Humans have been practicing outsourcing since a very long time. Having someone to fix up electrical fittings in your house is also a kind of outsourcing. However, outsourcing potentially became a buzzword when it spread across IT and ITES domains, crossing various geographies. Outsourcing essentially means defragmenting the operations into individual processes and giving it to a specialized company to handle it. These individual services can be procured at much lower costs than what it would have required otherwise. The overall effect turns out to be a cost effective proposition for the organization outsourcing its operations.

First sector to tap on this vast potential of cost effective solutions was IT (Information Technology) and thus was born software development outsourcing. The underlying factor for software outsourcing has been ‘buy it cheap’, however, the importance of efficiency, quality, and productivity was equally stressed. Apart from software development outsourcing, businesses also grew in medical field, legal practices, financial markets, gaming, publishing, and so on. Outsourcing software development essentially deals with covering every aspect of software development cycle with occasional visits to the client’s base location, if required. Most of the software development outsourcing businesses trade in support, maintenance, and testing services.

Though outsourcing software development or outsourcing of any sort for that matter had been surrounded with controversies for some time, it has accelerated the growths of the individual companies as well the sector as whole. Software development outsourcing has helped the global economy gain financial growth. With the technological advancements in communication and computing techniques, software development cross-selling has broken all regional barriers. Economies of many developing nations like India, China, Philippines, and other European nations have strengthened with the outsourcing phenomenon.

Outsourcing software development certainly proves to be an inexpensive equation when compared to same operation done onshore. It is a win-win situation for the companies, the one which outsourced the work and the other which took up that work, when viewed from a cost-effectiveness angle. Also with globalization and lot of vendors pouring in, the competition is increasing in this space. All this leads to better quality procedures and policies being implemented and followed in an attempt to reap some profits from outsourcing bash.

Technically, one would say that Software as a Service is an application model where a software vendor works on developing a software application and hosts and operates the application for use by its users over the Internet/desktop. In a Software development company the focus is on Custom Software, which is developed for a specific organization and targeted to several business, entities, companies or organizations. The second kind of software will be off the shelf Software that is already produced or designed and are more readily available and cost effective.

Software development process has been observed that large numbers of projects now a day are not meeting the expectations in terms of functionality, cost, Deadlines and effective project management which hampers the overall growth of the Software Development Company.
There are lot of Software Development Companies that follow different models for the development of the Software, most commonly used would be Process Model which includes Waterfall Process, iterative process and Formal Methods.

IT Department and Software Development Company across the globe are considering outsourcing in a big way. Considering deeply the cost factor and the availability of highly qualified developers. The major factors that are kept in mind while outsourcing any project is “Track record” of the company and “Knowledge of the Industry Vertical”. The main reason to choose a company with these two important factors is firstly, the company that says that it caters to all verticals in software development may not specialize in any area and which may take lot of time and effort for that company to fulfill the needs of the project. This may adversely affect the deadline and the cost of the project. Secondly, the track record that can only be studied by the previous project company has taken up and by taking all possible references. At the same time it will be important to take into account the quality certification and quality of developers in the company. It is always advised to visit the premises and consider all options before outsourcing a project.

It will be surprising that sometimes no physical contracts or no disclosure agreements are signed between companies while outsourcing the Software project to offshore Software Development Company. The contracts or agreements signed usually are via email and the whole project is taken up on simple mutual trust between two companies. When a project is planned to be outsourced the deliverable should be clearly defined while maintaining the confidentiality rights on both ends as the entire project information is let out to a third person and can be critical for the business. Also the vendor under any circumstances should not directly interact with the employee of the Software Development Company. And of course not to forget the foremost reason the cost, it is often seen that the reason for outsourcing the project often becomes the most common reason for arguments between a supplier and vendor and is applicable in all industries in the world. Thus, a clear mention of the total project pricing and milestones at which the charges will be paid should be included as an important point within the contract.

The success of Offshore Outsourcing rests on the word “customer satisfaction”. Offshore Software Outsourcing is much about building relationships based on trust, and mutual respect. Software Development Company, should provide reliable, quality, and value added services to clients that take care of the definite business needs of the customer. A highly dedicated team for a project proves to be a beneficial point for the success of any outsourced project. Any team should have a Project manager, which fills the gap between the client and the developer. There should be proper goals defined for the team and client should be updated every week of the development made. And in case if there are any issues developers can be kept well informed in time.

Thus, the concentration should be on selecting the right partner for Software Development while evaluating all aspects. Selecting the right partner is often defined as a difficult choice to be made as Software Development Company, which leads to several consequences at a later stage, makes sometimes-false promises. It is suggested to review the resources (Infrastructure, personnel, track record etc.) of the business partner well before committing anything in “Offshore Outsourcing”.