Unfortunately, nationwide spending on equipment and software shrunk by 5% in the second quarter of this year—56% more than was anticipated. It was the second straight quarter that spending in this category contracted. This is a signal for economists that production plans are being scaled back. These are not the kind of statistics that anyone wants to hear. When production is slowed, everyone feels it. We could see job loss and decreases in consumer spending—signs of recession.

We’ve positioned ourselves to overcome the slowdown. Economists can read the proverbial cards all they want with respect to decreases in software spending reflecting a production slowdown—but there are other reasons to spend money on software development. So despite what the economists are saying, we remain optimistic about putting our local experts to work for Kansas City area companies in need of outsourced development teams.

We know that businesses outsource software development for other good reasons, like:

• Increasing efficiency. Spending the dough on software solutions that allow reallocation of employee resources will enable a more efficient multi-tasking model. An outsourced software solution can decrease the burden on employees in multiple areas, allowing them to divide their workday in a way that allows them to do the work normally done by 2 or more people.
• Avoiding HR headaches and expense. Salaries, foibles, health insurance, time-off—just a few examples of what can be avoided by local outsourcing for software development.
• Doubt free prioritization and outcomes. Hiring an outside firm to take a project to completion doesn’t permit internal priorities to dilute efforts. In general, internal IT staff is routinely pulled in different directions as challenges erupt. End users constantly “opening tickets” for help with legacy systems is a prime example of this. If the engineers only had more time to work on the solution that would replace the legacy system in the first place… In many cases, outsourcing the project is more likely to get the project done on-time and with a superior outcome.
• Dedication and commitment. When a project is outsourced to a reputable software development firm, the chosen firm is 100% vested in the project. In a market like Kansas City—big enough to offer wealth of choice, and small enough for reputation (good and bad) to spread quickly—it’s a certainty that the right outsourced development firm will attempt much more than simply meeting the minimum requirements on a project. The right company will seek ways to exceed expectations, earning bragging rights, referrals, and repeat business in the process.

So lack of intent to increase production doesn’t preclude local software development as a solution to enhance business processes and, ultimately, drive cost reductions. On a basic level, a downturn in the economy means we need to do more with less. This is what local outsourcing is all about: doing more with the line of business application itself, without increasing headcount and headaches.

The study found that a small percentage—around 5%—currently outsource overseas. Ninety percent of those that do outsource do not intend to increase outsourcing levels and some of them actually intend to decrease overseas outsourcing efforts. Companies with more than 500 employees are more likely to outsource than smaller organizations.

What does it take to successfully offshore development work?  In our experience the best results are gained when companies first work with a “local sourcing” company to help manage the tasks to be outsourced.  Generally these companies have lots of experience working with offshore teams and can help you navigate around the pitfalls.

The moral of the story: If you are wanting to use offshore resources, leverage the experience of a local outsourcing firm to increase your chances of success.