Why would company like to outsource application development? Why would company hire secondment staff in stead of permanent staff?
Why would company like to outsource application development? Why would company hire secondment staff in stead of permanent staff?
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To lower costs. In my country most development work is done for outsourcing companies. You'd argue the quality you get back is "lower", that might be true in some situations, though I've found myself fixing fuck-ups from developers that make 2 to 3 times more money, most likely not because their knowledge or capabilities surpass mine, but because of where they happen to live and work.
Most of development work is outsourced to your countries. I do not think the lower quality is due to the knowledge and capabilities. As you know, software is not a technical stuff. It is a people stuff which is developed to solve real problem.
Once outsourced, the control of software development is decreased. The requirement fails deliver to developers.
One more importance, Software is a never-completed software but only released. Outsourcing would make longer for the release cycle of software.
Sometimes to lower the costs, the company wont need HR resources and other costs to support an outsourced team. On certain countries is too expensive to hire and fire people, in case of projects where you know will probably dismiss or reduce the teams after some time the other company will reallocate to other projects or deal with this burden.
Companies outsource software development for a lot of reasons. As plenty of the comments below indicate, sometimes it's to do with cost.
Sometimes it's to do with scale. Got a big deadline to meet? Add a few feet to the factory floor to get the software machine moving faster.
Sometimes it's to do with specialization. Got a particularly difficult, niche, problem? Grab some folks who know how to solve it, and have them up skill your team as they go.
Sometimes it's just to get started. Don't have a development team yet, but have a great idea for a product? Hire a team of experienced contractors and have them start the work while you do the work to hire permanent staff.
Some companies also take the view that the team that builds an application should shrink one the application is "done". It's completely flawed reasoning, but this is also a driver to outsource some dev roles in a team and only keep a few permanent folks to support the application in the long term.
Finally, I know that there are many reason making a company outsource. For a outsourced employee, it is just a depressed job for different aspects.
For example, implementation make difficualt when requirement gathering as the outsourced employee do not know well the business. It make change repaidly and may complete destroy the architecture. Employee cannot find future as the jobs are just temporary and easily changed.
One reason: Flexibility. You can ramp staff up / down depending on your specific project needs. Allows you to use funding for large projects to beef up your teams. Once projects are complete you can keep just your core staff for maintenance and enhancements.
I have worked in an outsource servicing company for several years and moved to another company which is also like a "Factory" for companies for their application development. I say that this is a cleaver strategy, why? of course its the cost.
Imagine that you have a hotel. Of course your primary business is hospitality, your room, service, etc. But, don't forget there is restaurant for that hotel which is quite an important infrastructure.
Sometimes, you may want to hire a permanent restaurant staff, but it will cost you more:
While if you go to a say "Professional" group that provides experienced, hands-on, mature Chef's that can adapt easily and have been doing their job for years, of course you'll get excellent high quality service with similar cost.
However..
There is downside to this. Companies should be careful not to choose bad outsourcing services. Many outsourcing companies (at least in my country) tend to be a greedy - money oriented. They just hire fresh graduates or people looking for jobs without having to test/audition/interview them and "sell" those people to their clients.
Whereas a good outsourcing service (my former company :D) spent/invest in people development. If company sells product, of course you want your product to be the highest quality. If company "sells" people, of course they would want to have high quality people.
Outsource is not always that bad. I have found many companies that have long term relationship to outsourcing services. Companies just need to find the right outsourcing services.
Because they're usually willing to accept less money for more work.
Do they really reduce cost?
Yup.
But in general the salary of secondment staff is higher than permanent staff.
Yeah but you don't pay directly the salaries of the outsourced developers. You pay the amount stipulated in the contract for a job X. Usually the contractors have multiple clients and use those money to pay their employees's salaries.
Also I'm not sure that the salaries are higher. Salaries for developers, in the US for example are among the highest of all countries I can think of. I'm not sure that the salaries of the contractors are higher than those of someone you would have to hire.
I thinks secondment staff may not have multiple clients. It is very similar to contract job but the head count is under different company
It's so much cheaper. My company is currently outsourcing their IT department, throughout the whole corporation, and it's saving them millions.
Outsource to other country or outsource to third party company? I just wonder if it can save cost.
Outsourcing make me quite depressed for my future.
Unfortunately, both aha. Outsourced to another company in a different country.
But the one thing I will stress, these organisations do not require quality development work. It has been raised multiple times that they will not get the same level of quality as they did before, but they believe that the benefits outweigh the business risks.
Development will be the next "office job", so it's not going to go away. In fact, it's the old corporation mentality that is doing this, and that mentality is fading very fast.
In summary, I wouldn't worry: You're in one of the safest industries to be in, as long as you keep being good as your job :)