Outsourcing your software development to an offshore team might seem like a no-brainer to save some cash, but outsourcing is not all rainbows and unicorns. The risks of outsourcing software development and engineering can derail your project and compromise its success.
Last year alone, businesses spent over $700 billion on outsourcing; IT services make up over 70% of that number, and software development outsourcing is forecast to grow even more in 2023.
Before you take the plunge and decide outsourcing and its inherent risks are right for your business, let’s explore the top four pitfalls that every CEO and software investor should know about first so you can reduce your software development risks.
The Risks of Outsourcing Software Development and Engineering
Some of the risks of outsourcing are obvious from the start, while others are deeper and often unseen. We want to be sure you have all the information you need to make the best choice for your business.
1. Throwaway Code – Your Work Should Not Be Trash
This is a classic pitfall, even smart people do it — this mindset that you need to get something done quick and dirty and then think about the consequences of that decision later . . . but later never comes. It’s classic Groundhog Day. Businesses become so fearful of spending too much time over-developing or over-engineering something that they under-engineer it instead, assuaging their fears by telling themselves that they’re being “extremely agile,” when in reality, they’re simply making it up as they go along. You’ve got to aim higher if you don’t want to later drown in chaos and spaghetti code.
Many companies simply lack the knowledge, understanding, and desire to see another way through software development. They don’t understand or sometimes don’t trust their people, processes, or technology, which leads to them treating software development like a black box and taking ineffective and expensive shortcuts.
Remember this: if you build something – anything – quick and dirty, you will light money on fire. This is practically guaranteed in the software business.
With PlatformPlus® you can flip the script to build quick and clean versus quick and dirty. We don’t believe in throwaway code – give us 15 minutes and you won’t either.
Low-code software development will allow you to build the software platform and apps you need but with 80% less code to write, less cost, less risk, increased quality, and significant improvements to your Innovation Fraction. Skip the throwaway code, it’s not worth your time.
2. IP (Intellectual Property) Hijackers – Your Innovation Is On the Line
Protecting your IP during software development is of utmost importance — the value of a software company is directly linked to its IP. Innovation and IP are synonymous in software development — your IP is innovation, monetized. And you want to build your valuation as quickly as possible.
What’s the biggest risk to this? Outsourcing.
With outsourcing, turnover is extremely high, sometimes as frequent as every six months. What does this mean for you if you outsource your software engineering? You hire a company, and they get access to your IP. It will take months to understand it, and then a few more to work on. Then somebody leaves, and they may take your IP with them to a competitor.
There are laws to prevent this, but if they’re offshore this gets complicated. Even if they don’t take your code, they still take the knowledge with them.
PlatformPlus® lets your existing team punch higher, effectively doubling their development velocity. You won’t be worried about turnover as much because you’ll be keeping everything in-house with your trusted team.
3. New & Recurring Revenue Lag & Leakage – Your Earning Potential, Stunted
Every business leader wants to generate net new revenue (NNR) and net recurring revenue (NRR). The more recurring revenue, the more valuable your business becomes.
Which leads us to NNR lag: if it takes your team nine months to light up a solid MVP, what if you could do it in three months? You’re pulling in revenue six months sooner than if you go the traditional outsourcing route.
Every month out of production is lost revenue. Why would you wait?
Once you get out of production, then you have to start thinking about hidden and ongoing fees, we call this NNR leakage. Many cloud and low-code platforms come with ongoing runtime costs and runtime fees. PlatformPlus® has no runtime fees.
Most businesses aren’t thinking about the consequences of cloud and low-code platforms. As time goes on, your operating costs will continue to climb. PlatformPlus® is cloud agnostic — it runs wherever you want and scales efficiently, helping you to minimize risk and maximize return.
4. Single-Sighted Software Development – Your Self-Imposed Limitations
It’s time to break the mindset of being hungry for more software developers. Many developers are like bricklayers; they are talented, but they’re not engineers. The difference is how much thought they’re putting into the process of building software. Developers love to go from the whiteboard to the keyboard. Engineers believe in designing something before building it.
Developers are told to build quickly and dirty, so that’s what they do. Engineers build clean and they build code to last.
Building a software product is different than making a piece of software – software products and platforms must be engineered if they are to be profitable.
You can’t TEST quality of a product, you must ENGINEER quality into a product.
This isn’t a complex concept, and it applies to software engineering just as much as hardware engineering.
The real difference between software developers and engineers comes down to process discipline, an embrace of automation, and a grasp of the timeless first principles of product engineering. The best engineers are also just the tiniest bit lazy – they hate doing the same things over and over again and instead try to solve problems once and for all, building components that can be broadly reused down the line.
If shifting from development to engineering sounds scary, don’t worry, we’ve got you covered:
PlatformPlus® is the force multiplier that will turn your developers into engineers. It’s the answer to all of these issues.
Build Right. Build Fast. Build to Last.
At Modularis, we offer more choices, more options, and more control than traditional outsourcing models. With PlatformPlus® you can lower your risk and maximize your return by making better decisions every step of the way. Do it right the first time!
There’s a better way to build software products. Schedule some time to talk to A.J. today!