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How to Improve an ROI through Outsourcing Software Development

Take advantage of the software development outsourcing to achieve an ROI

Project managers want to see the bottom line ROI from their software development projects. However, very few have the background knowledge of what to do with this info once they do get it. The question becomes how can effective ROI be presented to project managers through outsourced software development? There are many ways this can be achieved, some of which are explained below.

What questions should you ask?

If you are a project manager, CEO, CIO, CTO, etc. you want to ask yourself the following questions prior to beginning work with an outsourced vendor for your software development projects. While cost is most likely your main concern you also need to consider the quality and expenses you’ll have over the course of a software project. Keep in mind the lowest rates aren’t always the best route to go. The term “you get what you pay for” rings true for everything.

Lowest rates aren’t always the best route to go. The term “you get what you pay for” rings true for everything.

ROI is the result of an initial investment. ROI is achieved when it supports goals and objectives set out by the product owner. In order to achieve ROI you need to know your objective. If labor costs are the main thing then consider outsourcing rather than developing software in-house.

Investment vs. operating costs

Investments produce a yield. These yields come in the form of how a profit-making organization can improve itself while keeping operating costs low. What is the purpose of the software project? Will the end product save time which essentially saves money? Outsourced development projects often work well because of the time zone differences. While you are sleeping your outsourced software developers are hard at work on your project. In the morning you may receive a progress report that the project is moving forward. Outsourced projects often have zero operating costs to you since everything is handled by the vendor. This can be reported on an ROI report.

Take all costs into account

It may not be as simple as comparing in-house development vs. outsourcing development costs. You have to realize the time duration of an outsourced vendor, transition time, testing, QA, etc. How are all these things accomplished? If you have taken these things into consideration and conclude that outsourcing your software development projects will relieve a lot of stress and cost then go for it. There is a reason why companies still choose to outsource, because it works and saves money.

Consider everything an outsourced software development firm has to offer

While you were getting in-house commitment your outsourced vendor should provide the same level of commitment. When calculating your ROI you need to keep the differences between reducing your operating costs and improving your business in mind. If you are comparing costs and benefits make sure you do an equal comparison that takes everything you spend and everything you get into account. Remember that your credibility and your company’s public image are on the line if these projects affect the way you do business. For example, if you use a software product for marketing automation or sales automation that uses email or phone marketing campaigns that end up calling the same person multiple times after you just spoke with them what does that say about your company? It says you are unorganized and your sales and marketing departments don’t have a clue what is going on. This can tarnish your public image and cost you future sales.


I hope you now have a clearer picture of how to improve your ROI though outsourcing software development. Outsourcing, if done correctly, can significantly improve your ROI compared to in-house development.

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