A few years back, Independent Software Vendors (ISVs) began to explore the options of outsourcing non core activities to outsourced product development firms. They realized that this way they could concentrate on product ideas and marketing which are the core activities. What further heightens the drive to outsource product development is the rising wages and reduced product life.
The lull in the economy is a reality however its also a fact that to stay competitive ISVs are now under more pressure to cut down product cost and the time to market apart from the technical aspects of reducing product life cycle, preventing product from reaching a stage of technology obsolescence. Outsourced Product Development can still make all this possible without feeling the pinch of the economic recession.
This explains why as the world frets over the current global economic meltdown and the impending recession, the Indian outsourced product development firms are optimistic. They foresee a surge in demands once the crisis is over. Curious as it may sound, the current turmoil hasn’t been able to affect the Outsourced Product Development companies in India.
According to a recent report by Business Line, the outsourced product development (OPD) firms here are gearing up for an anticipated surge in outsourcing once the dust settles down.
Various industry sources confirm that the recession has not affected the sales figures yet. Reportedly a number of new clients have been added to the portfolios of several Outsourced Product Development (OPD) firms during this period. The business from the mid size as well as comparatively large ISVs continues to grow. Only the small ISVs are holding back new projects since the venture capitalists funding them have been more or less affected by the turbulent times.
The overall reaction of Indian outsourced product development firms to the slowdown in the economy is that of watchful optimism. Almost all of them are looking forward to the proverbial silver lining that every cloud has.
Friday, November 14, 2008
Thursday, October 23, 2008
Trends in Mobile Computing
Mobile computing, communications and services have come a long way. In a span of only 20 years, wireless services have reached almost 50 percent of the world’s population. There are now more than 3 billion mobile subscribers globally, a number expected to grow to 4.5 billion by 2012. Each second around the world, four people are born … and 36 mobile phones are sold.
Yet even in the wake of this growth and popularity, phone manufacturers, service providers and others in the mobile industry face a number of stiff challenges. Competition is more intense than ever and profit margins are being squeezed. The pressure on companies to differentiate themselves through innovative services—created and delivered at breakneck speed—is rising. And the pace of change will only increase.
Based on observation, and on Accenture's experience in the mobile industry, here are the top eight mobile technology trends to watch—trends that will affect usage patterns, industry positioning and opportunities to achieve high performance in the mobile computing industry.
1. Unified-memory-as-a-service provides wireless memory on demand
Wireless broadband will be a significant driver of mobile usage in the years to come. At the same time, the rich, multimedia experiences enabled by wireless broadband will strain the memory capabilities of the typical mobile phone. Most mobile devices have a capacity of only about 128 MB to 256 MB, compared with the many gigabytes of memory in the typical PC today. To respond to storage and access needs in a wireless broadband world, unified-memory-as-a-service will become important. Such a service will provide unified, remote memory capacity accessed over the wireless Internet. Users will be able to create and use remote memory from the device of their choice, delivering an experience similar to using local memory residing on their device.
2. Mobile surface computing makes the device interface more powerful
Picture an electronic, touch-sensitive surface that can recognize physical objects and allow hands-on, direct control of content such as photos, music and maps. With natural and intuitive hand movements, the technology enables users to interact with the objects or content, manipulate information and share it. That's surface computing, and it promises to revolutionize many industries, including wireless—especially the manner in which mobile devices are designed and used. One surface on today's mobile devices is already electronic: the screen. Other major surfaces on the device will also become electronic. The device will become, in effect, a series of electronic surfaces capable of interacting with other electronic surfaces, transforming the way mobile devices deliver multimedia experiences.
3. Widgets improve the mobile user experience
Widgets are self-contained, portable chunks of software that users can install and use quickly and easily on their desktops, set-top boxes or mobile phones. In the wireless environment, widgets will become increasingly essential as they enable richer Internet experiences without the need for complex keying in of information—something difficult to accomplish on a small mobile device. Widgets will evolve into an end-to-end framework that will help users define and personalize the Internet data they need. The framework will search, locate and extract this information from various sources on the Internet. Personalizing the delivery of information and capabilities using widgets will also be important. For example, a widget functioning as a virtual personalized assistant could interact with users, taking the mobile experience to the next level of value.
4. Applications and devices constantly maintain the best connectivity for users
Mobile connectivity is a complex proposition. In the current wireless world, many different technologies—from 2G to 3G to 3.5G to 4G—co-exist uneasily. Currently, Unlicensed Mobile Access is the communications standard that makes these technologies work together. It holds the signal for the device until that signal begins to deteriorate, at which time it tries to make a new connection and then break the old one. This connectivity method will change in the future, given the rise of Internet protocol-based networks. The devices will be able to handle IP connectivity over multiple access technologies. The applications themselves will decide the particular route that data should take over different technologies to deliver a compelling Internet experience to the user, and that decision will be automatic and entirely transparent.
5. Mobile content management frameworks help manage the risks of mobile content
User-generated content and social networking are now seeing explosive growth, both in a PC-based environment and a mobile one. While this growth is benefiting the industry at large, there are several issues and obstacles that have surfaced—challenges related to user behaviors, practices and the law. User-generated content, or content shared through social networking, presents risks of privacy invasion, defamation, piracy, pornography or content that may be illegal or in some way morally questionable. These risks can be mitigated in part through advances in mobile content management systems, or MCM. MCM is an end-to-end framework that embeds rules and regulations about content and usage at different control points in the mobile computing system—mobile phones, base stations, gateways and so on. The rules and regulations would be enforced through technology in various situations based on context. A financial services institution or confidential research facility might have the ability, for example, to disable the camera feature of a mobile device.
6. Unified user profiles simplify interaction with the mobile Internet
To access the world of rich, Internet-based services, a user needs to subscribe to each service by creating a user profile. This means a typical user must manage several profiles and map them to the appropriate service. In the future, helped in part by biometric technologies that identify users by fingerprints, iris scans or voice prints, identity management and user profiling will become simpler, which, in turn, will drive mobile usage. Profile management services will be available via the Internet. Users will be able to create a profile on a mobile device and upload it to a Web-based server. This profile will then be used across various subscriptions—enabling a user to retain personal data while shifting services easily from one device or service provider to another. Profile management services will also enable the most relevant information to be delivered in the most meaningful format, at the appropriate time and to whichever device a user so chooses.
7. Mobile security gets serious
As mobile computing rises in popularity—and as the quantity, sensitivity and interconnectivity of information increases—expect the prevalence of mobile viruses and hacking to rise as well. To respond to this challenge, which is a threat both to individual users and to industry growth, security will take on a more holistic approach. Security will encompass infrastructure and corporate data, with mechanisms and services in place to detect and recover from attacks. Mobile security will also extend to end-user devices and user data, and will become a key aspect of the quality of service that users will be willing to pay for. There will be a collaborative effort by each player in the mobile value chain to make security more effective, but it will be primarily driven by the service providers. New security systems will assess threats and risks in real time and adopt appropriate security mechanisms to counter such threats. The anti-virus and vaccines industry will get into the action too.
8. The wireless industry goes green
Issues of environmental sustainability are growing in importance throughout the global business community, and "green computing" is now an important trend in the information technology industry. Current mobile networks consume about 43 billion kilowatt hours of energy a year, so there is pressure on the mobile industry to "go green" as well. The design and development of power-efficient software and hardware for mobile devices will become increasingly essential. As software matures, common functionalities will get pushed into the silicon while heavy computing will get offloaded to software-as-a-service servers. Becoming more energy efficient makes good business sense, in addition to being good for people and the planet we live on.
If there is a dominant theme in the eight trends reviewed here, it is the centrality of the user experience—the rise of the powerful consumer. From transparent connectivity to more intuitive interfaces to easier profiling and identity management, making mobile computing easier, richer and more powerful is an important enabler to generating higher rates of mobile usage.
Mobile devices are becoming richer in functionality, and the relevant technologies continue to provide almost unlimited potential. Now, companies need to accelerate their ability to provide innovative, value-added mobile services. As this occurs, the day may not be too far off when a mobile device supplants the computer and the television as the electronic device most central to a person's life. That will signal the arrival of a world with almost unlimited opportunities for companies in the mobile industry to drive toward high performance.
Thursday, September 25, 2008
Upcoming Favourite Destinations for Offshoring to India
The advantages of outsourcing to India can be summed up below:
India is a talent-rich country: With the basic education system geared toward mathematics and science at early levels, Indians possess rich technical expertise. In addition, India also has a large number of educational and training institutes of international repute, offering some of the best programs in the world. The presence of renowned technical and business schools in India ensures the availability of professionals proficient in diverse domains.
Proficiency in the English language: As a direct result of the century long British colonial rule in India and the current education system being based on British standards, Indians are proficient in the English language. The lingua franca of the world, English is also the business language of India. Furthermore, all government documents and reports including the National Budget are prepared in English. India alone produces 2 million English-speaking college graduates and 300,000 post-graduates annually
Information Technology is a top priority for the Government of India: The Indian government has established a National IT Task Force to promote IT in the country. In addition, a separate Ministry of Information Technology was set up to expedite swift approval and implementation of IT projects and to streamline the regulatory process. Some of the measures taken by the Indian government include:
The Information Technology Act of 2000 (an Information Technology Bill passed in the Indian Parliament in May 2000) which brings E-commerce within the purview of law and accords stringent punishments to "cyber criminals". With this, India joins a select band of 12 nations that have cyber laws.
Software Technology Parks of India (established in 1990) offer state of the art infrastructure and various fiscal incentives and concessions to encourage foreign investment and promote software development in India.
India has state-of-the-art technologies for total solutions: Offshore assignments have moved up the value chain - from data entry to large and complex turnkey projects of 200 to 300 person years. A study by the Export-Import bank of Japan cites India as having excellent investment potential and expected to grow in the next 10-year period. A convergent network has been created by the intertwining of the ISP, Telecom, VSAT, Cellular and networking sectors. In addition, India's large business houses and Public Sector Units are working towards creating greater bandwidth availability.
Expertise in International Processes and Systems: Indian professionals have cultivated expertise in global methodologies owing to the large software exports (95 countries around the world) and the phenomenal growth of the BPO sector in India. In addition, the presence of large global corporations (in diverse fields ranging from IT, hospitality, manufacturing, finance, education to healthcare) such as Microsoft, GE, Dell, etc have enriched and augmented Indian skill sets, thereby providing Indian professionals with a global outlook and expertise in diverse domains and international methodologies and processes.
Adherence to International Standards of Quality: India joined the International Monetary Fund (IMF) on December 27, 1945. In addition, India is a subscriber to the Special Data Dissemination Standard of the IMF. Indian organizations value the ISO certifications. To safeguard Intellectual Property Rights, India became a member of the General Agreement for Tariffs and Trade (GATT) and, Trade-Related aspects of Intellectual Property Rights (TRIPS). India is a member of both the Berne and the Universal Copyright Conventions. Of the 23 software companies in the world that have achieved the prestigious SEI-CMM Level 5, 15 of them are Indian. India also has a high number of ISO-9000 software companies in the world (soon to be the highest, according to different news and industry reports)
Strong understanding of international affairs and diverse cultures: Since itself India is a large diverse country; Indians are adept at working with people from diverse cultures and backgrounds. In addition, Indians in general keep abreast of international news and events through international media including CNN, BBC World Service, The Wall Street Journal, Time magazine, The Economist, and several other international news journals (available in India through print media, television and the internet). In addition, Indians (usually being multilingual) are skilled in learning different languages and as such some of the international languages Indians are proficient in besides English include: French, German, Spanish, Italian, Russian, Arabic and Japanese.
Memberships in International and Regional Associations: In order to build an atmosphere of peace, goodwill and harmony as well as to promote international business, India is a member of prestigious international and regional associations including The United Nations (UN), The International Monetary Fund (IMF), The World Bank, The World Trade Organization (WTO), The Association of South East Asian Nations (ASEAN), The South Asian Association for Regional Cooperation (SAARC). India also maintains free trade agreements with different countries.
Trade Promotion and Business Advisory Councils: Export Promotion Councils (EPCs) have been set up for the purpose of promotion and development of exports from India. EPCs are non-profit organizations providing information and assistance to their members in order to boost exports. At present there are 19 EPCs and 9 Commodity Boards in India. The Indian Trade Promotion Organization (ITPO), a multi-product and non-sectoral service organization, helps in export promotion efforts mainly through trade fairs and other export development programs in comparatively less explored markets. In addition, Industry Associations such as ASSOCHAM, FICCI, CII and FIEO at the national level, and industry specific organizations assist members in export promotion. In addition, several countries seek to forge business alliances with India recognizing India as a both growing market in terms of service provider and consumer. For instance, the U.S.-India Business Council established in 1975 by the governments of India and the United States, is the principal U.S. industry voice promoting policy change to deepen and strengthen bilateral commercial ties between the two countries.
India offers a stable democracy and economic growth: India has been a stable parliamentary democracy since independence in 1947 and is one of the world's 10 fastest-growing economies. The Indian service sector contributes a massive 51 per cent to India's GDP. Within this category, the most promising is Information Technology development, which grew at an amazing rate of 40-50 per cent every year during the 1990s.
Wednesday, September 24, 2008
Software Product Lifecycle--A Visual Overview
Product Lifecycle Management (PLM) deals, as the name implies, with the entire lifecycle of a product. A lifecycle may be divided into many different phases depending on the level of detail. The PLM mindset is focused on the product in the entire lifecycle, which means that the view is different from the traditionally division in functionalities and silos in a company. The PLM view follows the product from the first concept to disposal and recycling. The traditional horizontal view is therefore said to be changed to a vertical view. I would define a full PLM solution to be when information relating to the products flow across the enterprise and people collaborate around it.
Market Analysis on Outsourced Product Development
Commercial-Software is as different from custom software as commercial real estate is from residential. Would you turn to the developer who just built your home to build an office park? Unlikely, software built for multiple users is like property built for multiple tenants. You’re not solving the needs of a specific family but of the market in general. Similarly the tools, training and methods are entirely different. Increasingly software companies are waking up to this fact and rather than turning to general IT outsourcers, the same companies that made a business building custom software, they are now starting to turn to specialist that exclusively build and maintain commercial software products.
NASSCOM (National Association of Software and Services Companies), the organization representing Indian IT and services businesses, refers to this new industry as the ‘outsourced product development (OPD)’ market. Not so long ago, NASSCOM revealed the results of a study it jointly conducted in collaboration with US-based consulting firm McKinsey, which predicts that the market would balloon from $350 million in 2003 to an incredible US $8 billion by 2008. Some VCs estimate that OPD could in fact exceed $10 billion in this timeframe. If one assumes that a growing number of software companies are sending a growing percentage of their product offshore then it’s not hard to swallow these dizzying growth rates.
Increasingly new startups are capitalizing on the weightlessness of global-delivery to emerge as serious challengers to well-known organizations. These organizations start their life in a similar way to fables-semiconductor companies but having no manufacturing capacity of their own but in stead turning to the growing number of companies that cater to their very specific needs.
In a radical departure from the business model of the large software companies, these startups neatly sidestep expensive propositions such as opening development centers in prime locations such as Bangalore, by forging partnerships with firms that do this and only this for a living. These firms support the entire product-lifecycle encompassing everything from researching new product concepts, designing, engineering, testing and support.
The other major drivers are the VC firms — often the final trigger in the startup decision — for whom such high-potential startups are a veritable bonanza. By risking a very most sum, they can finance a startup that could yield rich dividends within a relatively short gestation time…something few other prospects can come anywhere close to offering.
NASSCOM (National Association of Software and Services Companies), the organization representing Indian IT and services businesses, refers to this new industry as the ‘outsourced product development (OPD)’ market. Not so long ago, NASSCOM revealed the results of a study it jointly conducted in collaboration with US-based consulting firm McKinsey, which predicts that the market would balloon from $350 million in 2003 to an incredible US $8 billion by 2008. Some VCs estimate that OPD could in fact exceed $10 billion in this timeframe. If one assumes that a growing number of software companies are sending a growing percentage of their product offshore then it’s not hard to swallow these dizzying growth rates.
Increasingly new startups are capitalizing on the weightlessness of global-delivery to emerge as serious challengers to well-known organizations. These organizations start their life in a similar way to fables-semiconductor companies but having no manufacturing capacity of their own but in stead turning to the growing number of companies that cater to their very specific needs.
In a radical departure from the business model of the large software companies, these startups neatly sidestep expensive propositions such as opening development centers in prime locations such as Bangalore, by forging partnerships with firms that do this and only this for a living. These firms support the entire product-lifecycle encompassing everything from researching new product concepts, designing, engineering, testing and support.
The other major drivers are the VC firms — often the final trigger in the startup decision — for whom such high-potential startups are a veritable bonanza. By risking a very most sum, they can finance a startup that could yield rich dividends within a relatively short gestation time…something few other prospects can come anywhere close to offering.
Choosing a Product Development Partner--These questions can help
| I usually share this article with most of my clients, who are looking to outsource their system development and application programming. Perhaps a leading-edge technology start-up, very knowledgeable and looking to strengthen their product offerings. Or a very large enterprise that has a one-time requirement for very capable custom software. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The search for third-party assistance can quickly become tedious and confusing. Every outsourcer they meet or send email to affirms that they are the best of the breed, faster, cheaper, that they have exactly what’s needed before you even send them a formal Request for Information (RFI). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| There are so many different types, you find out – freelancers, small companies, local contractors, full-service domestic organizations that are big names in the IT industry. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
But they have also heard about more affordable rates and efficient delivery models of India-based IT companies, and finally, dual-shore companies with onshore as well as offshore capabilities.. Herewith forty hardnosed questions to weed out the pretenders from the achievers and make sure the integrated service provider you partner with can and will meet ALL your needs.
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Monday, September 22, 2008
Predictions on how Indian Outsourcing will be affected by recent market gyrations...
It is my humble prediction that Indian outsourcing will grow even faster but folks in India who are starting to become competent will be displaced by freshers...
When American companies lose money, they start to tighten their belts and find ways to accelerate expense reduction where outsourcing to India is one potential solution. The challenge in India though is that as the currency of the US dollar declines, it becomes more difficult to support the salaries of higher-end IT workers in India and they too will also have to practice expense reduction.
If you are in India and have crossed the five year mark and more importantly have transitioned out of being technical to become a form of middle-management, then you can expect your job to be in jeopardy. Indian outsourcing firms will have to leverage the same playbooks as American companies in the 90s by cutting out folks in the middle.
My prediction also states that India will need to eliminate many of those who are really talented and were compensated for their abilities and will need to replace them with freshers who are cheaper and available for half of their salary.
Unlike America which used to have a culture of the employer caring for their employees, India never really adopted this way of thinking and will think of their talent as more expendable. Executives in India will figure out ways to make folks work more, get paid less and ruin any opportunity for work/life balance.
The key is whether folks in India will not repeat the mistakes of American IT workers and seriously consider unionizing...
When American companies lose money, they start to tighten their belts and find ways to accelerate expense reduction where outsourcing to India is one potential solution. The challenge in India though is that as the currency of the US dollar declines, it becomes more difficult to support the salaries of higher-end IT workers in India and they too will also have to practice expense reduction.
If you are in India and have crossed the five year mark and more importantly have transitioned out of being technical to become a form of middle-management, then you can expect your job to be in jeopardy. Indian outsourcing firms will have to leverage the same playbooks as American companies in the 90s by cutting out folks in the middle.
My prediction also states that India will need to eliminate many of those who are really talented and were compensated for their abilities and will need to replace them with freshers who are cheaper and available for half of their salary.
Unlike America which used to have a culture of the employer caring for their employees, India never really adopted this way of thinking and will think of their talent as more expendable. Executives in India will figure out ways to make folks work more, get paid less and ruin any opportunity for work/life balance.
The key is whether folks in India will not repeat the mistakes of American IT workers and seriously consider unionizing...
Thursday, September 18, 2008
Product Development V/S Application Development
Outsourcing "non-core" activities to gain economic advantage has now become an essential constituent of any winning business stratagem. Nevertheless, as the industry matures, what constitutes its "core activity" is undergoing a change and is a constant debatable topic.
For Instance
- Nike outsources manufacturing of shoes
- Asian Paints,
- GE out sources manufacturing of F-16 engine part to an organization in
The industry is in a maturing phase of virtual organizations, where HR, Finance, IT, operations, marketing and in some instances, even idea generation is being outsourced.
The equilibrium as to what constitutes core function continues to change.
Today, organizations have understood that manufacturing alone does not provide differentiation, therefore manufacturing is widely outsourced. Companies like Asian Paints have started building services around products while moving in the direction of outsourcing the manufacturing process, as non-core activity.
On similar lines, Independent Software Vendors(ISVs) have started looking at outsourcing product development, labeling the activity as " Non-core" while concentrating on product ideas, marketing, financing, customer relationship as core activity. The drive to outsource product development is further heightened by rising employee cost, rising attrition rate and reduced product life.
Steps to Start a Outsourced Product Development Engagement
Though still viewed as core activity of an ISV and with issues remaining around Intellectual Property (IP), doubts over its feasibility and success of an outsourcing engagement, a piece meal approach to outsourcing product development and then incrementally increasing outsourcing product development is best the recommended approach.
Product life cycle typically involves:
- Development
- Enhancement
- Re-engineering and migration
- Support and testing (L2&L3)
To start with, ISVs can look at outsourcing one or more of above activities - better still, the ISVs can look at outsourcing one of above activities in sub-module of their product.
Startup companies, VC funded companies should be looking at outsourcing entire product development lifecycle and concentrate more on defining, marketing and packaging of product than product development.
Emerging Models of Product Development
- Software Product Line
Most companies target the needs of their prospective customers by creating a product line a portfolio of closely related products with variations in features and functions. This involves building modular product with Core and adds on features. To start with, outsourcing software product line once the core product is built, is a low-risk model to check vendor capability and free management's bandwidth for other activities.
- Modular development
Development of software in bits and pieces. As module any module can be outsourced as low-risk process.
- Co-development team
ISV and OPD (Outsourcing Product Development) teams work together. This is more relevant in T&M based engagement. Generally OPD firm provides resources while project is managed by the ISV.
- Product Development Outsourcing
OPD looks after every aspect of product development.
OPD has gained recognition as a viable development alternative for product companies. OPD provides ISVs with a comparatively low-risk and high-benefit prospect for boosting productivity, profitability but careful planning and monitoring of the partnership with the OPD provider at all stages is a must. ISVs must be also bear in mind that choosing a right OPD team is critical to a successful partnership.
Outsourced product development requires the offshore team to work in very close association with the client's engineering team. Partnering with an OPD service provider allows independent software vendors (ISVs) to leverage a strong value proposition, low time-to-market, reduced development costs and quality manpower. Outsourced software product development is primarily a means of leveraging an organization's resources and infusing new thoughts, skills and expertise, while reducing time-to-market. Outsourced product development is the obvious remedy to the current market scenario where technology, skills and approaches are momentary.
Offshore outsourcing phenomenon has been making waves across the world for many years. Companies have long outsourced software and products development to offshore development facilities equipped with state-of-the-art infrastructure and armed with best-of-the-breed talented professionals, offering world class services at reasonable price. In spite of some concerns such as job protectionism and intellectual property protection, the economic benefits continue to be big differentiators, driving IT organizations to outsourced product development. Apart from cost effective business proposition, the massive growth and widespread adoption of offshore IT services are results of following interrelated global developments:
- The depressed economic environment, rising globalization of business, increasing business complexity, and technological advances have in combination, crystallized the adoption of outsourcing, causing the emergence of outsourced product development.
- Apart from tactical objectives such as cost-effectiveness and focus on core competition, strategic objectives are playing more prominent roles, and more companies use outsourcing either for a distinct marketing edge or to score over their competitors.
Making sure the "Outsourced Product Development" is sucessfull
Successful launch of product development hinges heavily on cautious planning, unambiguous characterization, and effectual communication. The said elements become more crucial if you want product development outside the precinct of your company or organization. In order to completely define your outsourced product development projects and accordingly map out your road to success, three primary rungs of analysis must be done with a well thought out process, comprising Product Requirements, Project requirements, and Design Requirements.
Product Requirements
It usually starts with customer or marketing requirements and flows through the system engineering and regulatory process to fully define how the product will look, feel, and perform once it is complete. However, this process is iterative as tradeoffs are made between features and benefits, and the inherent safety, regulatory, and implementation overhead incurred to implement these features, but the end product emerges out as a comprehensive product requirements specification.
Project Requirements
Project requirement is one more critically important process of the product development project analysis. At this stage of analysis, development plans are formulated, tools are selected, norms are established, and communication methods are defined-all these help development team members understand clearly their roles and responsibilities. Clarity at this stage lets the development team concentrate on technical challenges. Precisely, project requirement process sketches out a clear development plan that considers and documents interface points, tools,risks, and defines how information will flow, how system will be used, and how obstacles will be overcome.
Design Transfer Definition
The design transfer definition comes at the final step to ensure successful outsourced product development. At this stage, the structure and content of the design outputs as well as the process by which these outputs will be delivered, are identified and documented. The optimal end result from this process is a sender that fully understands the formats, templates, and best-practices expected by the receiver and a receiver that knows which outputs will be sent and in what format and timeframe to expect them.
Effective Requirements Definition: Key to Outsourcing Success
Requirements identification is the most critical element of a successful outsourced development project. Three primary groups of requirements are: product requirements, project requirements, and design transfer requirements.
Product requirements
Product requirements remain at the core of the product development project. One must know what they are creating in order to successfully realize it. This knowledge needs to be communicated to all members of the development team. This involves fully documenting, reviewing, and clarifying the product requirements. This should be a first step in the project plan.
Project requirements
Identification of Project requirements is the second major identification category necessary for outsourced product development success. These critical factors include required interface points, deliverables, tools, team members and roles, and other project planning items necessary to fully identify how the product will be completed.
Design transfer requirements
The last key requirements definition category is identification of the design transfer requirements. The design transfer
requirements describe who needs which deliverables at the end of the project and, more specifically, the format and form that these deliverables must assume to seamlessly integrate into the destination systems. Whether it’s documentation control or a specific, chosen manufacturer, clear definition of how the recipient must receive the project outputs in order to quickly and efficiently finish the product development project pays huge dividends at the end of the successful product development effort.
Bottom Line
With careful, up-front analysis of the product, project, and design transfer requirements as a critical first step, your company will be on the road to outsourced
product development success.
Defining the "Time & Reason" to Outsource the Product Development Activities
When does outsource product development make sense?
Outsource product development has caught the imagination of the entire business world. Sometimes, an enterprise opts for outsourced product development to manage costs, boost bottom line and save time for core activities. Other times, some strategic purposes such as dispense with some centers located at critical geographical regions have bearing on the option for outsource product development. There are several reasons can be cited for outsourcing option. But the moot question is -When does outsourcing make sense?
Outsourcing product development makes the most sense when:
- There is a need for expertise the company doesn’t have or need full time involvement.
- There is a need for resources the company currently does not have to complete all of the required work.
- It incurs heavily to keep up internal teams to do some or all of the development projects.
- There is a desire to incorporate standard practices or fresh approach in the product development processes.
- The capabilities to find, evaluate, and hire the outsourcing firm.
- Methods, protocols, and resources for communicating and managing the outsourcing firm.
- Tools, resources, and plans for gaining, storing, and using knowledge transfer.
What are the reasons to outsource product development?
Acquiring Expertise
One of the most plausible and successful reasons to outsource product development is to acquire expertise not currently available within the company. This lack of expertise could be because of a specific, non-core activity within the company, or it could be due to sudden rise in demand that exceeds the company’s existing capability.
In both situations, outsourcing product development is an excellent way to plug the need for expertise. However, a critical factor for successful implementation of outsourced product development is to ensure protection of all proprietary information, which should be arranged at the earliest or just before the onset of the project with some sort of contract.
Building Additional Resources
One very obvious reason to outsource is to supplement the number of development teams available to complete projects. Actually, in most of the cases firms prefer to staff below their total development capabilities in order to lower costs and risk, and with outsourcing they escape the possible burden of repetitive layoffs and hiring sprees.
This approach to outsourcing, or resource expansion, works well when the company outsourcing the project understands the capabilities required to effectively outsource a development project. These capabilities include:
- Identifying the best projects to outsource
- Managing the outsourcing relationship
- Identifying the project deliverables
- Auditing and smoothly integrating the project deliverables into existing systems
Although expansion or augmentation of resources is a common reason for outsourcing, it sometimes acts as a compelling reason for firms to miss out this opportunity. Ineffective cost benefit analysis and an inability to measure internal development costs often leads to conclude that the project can be done internally for less. Inevitably, the internal teams get pressurized and over burdened that lead to delayed and ineffectual product development. Development teams focusing on a single project produce the best results because they avoid the overhead and mistakes that result from multi-tasking across several projects.
Minimizing Development Costs
One very pertinent reason to outsourcing is to minimize costs involved in the development of products. Outsourcing seems to be a better and cost-effective measure, if you take into consideration all costs involved in maintaining the necessary capabilities within your company, which include:
- Employee costs such as salary, taxes, benefits, etc.
- Overhead expenditure on office space, desks, computer, training, software and hardware tools, etc.
- Supporting costs on information systems, management, human resources, payroll, etc.
- Risk costs such as downsizing costs including severance pay, legal support, etc.
In addition, certain irritating questions keep recurring such as:
- How do we build and maintain a high quality development team within our corporate culture?
- What traits and skills are important? Are those traits and skills available in our area of geography and expertise? How long will it take? What will it cost?
- How many teams will we need today and should we try to staff every project internally?
After having done cost benefit analysis on all these posed questions, most firms come to the conclusion that outsourced product development teams cost less than maintaining comparable internal product development teams.
In addition, organizations having internal product development resources that choose to outsource product development projects can have the following benefits of outsourcing:
- Gaining new perspective & process
- Acquiring quality system reviews, and
- Gaining industry standard practices
Most would agree that firms that don’t usually outsource product development should periodically do so to know how they could improve the results of their internal development teams. To glean the maximum benefit, the firm outsourcing the development should have systems in place to imbibe within the lessons-learned and to integrate them into its systems where appropriate.
Bottom Line
Thus, it certainly makes business sense to outsource either complete or a part of product development process, which helps organizations build near-term capability, meet increased resource needs, reduce costs, and bring a new development project perspective.
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