Where Does Your Business Place on the Outsourcing Maturity Curve?

Is your company ready to establish an offshore operation? This move might be the right step at precisely the right time, or it could mean acting beyond your current capabilities. There are five stages of maturity, and knowing your company’s current stage is crucial to successfully engaging with an offshore software development company.

Stage One: The Offshore Bystander

A business in stage one is not yet taking advantage of the benefits of global software development resources. It is, however, considering the prospect as it watches other companies outsource. The first stage provides an opportunity for a company to think about its current level and consider whether it is prepared to move forward with an offshore operation.

Stage Two: Experimental Stage

At this point the business is not ready to jump in feet first. It is likely to begin outsourcing with a small number of people or a smaller project. This offers an opportunity to see how outsourcing works and to gain more knowledge about the experience. If the software development company has minimal needs, there may be no need to go any further than this stage to accommodate its projects. For larger businesses, this stage serves as a stepping stone to recognizing the value of outsourcing.

Stage Three: Cost Strategy

One of the major reasons companies decide to outsource is to reduce costs. In stage three, businesses work to perfect their processes while striving to reduce the cost of development. This stage can be very broad. It can be geared toward hiring programmers, or it can be about embracing the concept of global software development. It is worth noting that outsourcing not only solves the cost problems that many companies face, it solves the overall resource problem in general.

Stage Four: Strategy

At this point, the focus shifts to giving the company the opportunity to work with those who have specialized skills and knowledge, which increases the speed, agility and flexibility of its operation. The company also acquires location-specific advantages which it would not normally enjoy. This tactic reduces cost and increases leverage for your company as you begin to build a global network.

Stage Five: The Offshore Operation

Companies make a solid commitment toward outsourcing to a foreign country by stage five. A move beyond mere strategic advantage occurs, and more leverage is gained by possessing a subsidiary. It is a full expansion of your software development company, with access to previously unattainable resources and consumers.

It is vital that a company is aware of its level of maturity. There is a danger in trying to perform at stage four when a company is only at stage two or even three. To gain leverage offshore, it is crucial that you can complete a small task before committing to an ongoing process.

This article first appeared in NSAM sister Publication Global Delivery Report.