like
2)Fixing bugs
3)Giving technical support to the client.
- Project Plan Revised : The project plan is being revised in accordance with the needs that arise out of the design specification and Acceptance plan.
Ensuring that both the parties involved in the contract have agreed on the conditions & nothing remains unclear between them.
Communication
The IT industry is more dependent on the transfer of information and communication, than any other industry in India. The software development outsourcing companies in India are keen about maintaining a healthy communication with their clients. Barriers of any form that threaten to hamper the smooth flow of information at any stage can be disastrous to the whole outsourcing process, which may in turn lead to unnecessary negotiations and modifications.
The major medium used for the transfer of information in outsourcing includes Internet, e-mail, chat, videoconferencing, collaborate tools & project management software.
Analysis has to be done by the client and the vendor for the following.
- Functional Specification, made by the vendor and signed by both parties must contain:
2) Acceptance criterion
3) Main objectives & special system requirements
4)Overview of the application/system
5)Client-vendor communication interfaces/protocols
6)A method for negotiating specification changes.
7)Responsibilities of parties, terms, conditions, and assumptions.
- The Initial Design a. High-level design of application / system as a whole b. Description of user-interaction, data flow & data storage.
- Development Proposal
- Final version of analysis proposal and
- The Executive contract
- Misunderstanding can arise between the vendor and the client if the discussion regarding the software application is not based on the final document.
- Misunderstandings may also arise, if the vendor representative and the client are not close to each other, as it is virtually impossible to explain all the finer details during the course of the conversation/discussion.
- The possibility of cultural clashes between most of the offshore professionals who are in the East and clients in the West, cannot be overlooked.
- The difference in the time zones between that of the vendor and that of the client could be yet another barrier. Mutual adjustments have to be made in such situations.
Before software outsourcing in India, the client and Vendor should sit for an open talk, stating:
- The original objectives and proposed solutions
- Organization and method of the project
- Comparison of estimates and actual results
- Successful aspects of the software application
- Problems involved and suggestions to avoid them in future.