Outsourcing Overseas and its effects on the development process

1. Sam Eiring Outsourcing Overseas and its effects on the development process

2. Outsourcing Software Development • “Outsourcing Software Development involves shifting of software development activities by a company to third party service vendors or software firms that may be located in offshore destinations.” (www.cyfuture.com) • Outsourcing began in the late 1990’swhen the cost of IT development skyrocketed because of the hype of the internet.

3. Outsourcing • Advantages/Disadvantages • Uses for Outsourcing • Outsourcing at Thomson Reuters • Steps to Begin Outsourcing • Cost Savings • Hidden Costs

4. Advantages • Can save money and time • Get access to specialized labor at low costs • Cut Human resource costs • Software research at lower rates • Reduce training costs • Allows ability to provide product support 24 hours

5. Disadvantages • Must have very specific requirements • Loss of managerial control • Many hidden costs • Threat to security and confidentiality • Possible loss of flexibility • Language barriers • Difference in time • Initial Cost

6. Uses for Outsourcing • Specialized Development Teams • Specialized Testing Teams • Support services • Call Center • Desktop Support • Helpdesk • Expanding workforces

7. Multi-Source Outsourcing • Multiple teams with specialized tasks • Can gain access the best developers of each task • Lowers Risk of Failure • Can use trained testing experts • Allows the company to use smaller outsourcing markets • Lowers cost • Not a single contract • Creates independence between testing and development

8. Outsourcing at Thomson Reuters • Location: Bangalore, India • This is an in house form of outsourcing • The facility was set up as a sister company • At the beginning there were 10 developers and one manager overseas and a Team Liaison in the office • The employees have been an expansion to the company • Overseas Employees Divided assigned to a specific team in the office

9. Training at Thomson Reuters • There are Cultural Differences classes held for both employees overseas and in house. • Teach the differences between different cultures • Brought overseas employees to the US to have face-to-face meetings and training • Ratings of Overseas teams for each project • Survey covering different aspects of the project

11. Culture Calculator

12. Overseas Employee Rating Form

13. Overseas Employee at Thomson Reuters • Since they are in house they are treated the same • Time reporting • They do not have any technical differences • Some Issues they have • Specific Instructions • Language Barrier • Time Difference

14. Steps to Begin Outsourcing • Imagine a Software development Partner • Draw up what your ideal partnership • Selecting your International Outsourcing Partner • Request referrals • Contact each potential Partner • Pick a partner who uses the same Development Process • Ask for Code Samples • Helps determine the skill level

15. Steps to Begin Outsourcing • Protect your rights • Use a Lawyer • Security • Deadlines • Good Communication • Face to Face communication • Email • Phone

16. Signing a Contract • Identify security requirements • Require your partner to provide a 3rd party security audit • Allow the right to perform process audits. • Set turn around times • Require Documentation for all steps of development

17. Cost Savings with Outsourcing • Overseas help does not need: • Healthcare • Social security • Pension • Paid Time off • Bonuses • Office Space • Computer and Software Licensing

18. Cost Savings with Outsourcing • Overseas Developer = $20/hr x 40hr wks = $40,000

19. Hidden Costs • Initial Costs: • Research to find a partner • Training • Setting up a process to manage and send work to your outsourcing partner • Contact Liaison • Errors from Overseas Developers

20. Conclusion • Advantages/Disadvantages • Uses for Outsourcing • Cost Savings • Hidden Costs • Outsourcing is Different for each company • It is a long term investment • It is a constant improvement process

21. References • Miller, Brett. "Selecting a Custom Software Development Company." Custom Software by Preston blog. Custom Software by Preston, 1 June 2009. Web. 15 Feb. 2010. <http://cspreston.wordpress.com/2009/06/01/selecting-software-development-company/>. • Palisade : Controls for Outsourcing Software Development. Oct. 2004. Web. 5 Feb. 2010. <http://palisade.plynt.com/issues/2004Oct/software-outsourcing/>. • Berg, Ryan. "Guest View: Addressing security in outsourced applications - SD Times: Software Development News." SD Times: Software Development News. Software Development Times on the Web, 15 Aug. 2009. Web. 5 Feb. 2010. <http://www.sdtimes.com/GUEST_VIEW_ADDRESSING_SECURITY_IN_OUTSOURCED_APPLICATIONS/By_Ryan_Berg/About_OUTSOURCING_and_SECURITY/33685>.

22. References • Mullaney, Jennette. "Software development trends in 2008: Outsourcing, agile development." Software quality management, testing and QA resources - SearchSoftwareQuality.com. 26 Dec. 2007. Web. 5 Feb. 2010. <http://searchsoftwarequality.techtarget.com/news/article/0,289142,sid92_gci1287341,00.html>. • Filev, Andrew. "Adopting and Benefiting from Agile Processes in Offshore Software Development." MSDN: Microsoft Development, MSDN Subscriptions, Resources, and More. July 2006. Web. 5 Feb. 2010. <http://msdn.microsoft.com/en-us/library/bb245671.aspx#jour8adopt02>. • Kielpikowski, Bob. "Outsourcing At Thomson Reuters." Telephone interview. 19 Feb. 2010.

23. References • "Salary Wizard - Java Developer." MySalaray.com. Mar. 2010. Web. 04 Mar. 2010. <http://swz.salary.com/salarywizard/layoutscripts/swzl_salaryresults.asp?hdSearchByOption=0&hdSearchByOption=0&hdKeyword=Java%20Developer&hdJobCategory=IT05&hdZipCode=&hdStateMetro=&hdGeoLocation=U.S.%20National%20Averages&hdJobCode=IT10000289&hdJobTitle=Java%20Developer&hdCurrentTab=&hdNarrowDesc=IT%20--%20Computers,%20Software&joblevelcode=>.

24. Questions ???