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Software development outsourcing has evolved from a simple cost-cutting measure into a strategic method for accessing global talent and accelerating project timelines. However, managing these external partnerships requires objective data to ensure that potential liabilities are transformed into valued assets.
Ongoing skills shortages make it challenging for businesses to hire in-house software developers. It’s estimated that there is a global shortage of more than 40 million skilled workers. By 2030, analysts expect the supply shortage to be more than 85.2 million. Companies can combat the problem by using outsourcing to gain access to a much wider talent pool.
In 2020, a study by Deloitte showed that 70% of companies who choose to outsource do so to save money. Not only is outsourcing significantly cheaper than carrying out a formal recruitment process, it can also cut down on training costs if your outsourcing partner provides developers with specific skills. Businesses look to minimise both costs and risk by using outsourcing to access staff instead of traditional recruitment methods. This may include offshoring or nearshoring to bolster specific teams.
Recruiting for a skilled position like a software developer can take a significant amount of time. By outsourcing developers, you gain access to a wide range of skilled individuals without needing to go through the long recruitment process. This helps minimise project delays and enables business leaders to focus on growing their company instead of searching for new talent.
To ensure development partners deliver maximum value, executives should utilize objective, consistent insights into performance.
Use a pre-agreed and transparent set of metrics to compare all vendors in terms of productivity, cost, and code maintainability in an objective and standardised manner.
Use performance insights to identify underperformance and quantify objective, achievable targets. Inserting clauses in SLAs ensures that vendor delivery does not drop below a specific threshold.
Identify discrepancies between the number of developers being paid for and the number of developers actually delivering code.
Identify if top developers are swapped out for lower performers. Assess which vendors supply the most and least productive developers to specify the retention of top talent.
Prioritise the most productive and cost-effective vendors for broad locations. Consolidate them to reduce the number of suppliers while increasing capacity without additional costs.
The BackgroundThe client suspected that a particular project was underperforming for the year, but lacked the data to support the claim.
The ResultsBlueOptima analyzed the project via monthly trends, individual performance, and interaction maps. Findings included:
The BackgroundThe client was aware of vendor underperformance but could not understand the extent. They needed objective facts to hold an informed discussion with the vendor.
The ResultsThe analysis identified that the vendor’s developers were 60% less productive than the average developer. The client confronted the vendor with objective data showing 10 underperforming developers. When the vendor was unable to justify the findings, the client used the information to support a move to a more productive vendor. A new vendor was onboarded, resulting in a saving of $600,000 (USD) in just six months.
The BackgroundThe client reduced their in-house developer teams by 40% in favor of outsourced talent. They wanted to discover how this move affected overheads and productivity.
The ResultsBlueOptima analyzed four years of historical data to determine the economic impact. The study found:
We provide a SaaS technology that objectively measures software development efficiency. Our core metrics for productivity and code maintainability allow executives to make data-driven decisions related to talent optimization, vendor management, and location strategy.
Meta Description:Learn how to transform software outsourcing into a valued asset. This report explores the benefits of global talent access and cost reduction, addresses challenges like deferred control, and provides real-world case studies on optimizing vendor performance through objective metrics.
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