Microsoft, Oracle, Siebel, SAP, Intel, Motorola, just to name of few, have moved parts of their development organizations offshore.

Why do they do this?

They do this for several reasons.

• Product release cycles are shrinking
• Technology and customer requirements continue to evolve, forcing companies to look at how effectively they have trained and re-skilled their development teams
• There are greater risks associated with relying on a technical talent pool from a single geography
• Resource requirements always fluctuate, making planning difficult

For organizations dealing with these challenges, the appeal of offshore outsourcing is growing, and not simply for the cost savings. The trend being seen by the various analyst organizations is that outsourcing is being seen as a business enabler. While reducing costs is still the number one reason that companies look to outsource, freeing up internal resources to focus on more critical initiatives has emerged as a key factor.

Companies that are thinking about outsourcing will want to consider a variety of approaches before making a decision. In this paper, we offer a brief review of the typical offshore models. We will focus in on one in particuliar the Offshore Development Center Model. We believe that this model is the most effective for the small to medium size organizations.

OFFSHORE OPTIONS

There essentially five approaches to consider when considering moving software development and maintenance work offshore.

There is:

• Tactical Outsourcing
• Offshore Development Center (ODC)
• Build Operate and Transfer (BOT)
• Do It Yourself
• Acquisition

For the typical small to medium enterprise there are essentially two choices. Tactical Outsourcing or the Offshore Development Center.

Tactical Outsourcing:

Contracting out your development work to an offshore vendor means outsourcing on a project-by-project basis.

• You avoid the cost and challenge of updating your organization’s technical skills every time a project requires a special capability.
• As your development cycles ebb and flow, you are able to staff your projects with appropriate numbers of low-cost resources.
• If performance becomes an issue, you are able to terminate the outsourcing relationship
• Pricing is based on project scope – either time & materials or a fixed bid.

ODC:

Like tactical outsourcing, an ODC provides your company with an extended development arm that already has space, infrastructure and people. The important difference is that the ODC provides you with resources that are 100% dedicated to your development work for the length of time you desire. This creates a more stable and reliable production environment and gives you the workforce you need to support your ongoing development programs. It also gives you cost benefits

• Dedicated resources are made available to you for a flat rate based on the number of developers you need
• You commit to a fixed time period and from that time initial time period you can add or subtract from your minimum commitment
• You mitigate your risk in hiring and building a team
• Very little of your management bandwidth is required to get your teams up and running
• You have access to a wide range of skills and technology expertise
• You retain continuity of business and process knowledge around your applications and users

When built within or in tandem with an established organization such as BridgeQuest’s facilities in St. Petersburg, Russia your timesavings and cost savings can be dramatic.

Conclusions:

Companies, who have a longer-term view, should consider an ODC model. Unlike tactical outsourcing, an ODC is a long-term relationship that provides a ready team of offshore developers for ongoing program execution - a relationship managed by experts who understand the local culture and can deliver the most value to your organization.

ODC’s built with established organizations further optimize the model:

• Full access to physical location and infrastructure day one
• Access to “flex” resources for special skills and variable workload requirements
• Standing process maturity, which accelerates software development, knowledge transfer, project management, and quality assurance

ODC’s retains long term flexibility as market cycles, corporate development goals, and economic conditions continue to evolve. ODC’s ensures a safe and effective means of remaining competitive in the global marketplace.