Submitted By: Shaun Parker

Competitive pressures have pushed many organizations to outsource their IT and software development services around the globe.

According to DiamondCluster International's third annual Global IT Outsourcing study, more than three quarters of the Global 1,000 plans to increase its use of IT outsourcing this year, with software outsourcing being a big portion.

While the motivation behind this trend can vary depending on the organization, the primary motivation is simple: cost savings.

The attraction of low-cost, high-quality labour is just too tempting to resist for many organizations. Add to that the ever-increasing expectations that the business places on software to achieve business goals.

To that end, outsourcing also offers the lure of being able to build and maintain a greater number of applications for the same budget dollars.

On paper, outsourcing leads many organizations to believe they can expect up to 70 per cent savings in their IT budgets. The reality though is closer to high single or low double digit returns. The discrepancy lies in the downstream challenges of making software outsourcing a success.

Software development is a complicated beast. It involves not just technical skills but a general understanding of the business' priorities and an ability to balance the tradeoffs that continuously occur in development around spend, scope, quality and schedule when those business priorities shift.

Giving another party control of one of your business' most important assets and trusting that they can manage its complexity and deliver a quality product is an important issue. It is an issue that requires some serious planning and consideration.

Below are five questions you should ask yourself before moving forward on an outsourcing endeavour.

1. Which projects or tasks can I afford to outsource?

Before even investigating a service provider, consider which projects are good candidates for outsourcing. There are strong arguments for selective outsourcing.

2. What kind of relationship do I want to have with my outsourcing supplier?

Companies can choose to pursue different models of outsourcing based on the projects or tasks in question.

The model one chooses invariably affects the type of relationship that exists between the outsourcer and service provider, as well as how the outsourcer organizes its own internal development teams.

2. What kind of relationship do I want to have with my outsourcing supplier?

Companies can choose to pursue different models of outsourcing based on the projects or tasks in question.

The model one chooses invariably affects the type of relationship that exists between the outsourcer and service provider, as well as how the outsourcer organizes its own internal development teams.

4. Do both teams have the right technology in place to automate and enforce these processes?

It's important to know if your outsourcing provider is relying primarily on manual processes for important areas such as requirements, change or quality management.

5. Have I established measurable goals so I know what success looks like?

By baselining and setting measurable goals, organizations are able to translate the end result into business value. Executives should work with the outsourcing vendor to agree on program rationale and understand how to regularly measure progress toward specified goals. This will help to sustain the interest and effort that is required to make the project a success.