OUTSOURCING SOFTWARE DEVELOPMENT The Complete Guide to Outsourcing Software Development and Increasing Velocity, Agility and Innovation
CONTENTS 1. Who should read this ebook? 2. What is software outsourcing? 3. Offshore or Nearshore what s the difference? 4. Why Mexico may be your best option? 5. How to choose your Nearshore Partner? 6. What the On-Boarding process should look like? 7. How can your nearshore partner increase velocity? 8. About Tiempo Software Development 2 3 4 7 9 12 14 17
1. Who should read this ebook? So, who should read this ebook: The Complete Guide to Outsourcing Development and Increasing Velocity, Agility and Innovation? Who can this ebook help? If you are at a business that understands or is learning about the benefits of outsourcing or you are planning an outsourced project then keep reading. While Offshoring and Nearshoring become a regular business best practice, the reality is that most businesses are still learning about the Outsourcing Development industry. In recent years the industry has rapidly expanded, and so have the options available to businesses looking to add to their development teams. As a growing number of developing countries advance in the areas of Technology and Education, outsourcing is propelling the global economy forward faster than ever before. Are you in software? If you are a Chief Information Officer or a Director of Development then you will probably take something valuable away from this ebook. If you are a Chief Technology Officer or Vice President of Engineering or Development at a software company then this information can support you in gathering all the facts you need to take the next steps in outsourcing your development. Whatever you do, no matter what your role is at your business, if you are developing software for the web, mobile devices or for internal company use, this ebook can help guide you in your decision making process as you find ways to reduce your Time to Market and increase agility and Return on Investment. 2
2. What is outsourcing? You have probably heard of outsourcing before. More businesses are learning about the benefits of partnering with outside development talent as outsourcing emerges as regular best practice in software development today. Here are the basics Outsourcing is a practice in which an individual or business performs tasks, provides services or manufactures products for another business projects and functions that are normally completed in-house. While outsourcing has been used by businesses in the United States and Canada for decades, in the last ten years it has become synonymous with keeping pace with the constant advancements in technology and resulting user and consumer demand. Outsourcing development talent is quickly rising in popularity to partner on projects and functions that can be addressed more efficiently and economically beyond a company s borders. With outsourcing, more businesses are significantly reducing their overhead and Time to Market. Have you used Chat or Phone support lately? If you have, chances are you may have been speaking with someone in another country. These days it is normal to have a company from Europe supporting customers in the United States and depending upon partnerships with manufacturers in Asia. More multi-national companies are growing and emerging from the United States these businesses perform marketing, sales and distribution stateside, but outsource the rest of their business all over the globe. Consumers have been aware of this trend for years. They know their German car may have been assembled in Mexico. No one questions whether or not their Nike shoes were made in China. So how many people realize how much software development is happening abroad? Software development is on the rise all over the world, in places like Afghanistan, Malaysia, China, India, Kenya, Morocco and Costa Rica. And the trends grow stronger and empower a more abundant and diverse global economy every year.
3. Offshore or Nearshore, What s the difference? When businesses offshore development work they are partnering with a development firm that is overseas. Typically these offshore suppliers are in Asia, (India, Afghanistan, Malaysia, China, Philippines), Eastern Europe (Romania, Bulgaria, Armenia), or Africa (Morocco, Kenya and South Africa). When businesses use a nearshore development firm instead, that means they are working with developers in nearby countries like Mexico, Brazil, Costa Rica, or Argentina. Nearshore development is quickly becoming more popular with U.S. and Canadian based businesses looking to reduce spending on overhead and labor. Doing business with nearshore companies means working across more similar time zones; usually at a lower cost than the offshore alternatives. Also, nearshore development eliminates more language and cultural barriers that can create confusion and make it harder to hit deadlines. Proximity matters. Numbers for offshoring have been on a continuous decline since 2005, while nearshore outsourcing numbers continue to rise. More experts are connecting the shift in these trends to geographical proximity. Offshoring usually means lag time (often in excess of 12 hours) and less control over projects and deadlines. The distance and problematic timing also increase difficulties in communications. Even when longer time frames or issues connecting with the outsourced team are not apparent, the working conditions that offshore developers are subject to can mean a lower quality of life and subsequently, an impact to the ultimate software outcomes. Other complications of offshoring can include a lack of quality control and undeveloped legal and regulatory systems. 4
Return on Investment is everything. Why are most companies looking to outsource development in the first place? More businesses are looking to outsource in order to increase their Return on Investment this is another major reason why nearshore development is so widely used these days. Offshoring options may mean higher costs overall with management difficulties, problematic language barriers and more disconnect between teams on different sides of the world and opposite time zones. Time zone proximity reduces the number of hours or resources required to meet deadlines, significantly lowering the overall cost for each project. Culture can impact your bottom line. Having cultural affinity is a key component to any outsourcing partnership. While developers in countries all over the globe speak English, more businesses trying to increase agility by offshoring have run into serious cultural gaps and communication barriers. Latin America shares a border and a common history with North America that spans more than three centuries. This synchronicity is vital in supporting innovation and effective communications. Having cultural alignment promotes a smoother working environment between teams and usually means fewer complications along the way. And cultural alignment is much more than just sharing a common language and lifestyle. Offshoring to developing nations involves risks tied back to less concrete civil infrastructure, less developed legal and regulatory systems, and problems related to political instability and sensitive, intellectual property.
Reliable talent is growing faster close to home. In order to really weigh the differences between offshoring and nearshoring, it is important to understand the variations in development talent that are available. Traditionally, U.S. based businesses have offshored roles with lower salaries and necessary responsibilities to cost-effective locations around the globe, but as of late, the trend has been changing. Recently the Deloitte Global Financial Services Group cited concerns around future accessibility to skilled workers in nations like India. The study shares that just 10-15% of Indian college graduates are considered suitable for direct employment in the offshoring industry. The way businesses use outsourcing is quickly evolving to keep momentum with the constant flow of new technologies and growing user demands. Back in the nineties and early two thousands, American businesses relied on offshoring mostly for lower-level positions. Now, more of these businesses are relying on outsourcing for more robust and strategic roles as well. Taking the nearshore approach connects companies with developers in nearby countries like Mexico, Brazil, Costa Rica, or Argentina. Nearshore is increasing in popularity with U.S. based businesses looking to reduce spending on overhead and labor. Partnering with nearshore companies involves similar time zones and usually a lower cost than the offshore alternatives. Nearshore development eliminates excessive language and cultural barriers as well that can come at the cost of agility, creating confusion and making it harder to achieve scheduled goals and deadlines. Recent trends are setting the barometer. The trends have been moving nearshore since 2010 when Gartner ranked Mexico in the top eight for outsourcing development locations with a leading score of very good for both the labor pool and the cost value, (ahead of Brazil and Chile). 6
4. Why Mexico may be your best option Outsourcing with nearshore development is becoming a common practice for businesses learning about the convenience, cost, and time savings, but not all locations are created equal. Variations in cost and accessibility? Nearshore partners vary in cost, convenience and accessibility. Certain regions mean higher travel times and costs, and even a higher likelihood of those frustrating language gaps that challenge innovation and agility. Unfamiliar regions mean unfamiliar challenges. Also, regional market factors come into play in ways every business needs to consider. For instance, in Brazil there is a growing shortage of nearshore talent. While the Development talent is growing there, the government and local universities are competing as emloyers. This presents challenges for businesses that are looking to funnel ample nearshore talent with their bottom line in mind. Alleviate unnecessary costs and roadblocks. Expanding your development team in Mexico eliminates unnecessary outsourcing challenges. Mexico is closer than other nearshore options, meaning lower travel costs, more flight options and similar time zones for optimal collaboration. Another benefit of working with developers in Mexico is the lack of challenges with language barriers. Because of the country s proximity to the U.S. there are a growing number of English speaking professionals there. 7
Projects run on-time more often across shared time zones. Most of the country runs on Central Time for more convenient collaboration a main reason why more U.S. based businesses than ever before are looking to Mexico for their development needs. Sharing the same working hours eliminates unnecessary delays and inefficiencies and also brings a more stable and satisfied workforce. There is a growing pool of educated, technical talent. More of the universities and technical programs in Mexico are requiring professional English competence, and that is not a coincidence. As the market and global economy are constantly shifting, more U.S. based businesses are looking to Mexico for the agile business model that made them consider outsourcing. In fact, Gartner Inc. recently ranked Mexican IT at number 3 globally for offshoring options. The tech industry there is rapidly expanding at 3x the global average. More security when it matters. Partnering with businesses in Mexico allows for fewer compromises of intellectual property security. This is due in large part to the support of the Mexican government and the country s swiftly advancing infrastructure.
5. How to choose your nearshore partner? Nearshore options are quickly becoming a business norm for American businesses looking to add to their development talent without exhausting their resources. Choosing a nearshore partner also protects companies from running into time zone or language barrier difficulties that can halt deployments to a standstill. Knowing how to find the right outsourcing partner is important the ability innovate faster and a business s bottom line depend upon it, and not all outsourcing options are the same. Efficiency and the quality of outcomes can vary based on many different factors. There are four keys areas to explore in selecting a nearshore partner. Are they headquartered in the U.S.? It may not seem important, but having a domestic liaison to nearshore Development talent generally means fewer bumps along the way. It also alleviates unnecessary confusion since the partner operates under the same laws governed by the United States. This results in fewer monetary complications as well since the business uses the same currency. Finally, it can mean fewer communication gaps for a smoother and more agile development process. 9
Are they big enough to scale, but small enough to care? Partnering with a company the right size makes a difference. The ideal fit is usually an outsourcing company that is large enough to scale and support your business as it grows. With the industry rapidly expanding, there are constantly new outsourcing companies launching. Many of these outfits are still growing and may lack the resources necessary to support agility. At the same time, the right outsourcing partner will be moderately enough sized to ensure that their customers business is valued over the long term and clients are subsequently receiving the responsive they need for optimal outcomes. Large outsourcing conglomerates have less time to spend getting to know the unique and individual needs of each of their clients. Partnering with a development team that will act like an extension of your own is crucial. That requires them having a specific understanding of your company history, customers and goals for the future. Are they an established business that won t disappear? The nearshoring industry is quickly expanding in response to the growing demand; this expansion has become problematic in finding a suitable partner. Many Development outsourcing businesses take off virtually overnight and are gone almost just as quickly. Selecting a nearshore partner requires a thorough vetting process. It is important to understand how long a nearshore provider has been in business, what awards they have won if any, and what testimonials or whitepapers they can share to back their results. Examining the nearshore company s client list is a must. It helps to know who their largest clients are and what industries they focus on the most. Any nearshore provider should be able to confirm how long their current client base has been working with them and if their overall business has grown continuously or dipped over time. What does their onboarding process look like? Before selecting a nearshore partner it is vital to understand their specific methodology. The following questions can help to shape a clearer visual of how smoothly projects will go once outsourced: What is the company s methodology to empower a development team to deliver innovation? How does the nearshore business manage broad projects that are often complicated while still delivering a powerful end user experience? On governance, how well can they document their processes and commitments, and what assurances are in place to ensure the final results are accurate, reliable and repeatable? What are the performance indicators they ve established? How are they connecting with their clients and keeping them informed at every stage of each project? 10
Do they have an agile development model for faster ROI? Agile Development is the current approach to fast-tracking quality software and application development. It breaks all the parts of the project or application into smaller functionalities via stories. Stories are then organized on a central storyboard before the IT team tackles each functionality (one at a time) in order of priority. Unlike dated software development models that can take 12 months to implement for a realized Return on Investment, the agile method s bite-sized deliverables generate faster timeframes and profits. When vetting nearshore vendors, it is necessary to know how they will streamline the development process for quicker turnaround and resulting revenue. Do they use an Agile Development model for faster delivery to streamline software development and outcomes? 11
6. What the On-Boarding process should look like? Taking advantage of nearshore resources is an effective way to extend the project team (across the same local time zone, language and culture for collaboration), while saving on costs. When finding a partner, it is important to understand what their on-boarding process looks like and how it aligns with your own business expectations, processes, deadline and long term goals. These first steps can make a significant difference in bringing teams together and propelling them towards success. Businesses can maximize Return on Investment with an accelerated onboarding process; starting with nearshore resources out-of-the-gates with a minimal ramp up. Achieving this remotely may have its challenges, but there are several ways a nearshore partner can approach onboarding to reduce downtime and more effectively prepare both teams for success. Learning more about the business and industry Our first step is always examining what our clients do and what their industry requirements are. Different industries may have very different security and privacy requirements for their software. At Tiempo, our client base spans some of the most complex industries and we are experienced in navigating the requirements for industries like Financial Services and Healthcare. Reviewing the main requirements first We take a deep dive into the main project requirements, to understand the specific goals of new clients and how they will guide the remainder of the project. 12
Examining the technologies and languages used To ensure our clients are matched with a Development team that has the precise skill sets required, we review all of your expectations for the full Technology stack, including the language used, the platform or framework, database types, testing methods and more. Covering the skills required from the nearshore team Not only does Tiempo look for technical requirements in building out a client s team, we also look at experience level, communications skills, leadership abilities and background experience. Our team reviews these skills with our clients by order of priority to ensure we match them with developers that are in perfect alignment with the existing team and project goals. Looking at your project and what makes it different Tiempo walks through the overall project so every member of the client s team understands exactly what the client is looking to achieve and how they ll be contributing to those unique goals. Exploring additional requirements Because some projects are more complex than others, Tiempo supports our clients in covering any additional requirements upfront to ensure our team is prepared and running with the right strategy. Partnering with you with our custom recruiting process At Tiempo, we build our recruiting process around the preferences of our clients. Here are the basics that we cover for every new project: Team skills overview: Our exacting overview drills down to the specific skills needed in new team members. Order of hires: Is there a particular order that we need to follow in hiring team members? We explore the different levels of every project and starting priorities to understand. When the team should be ready to start: We ll cover the expectations for the team s start-date. Getting travel in order: In some cases, team members are expected to travel and meet onsite at the start of a new or during a project. We are dedicated to ensuring a smooth transition and our team members are able to travel with minimal notice. All of our developers have current visas. We also encourage our customers to visit any of our three development centers. In addition, based on our client needs and recruiting goals, we may peruse these final areas: Involvement in talent selection: Our clients have the option of being as involved as they d like in our interview and selection process. Interview team candidates: When our clients want to interview candidates themselves, we coordinate meeting times and communications tools to guarantee the hiring process is a smooth experience. 13
7. How can your nearshore partner increase velocity? When looking to expand a development team with Nearshore Development, businesses are not just looking to increase agility, but also velocity; they go hand-in-hand. What is Velocity? Velocity (V) is a crucial software performance indicator. Software Velocity can be defined easily: Velocity explains how much a given project team has been able to achieve over a defined period or iteration. Because no two Agile projects are alike, it is important to specify exactly what these units mean. Examples can include use cases, user stories, test cases, new functionality or bugs. Sprint is defined by the period of time in which the sprint is accomplished. For Agile development, this is usually around two weeks, but it can also be defined in hours. One of the greatest advantages of Agile software Development is its immense potential to increase Velocity. High Velocity levels promote consistent releases of product into the market, balanced Business and IT stakeholder goals, and more satisfied end users. Velocity measures how effectively a software development team is in completing their objectives (known as user stories in Agile Development), during a given sprint, or series of sprints. Just adopting the Agile development model is not an immediate solution for optimizing Velocity. Reaching strong Velocity levels takes an understanding of the concept and the factors that influence it. 14
How the Tiempo Quality System increases Velocity? Tiempo s Quality System supports previously unmatched levels of Quality, Velocity and Scalability. The proprietary development process was created to help move our clients businesses faster and farther ahead without consuming valuable resources. TQS combines best practices from enterprise, mid-market and cloud development into a single system that can be configured to a variety of Development projects. This model supports companies in growing faster, and mid-market businesses can easily customize the process to their unique needs without the challenges and uncertainty that comes from starting completely from scratch. Tiempo s proprietary agile product lifecycle management framework called Tiempo Quality System or TQS is composed of principals and best practices that ensure productive client and team interactions and as a result, efficient software development. TQS supports partnering businesses with the structure and information required to create, operationalize and scale with innovative, reliable software. The result is increased control and continuous improvement throughout the entire Development process. 15
How TQS started? Tiempo Development has brought together experienced thought leaders throughout the software development industry, including senior professionals who have executed a wide range of software launches under various circumstances and conditions. Together, these leaders assembled methods and processes necessary for the best possible outcomes. Tiempo has spent numerous years refining these results for our clients and their end users. In the process, we have standardized both Development and management. Tiempo has built an environment and discipline that supports governance and reliability, achieving predictable and repeatable results over time with the consistent application of these processes (systems, training, enablement, empowering teams to have resources and training). This way, Tiempo can provide the same discipline and results to each of our clients. What are the requirements for TQS? Our main requirement for leveraging TQS is to apply agile methodologies. This means having an environment conducive to agile practices and making the transition to self-organized teams. It also means relinquishing a lot of the command and control that was previously deemed necessary. What are the unique benefits? The primary benefits our clients experience from TQS are a higher level of quality, self-organized teams, and fast time-to-market. Higher quality software supports the alignment, transformation and enhancement of the development, deployment and support processes for a higher quality end product. In other words, higher quality software means better performance, and fewer unexpected challenges throughout its lifecycle. TQS provides a specialized team solution that is based on specific client requirements. These teams are both self-organized and cross-functional with continuous collaboration and communication for synchronicity, rhythm and consistency in delivery. These processes are smoother, streamlined and alleviate unnecessary obstacles that can prevent businesses from meeting deadlines and budgetary requirements. Interested in learning how to drive velocity and a faster-time-to market? Learn how we can fast track projects and increase your ROI within weeks by visiting http://www.tiempodev.com. 16
About Tiempo Development At Tiempo Development, we are making the business of software development easier and more affordable with a unique combination of a nearshore business model, agile methodology, and advanced talent management. Tiempo s proprietary agile product lifecycle management framework called Tiempo Quality System or TQS is composed of principals and best practices that ensure productive client and team interactions and as a result, efficient software development. 17