HOW OUTSOURCING PRODUCT / APPLICATION DEVELOPMENT IS CHANGING IN THE IT SPACE?

outsourcing

Change is the only constant! A paradox that is true to the core. But what is prompting us to discuss change, on a blog relevant to software and app development? Let me explain.

Almost 95% of the Fortune 500 companies have enterprise mobile apps and the segment is growing explosively in the consumer technology market. Mobile app development needs investment and time. However, the biggest and most difficult decision is whether to outsource the custom app for business or build it in-house.

There are definite positives when one builds it in-house, but the benefits grow multifold when outsourced. Infrastructure outsourcing is a global game changer as it solves two of the biggest problems for IT- Innovate and Renovate.

Outsourcing ensures that your business is not lagging in technology, and renovating old apps adds creativity and freshness, and outsourcing may perhaps turn your app into the next big thing.

There are three technical problems companies suffer from.

1. Shortage of tech resources
2. Project delays
3. Cost

Outsourced resources are a breath of fresh air, both in terms of technical expertise and being time-bound. Obviously, this means a fair amount of cost savings for a better quality output. The cost has some very important unknown dimensions too. Outsourcing started with the idea of cost savings and has evolved to form the pivot around which progress is mapped. Entrepreneurs are trying to understand how to shrink development cost without forgoing the product’s quality.

A professional development agency like ours will give you a healthy contract and great scope of work. We have seen change and how agreements have evolved in recent times. Let’s detail a few of the major changes that this industry has seen in recent times.

Full Scope Projects to MVP

The once upon a time story of full scope products have moved to MVP or Minimum Viable Product, where products are launched with only the main features, with minimum functionality. The secondary features development happens at a later date. This technique allows one to evaluate the market demand by deploying the product to early adopters thus eliciting feedback. This strategy maximizes customer information per dollar spent, by saving engineering hours, providing the product faster to the customers and by becoming a base for other products.

The testing phase evaluates and verifies the existence of demand, helping the leaders take the decision to move forward. MVP is hand in glove with agile methodology.

SaaS to ASM

In the era of Software-as-a-Service (SaaS), why would one even need application support and maintenance (ASM)? Is this the question that cropped up in your mind too?

In this ever-changing business environment, organizations face two challenges, first to reduce the operational cost of ongoing support and second, to stay relevant and responsive to market demands all at the same time. So, like you, most business managers prefer packaged and SaaS solutions. But this also means that a diverse set of skills are required to support and maintain the ever-growing portfolio of applications. Consider also the effort involved in ongoing release management with a new functionality or the configuration changes, updates and testing of the system. This gives rise to the trend of ASM.

Application support and maintenance services are flexible with a ‘pool of hours’ approach and are so designed to serve the needs of SaaS and other custom applications. The biggest benefit is that it can be tailored to an organization’s application landscape and saves on cost.

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Full Investment to Revenue Sharing Models

Times have changed and people have realized the benefits of not investing a large sum of money in a single application or product.

Traditional IT outsourcing contracts are typically based on a fixed price for a set scope of work. A one-time fixed price model meant that work would be completed and delivered, leaving the secondary development at the mercy of the agency for another round.

In today’s incentive-based pricing, vendors are rewarded for adding benefit to the service: cutting costs, boosting revenue, improving efficiency etc. Outcome-based pricing is based on delivering a particular result or “outcome,” rather than on headcount and the revenue sharing is a subset of this. The revenue sharing models on an app can be ‘cost per sale’ (per app download for instance or ad clicked) or others.

In a gain-sharing pricing model, the provider offers to find novel ways to reduce developmental costs over and above the services commissioned in the contract — and the client and vendor share in the savings. Here the vendor can make an upfront payment being sure of the savings. Shared risk-reward and consumption-based pricing models are also in vogue.

“The practical details for each type of revenue sharing plan is different, but their conceptual purpose is consistent: using profits to enable develop efficiencies or innovate in mutually beneficial ways.” In such a scenario, both profits and risks and shared making it a win-win for both sides.

Tactical to Strategic

As mentioned earlier, the main driver of outsourcing a custom application development was always the bottom line, sometimes as much as 50%. The higher quality of work was retained in the parent site. These are very tactical in nature, but is it so today? The relationship dynamics are changing at a much faster pace with more mutual respect on either side. Offshore teams started carrying more responsibility by going up the learning curve.

There are way too many strategic reasons today for choosing to outsource today. This decision helps in continuing focus on companies’ core business processes. A place like India also helps in gaining access to best in class capabilities and leveraging the global knowledge base, again a win-win. If we watch carefully, we see the flexibility, scalability and sharing the risk, continuous improvement, shared goals and objectives among few others associated with outsourcing. All of these point towards a strategic shift in mindset for outsourcing.

Faster go to market

He who gets it right and live first wins the market. It is easier said than done with the lack of skilled manpower. Again outsourcing is what comes to help with reduced production costs and faster go to market, amounting to 5% to 20% of the increase in the business value of the application.

Traditionally, outsourcing was attached with the stigma and go to market was never part of the strategy. Today, we see a dramatic shift the worldview on outsourcing, especially with third parties like Norjimm being seen as part of a strategy to innovate and bring products to market rapidly. Teams brainstorm with clients sites to give the application the best of what is possible today. The best of industry knowledge is brought to the table even before working on product specs and R&D. Outsourcing contracts have indeed become mature and accommodating.

Keeping all these in mind, isn’t it time you take note of us as one of the best-outsourced product development companies in India for your custom app for Android, custom app for iOS, web application, data engineering and more.

Norjimm is a leading Mobile Application Development company India. Over these years our dedicated team has helped a number of organizations in their new product development and helped them succeed their dreams. With the expertise in latest technologies, we have been able to create an everlasting impact and help various brand innovations great heights. Some of our prospective clients are like Acquia, HP, and ABN Group to name a few.

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