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Application Outsourcing is More Than About Saving Money on IT, Says New Study



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Nov 14, 2006, News Report

Most companies outsource at least some of their application development or maintenance functions, but saving money is not the prime motivator behind these outsourcing strategies, according to the findings from a new Aberdeen Group benchmark study.

In addition, the study found that a substantial portion of respondents to the survey -- about two of every five -- say their companies would prefer working with service providers that are close to or within the same time zone to allow closer contact with the people they work with regularly.

These and other findings are detailed in a new Aberdeen report, "Outsourcing Application Development and Maintenance," underwritten by IBM, Softtek and Unisys.

"While cost savings remain an important cornerstone of many IT outsourcing strategies, most companies, especially in the mid-market, look at outsourcing application work to boost the skills of their internal IT staffs and allow them to tackle more strategic work," said Rick Saia, Aberdeen's research analyst for IT services and lead author for the report. Although India has become a popular destination for this work, companies in other nations are ramping up their IT capabilities, affording more options in choosing providers. "This allows companies more 'near shore' options as opposed to looking to the other side of the world," Saia said. "Many large providers recognize this, though, and are looking to perform more work in other countries or at least partner with native firms that can provide these services."

The study found that companies that are best at outsourcing application development and maintenance save more than twice the industry average in application-related costs. They also experience close to 50 percent higher user satisfaction and -- on average -- a 67 percent increase in projects delivered on time and within budget.
KW

Comments

By Anonymous on Jun 27, 2008

I'm not sure it is applicable, but I detest calling for technical support for my HP computer...I do not like having to explain my problem numerous times due to language differences. Since outsourcing tech assistance, I have had to use the service twice; once for the PC and once for Microsoft software. Both times it took at least twice the amount of time due to this language problem. Both instances were with someone in India...because I asked where they were...and both times I came away unhappy with the results. The software problem was that the authorization code for MS Office was not working. It took a full four hours to resolve the issue. The tech kept asking me the same questions over and over and all he had to do was get a new authorization code from a supervisor. So don't tell me about the benefits of outsourcing! I hate it. If I had any other option I would certainly use it. It creates a very bad taste in my mouth for the company using the outsourced tech.

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