Offshore Product Development (OPD) - Why should I?

ISVs today not only want better features in new products but also want them faster. Partnership with a offshore product development company can assist an ISV to stay competitive. By Shubha Sridhar

Shubha Sridhar

From a start-up company with a fresh idea to an enterprise software product company, everyone needs reduction in product realisation time. They are under constant pressure to upgrade and widen product offerings, augment internal skills and capabilities, accelerate product development and reduce product costs. To meet market demands and to gain a good return on investment (ROI), they would need to spend smarter and strategically leverage the resources available to them. 

Considering that the ISVs (Independent Software Vendors) today not only want better features in new products but also want them faster, it is imperative that they look at capitalising on a partnership with a professional offshore product development (OPD) company to beat competition, gain faster time-to-market and reduce their initial investment in-terms of time, money and effort. More important among these is the fact that an offshore product development company can assist an ISV to stay competitive—which is the main necessity today. 

 Benefits of Offshoring Product Development

OPD companies today are completely focused on developing products and have in the process, developed mature quality processes. They are able to implement world-class best practices within short timeframes due to constant improvements through investments on ‘Six Sigma’ and Capability Maturity Model (CMM) programs, which form a critical success factor in implementing the full lifecycle of product architecture, development and deployment. 

Although offshore product development started as a tool for labor arbitrage, today, the benefits gained by ISVs include higher quality, development discipline and significant value addition in terms of process efficiencies and innovation.

What can be off-shored

A product development lifecycle typically consists of certain core and non-core services. These could be broadly classified as below:

Core services:

• Market survey and capturing User requirements
• Technical requirements specification
• Product design

Non-Core services:

• Functional Specification, Development
• Cross platform compatibility, multi-lingual features, internationalisation
• QA and test automation
• Support

 It is common practice for the ISVs to retain core services, to begin with, unless they believe that the OPD company have more skills in a specific domain and have the ability to provide greater value in designing a product or perform such other core services.  

The productivity level of an ISV is higher if non-core services such as development, test automation, cross platform compatibility, support etc are performed by an OPD company. Apart from the non-core services mentioned above, there could be other services such as development of certain components for the product that form a separate entity in themselves. These can be implemented, maintained and enhanced by the OPD Company. These components would then be offered to the end-clients as an add-on to the actual product. 

Intellectual Property

In the past, ISVs were hesitant to offshore/outsource even the non-core services fearing Intellectual Property (IP) infringement and leakage. Today, the OPD companies have taken strict measures to ensure that IP is not tampered with, by putting in place processes and rules sensitive to IP. Their security standards comply with ISO 27001 and the likes. They have even invested in separate seating areas and networks for employees working on different products. The ISVs insist that the employees from the OPD company working on their products, sign non-disclosure and confidentiality agreements, prepared by them. 

The same precautions, as would be taken by an ISV are in place for an OPD company today. An OPD company developing an ISV’s product is treated as an extended arm of the ISV. 

Common Apprehensions

A few common hurdles and apprehensions that ISVs face today and the approach to solving them, are detailed below: 

• Once the sale of a product is made, in order to ensure end-client satisfaction, the ISV assumes that it has to maintain a large services team to fulfill all specifications, customise the product, integrate it and maintain it on the end-client environment.
• Maintaining such a team could cost a fortune to an ISV. With constraints set by tight budgets, the process of establishing a team proficient with the technology and the product may cause a dent in their monetary resources. Besides, the need for service resources may not be constant, there would be peaks and troughs in the amount of services work, irrespective of which, the ISV would be forced to maintain such a team.
• Early on, most ISVs realise that their focus must be on the core product. The costs incurred by the ISVs need to be channeled towards making a better product, establishing them selves as market leaders, promoting the product, branding etc. The non-core activities should be channeled to partners whom they can trust and who specialise in such services, ensuring that there is no additional strain on their budget.
• OPD Companies providing professional services have come a long way since their inception, in-terms of infrastructure and resources. They are well established and have meticulous screening processes in choosing the technologists working for them.
• An OPD team works like an extended arm of the core ISV team. Research has proved that the cost of manpower is reduced to almost fifty percent when partner professional services teams come into play, in place of an existing core team. The OPD companies would, additionally, bear the costs of HR framework, infrastructure, governance etc. of their resources, reducing these maintenance overheads for the ISV.

A Common Misconception

An offshore team may not understand or adhere to the required quality standards of the ISV. Considering that the ISV holds complete control over the product, a failing on quality would reflect poorly on its reputation. The loss of quality for relatively cheap labour is not a fair trade-off. The compromise on quality would be a disaster on the branding front and in turn on the Return-on-investment (ROI).

• OPD companies are currently concentrating on taking quality to newer heights. Processes like Six Sigma and Capability Maturity Model have been established for the purpose of setting metrics. OPD companies have dedicated Quality Assurance teams to ensure that these standards are met and exceeded. They collect metrics to constantly upgrade their quality processes. Resources working on the product are certified by recognised institutions, which put their technical acumen through rigorous tests before certifying them as competent in a particular technology.
• To avoid any compromise on quality and timelines, Service Level Agreements (SLA) are drafted and agreed upon. These SLAs are then measured and reviewed to see how the offshore companies have performed. The role of an OPD in ensuring quality does not end with development services. They test the product to the finest component and check for unfailing efficiency

Typical services offered by Offshore Product Development Companies today:

The OPD companies today offer both core and non-core services. Below are some of the services being offered:

• New Product development / definition
• Product migration and re-engineering
• Product customisation
• Web-enablement
• QA and test automation, full product testing
• Product support
• Product integration / professional services
• Documentation

They even offer innovative prototypes and proof-of-concepts to visualise the end product. They bring in greater bandwidth to develop multiple versions of the ISV’s product thereby enabling the ISV to gain a faster time- to-market. 

Bottom Line

The OPD companies can:

• At the least, churn out more solutions at a faster pace owing to the skilled resources that can be deployed in larger numbers
• Help ISVs to cater to a wider audience with varied needs. OPD companies have offices world-wide and can deploy resources across the world to service the ISV’s client base
• Maintain a larger pool of resources, without any additional costs to the ISV, owing to the fact that they are dedicated to product development. The OPD company will invest in HR function, Infrastructure and governance needs for the pool.
• Innovate, come up with better ways to engineer a product and contribute proactively to assist in the ISV’s business goals.
• Provide all of the above at optimised costs, owing to the onsite-offshore model of servicing.

Considering that the OPD companies today offer more than just programming services and lower costs, the ISVs should strategically leverage a partnership with an OPD to get significant value in-terms of on-demand services that will help garner a greater market share.

The author is Regional Manager (Technical Services)-Europe at Torry Harris Business Solutions