Outsourcing Software Development During a Recession

What I will discuss here is not a sales pitch for my company - it is relevant and true for any outsourcing company (the success of a project will depend on the particular company involved). Moreover, it is relevant to the outsourcing of almost anything, not just software.

An economic recession, such as one that most of the world is currently experiencing, is a time of great stress and upheaval for most companies. Product lines are consolidated, employees are let go, and budgets are slashed. Despite all this, companies must move forward in order to survive. The smarter companies work to not only survive, but to actually thrive while their competitors are suffering.

The following is a list of what I think are the top five reasons you should consider outsourcing some of your software development even (especially?) during a recession:

1. Budget vs. Head Count
An interesting phenomenon (especially in larger companies), is that there is often a sizable budget available for outsourcing/contractors even though there is an employee hiring freeze in place. Sometimes this is due to company politics and games, but there is also a very legitimate reason for this to occur: Having employees is a long-term commitment with recurring costs, whereas outsourcing or using contractors is a pay-as-you-go solution that can be adjusted as situations develop.

2. Fixed Price Projects
During difficult economic times, it is important to effectively manage whatever budgets are available. A benefit that an outsourcing can offer is that of completing a specific project for a guaranteed fixed cost.

3. Jump Ahead of the Competition
A recession offers a forward-thinking company the opportunity to leap ahead while its competition is licking its wounds, or at least paused in a holding pattern. Outsourcing new projects allows you to make this jump ahead, without distracting existing staff and/or assuming additional long-term commitments (as described earlier).

4. Develop Relationships, Processes, and Partnerships
Developing relationships, processes, and partnerships is hard work. Trying to this while under extreme deadline pressure is very hard work, and increasingly prone to failure. Take advantage of the slower economic times to investigate and cultivate new relationships with vendors and partners on smaller projects so that all of the “kinks” are worked out before you take on bigger and more complex projects.

5. Changes in Technology
Make use of the slower times to invest in new technologies so that you are in a better, more advanced, position when the economy starts picking up and clients start checking out your offerings.


Do any of these ring particularly true to you?
Do any of them not seem to make sense to you?

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Published Monday, January 12, 2009 2:51 PM by Jackie Goldstein
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Comments

Monday, January 12, 2009 4:12 PM by rrobbins

# re: Outsourcing Software Development During a Recession

Do any of these ring particularly true to you?

No.

Do any of them not seem to make sense to you?

Yes.

Monday, January 12, 2009 4:19 PM by Jackie Goldstein

# re: Outsourcing Software Development During a Recession

rrobins,

Can you elaborate why ?

Tuesday, January 13, 2009 12:55 PM by koistya

# re: Outsourcing Software Development During a Recession

Outsourcing Software Development to Russia During a Recession

Tuesday, January 13, 2009 3:18 PM by Cade Roux

# re: Outsourcing Software Development During a Recession

Never ever ever outsource your core competency or competitive advantage.  A recession is a good time to invest in your company and in your people, not invest in another company's profit margin.

Buying products off the shelf and consulting to customize them, yes.  Outsourcing to build a product which is not vitally important to your company's strategic goals and avoid opportunity costs for your most vital projects, yes.