When Outsourcing Makes Sense

PMI Southern Alberta Chapter

Mike Griffiths is a consultant and trainer who help organizations improve performance through shared leadership, agility and (un)common sense. He maintains the blog LeadingAnswers.com.

Disclaimer: This article is based on my personal experience of software project development work over a 25-year period running a mixture of local projects, outsourced projects and hybrid models. The data is my own and subjective, but supported by thousands of industry peers I question while delivering training courses for PMI. I do not work for a local-based or outsourcing-based company. I have nothing to gain from favoring either approach, but I hope these thoughts are useful for determining some of the pros, cons, true costs and circumstances for when outsourcing is better or worse than local development.

To the uninitiated, outsourcing seems like a great idea. Software engineers are expensive in many countries, but much cheaper in other parts of the world. Since software requirements and completed software can be shipped free of charge via email and websites, why not get it developed where labor rates are much lower?

Coding vs. Collaboration Costs
The flaw in this plan comes in the execution of it when it becomes apparent that software development projects typically entail more than just the development of software. Writing code is certainly part of it, but understanding the problem, agreeing on a design, discovering and solving unforeseen issues, and making smart decisions and compromises to optimize value and schedule are big parts of it, too. This is the …

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