Competitive pressures, access to specialized resources and fiscal incentives, in particular, drive the existence of application development outsourcing.

Corporate cost reduction initiatives
The first and probably most compelling reason to outsource is the promise of cost reduction. Savings in the neighborhood of 25-40 percent are not uncommon and attract the attention of procurement and "C-level" executives.

Access to alternative, lower-cost labor with world-class skills
Most IT professionals agree the biggest expense in any environment is the cost of people, so it is logical to look for a less-expensive alternative to very expensive staffing. Not only are the offshore technicians available at a lower cost, they often have the added bonus of a much higher CMMI certification.

Increased competitiveness/pressures to reduce time-to-market
Application development outsourcing can allow your company to virtually expand staff to address time-to-market demands without recruiting or taking on the future costs of new full-time employees.

Dwindling resources
Companies, suddenly faced with diminishing resources due to a retiring mainframe staff or downsizing, consider outsourcing to maintain new development and maintenance of their core business-critical applications.

"Silver-bullet" solution to existing problem
The ultimate silver bullet: Make it someone else’s problem!

"You can outsource the work, but not the responsibility" - Anonymous

Whatever your company’s justification, a successful outsourcing engagement is contingent on planning, due diligence and measurable success criteria. Those companies experiencing profitable outsourcing partnerships often have the following characteristics in common. They:

• gain a deep understanding of how the application runs today; as well as what the long-term expectations are prior to awarding the bid.
• establish a good CMMI process connection and solid communication surrounding requirements with the chosen outsourcer.
• author a contract containing agreed-upon performance, quality and complexity metrics. These metrics determine intermittent and final success criteria.
• use a phased approach. Arrange ongoing checks and balances based on agreed-upon requirements and benchmarks using the metrics mentioned above.
• establish an explicit exit strategy early in the process. Don’t wait until it’s too late to sever the partnership without penalty.
• remember that troubles travel. If an application is failing today, outsourcing will only move the mess.

"Outsourcing a troubled, poorly managed and poorly understood IT function almost always leads to disaster."
"The Pros & Cons of Outsourcing IT" White Paper, The Rochester Group Quoting:
Outsourcing Information Technology, Systems and Services by Robert Klepper
and Wendell Jones (New Jersey: Prentice Hall, 1998.)

In short, it’s essential that your IT professionals benchmark what they’re handing over to your partner, so they can later measure and validate what they’re getting back. Companies that do not employ a solid plan upfront (one in which includes tangible measurements of success or failure) may end up with inaccurate cost-savings predictions, unplanned expenditures, unacceptable deliverables and money down the drain.

Possessing valid performance, complexity and quality metrics will ensure your application outsourcing engagement stays in control, protecting you against costly unknowns. These metrics are available to your company today by using the mainframe tools you may already own.

Compuware Abend-AID Products – Application fault management is an important component when creating a baseline for an application before outsourcing development; otherwise, you have no way of knowing if the amount of failures occurring is in line.

Compuware File-AID Products – Data Privacy is imperative when shipping applications and related data near or offshore. Data analysis, modeling and management promote a better understanding and knowledge transfer of your data’s undercurrent and the nature of the application’s supporting data.

Compuware Hiperstation (QACenter) – Exploit the power of using reusable script assets to facilitate an automated application knowledge transfer as well as to drive the validation process between your company’s IT application experts and outsourcing partners.

Compuware Strobe Products – The code may be fresh, but is it running optimally? Capture before and after performance metrics to verify the newly engineered application runs as promised.

Compuware Xpediter Products – Use the Xpediter family of products to baseline code complexity prior to an outsourcing engagement, and to verify coverage when taking delivering of new or changed code from development partners.

"India is riding a boom in outsourcing. A report released by McKinsey & Co. and Nasscom
has forecast that the country’s outsourcing industry can grow at an annual rate of over 25 percent to
generate export revenue of about $60 billion by 2010."-Computerworld, January 23, 2007

To see if you qualify for a no-cost analysis on how to make your outsourcing cost-saving predictions a reality – send us an email at vomail@compuware.com.