SoftwareMinds and Coherent Solutions Announce Findings of Research into Attitudes, Perceptions and Key Factors in Software Development Staffing Decisions
Independently conducted study concludes that cost is the least important factor when considering outsourced software development
MINNEAPOLIS—March 10, 2008—Coherent Solutions, a Minneapolis-based software development outsourcing firm with offices in Minsk, Belarus, and SoftwareMinds, a provider of strategy consulting and custom and syndicated research for the software industry, today announced the findings and availability of a research study on staffing decision-making in distributed software development environments within technology-based organizations. Conducted by SoftwareMinds and sponsored by Coherent, the survey data was collected in August 2007.
The research results are summarized in a report and are based on interviews with 49 senior executives from Midwestern software companies, predominantly from the Minneapolis/St. Paul metropolitan area, with responsibility for software development staffing decisions.
The study focuses on understanding the perception of decision-makers about distributed software environments, including offshore outsourcing. Specifically, distributed environments were defined as “software development resources, including employees and/or contract resources working from two or more distinct locations inside or outside the U.S.” More specifically, the goal was to understand the attitudes, perceptions, and key decision-making factors of these executives in determining their organizations’ staffing mix among employees, U.S.-based contractors, and offshore contractor resources.
"Our goal in sponsoring this research was to investigate and validate our own internal findings from the field," said Igor Epshteyn, Coherent Solutions’ CEO and president. "Probably the most interesting result is that cost is the least important factor in making outsourcing decisions. This is contrary to what you hear in the media but consistent with our experience with clients."
Key Findings
Firms with larger software development organizations are somewhat more reliant on outsourcing than are those with smaller software teams.
The size of a company’s software development operations has some bearing on the extent to which they utilize outsourced resources. Smaller organizations, on average, utilize employees for a larger share of their development work than do firms with larger development needs. Companies with l00 or more software development Full-Time Equivalents (FTEs) consist of 23 percent contract personnel, while smaller firms use contractors for 13 percent of their software development resource needs.
Organizations are using more offshore personnel than onshore contractors.
Regardless of the size of an organization’s software development team, firms use more offshore resources than U.S.-based contract personnel. On average, 53 percent of outsourced software development resources are located offshore, while 47 percent are based in the United States.
Cost is the least important factor in making outsourcing decisions.
Cost or budget concerns ranked dead last among key considerations in deciding whether or not to outsource—apparently owing to IT managers’ improved ability to accurately forecast and budget for outsourced software development resources. Top decision-making criteria factors included concerns that managers believe they may have insufficient control over contract personnel to ensure successful projects, followed by worries that the client’s in-house development process and procedures were ill-defined and, therefore, not conducive to effective outsourcing.
Eastern Europe will receive the highest consideration in future offshore software development outsourcing engagements.
Eastern Europe ranked highest among key offshoring centers, with 71 percent of participants indicating they would consider engaging resources based in this region for their future offshore outsourcing needs. India dropped to second place with 67 percent, followed by China with 43percent and the South Pacific region with 37percent.
About SoftwareMinds
Headquartered in Minneapolis, SoftwareMinds is a leading provider of business growth and go-to-market strategy consulting, in addition to syndicated and custom research. Founded in 2002 by veteran IT company executives to address the lack of in-depth syndicated research on operational best practices and benchmarks for IT products and services companies, the company specializes in studying overall business metrics, as well as the go-to-market areas of marketing, sales and product management for North American companies. Today, it is one of few firms that provides IT company executives both in-depth best practices research and high-level strategic consulting. Please visit: http://www.softwareminds.com.
About Coherent Solutions
Since 1995, Coherent Solutions has helped over 100 technology clients successfully create and integrate an affordable outsourced software development capability—even those without a formal product development discipline or well-documented software. With permanent offices and highly experienced teams in both Minneapolis and Minsk, the company’s high-touch relationship approach includes dedicated local personnel and a commitment to surpassing expectations and to redefining the software development outsourcing experience. For more information, please visit: www.CoherentSolutions.com.
Independently conducted study concludes that cost is the least important factor when considering outsourced software development
MINNEAPOLIS—March 10, 2008—Coherent Solutions, a Minneapolis-based software development outsourcing firm with offices in Minsk, Belarus, and SoftwareMinds, a provider of strategy consulting and custom and syndicated research for the software industry, today announced the findings and availability of a research study on staffing decision-making in distributed software development environments within technology-based organizations. Conducted by SoftwareMinds and sponsored by Coherent, the survey data was collected in August 2007.
The research results are summarized in a report and are based on interviews with 49 senior executives from Midwestern software companies, predominantly from the Minneapolis/St. Paul metropolitan area, with responsibility for software development staffing decisions.
The study focuses on understanding the perception of decision-makers about distributed software environments, including offshore outsourcing. Specifically, distributed environments were defined as “software development resources, including employees and/or contract resources working from two or more distinct locations inside or outside the U.S.” More specifically, the goal was to understand the attitudes, perceptions, and key decision-making factors of these executives in determining their organizations’ staffing mix among employees, U.S.-based contractors, and offshore contractor resources.
"Our goal in sponsoring this research was to investigate and validate our own internal findings from the field," said Igor Epshteyn, Coherent Solutions’ CEO and president. "Probably the most interesting result is that cost is the least important factor in making outsourcing decisions. This is contrary to what you hear in the media but consistent with our experience with clients."
Key Findings
Firms with larger software development organizations are somewhat more reliant on outsourcing than are those with smaller software teams.
The size of a company’s software development operations has some bearing on the extent to which they utilize outsourced resources. Smaller organizations, on average, utilize employees for a larger share of their development work than do firms with larger development needs. Companies with l00 or more software development Full-Time Equivalents (FTEs) consist of 23 percent contract personnel, while smaller firms use contractors for 13 percent of their software development resource needs.
Organizations are using more offshore personnel than onshore contractors.
Regardless of the size of an organization’s software development team, firms use more offshore resources than U.S.-based contract personnel. On average, 53 percent of outsourced software development resources are located offshore, while 47 percent are based in the United States.
Cost is the least important factor in making outsourcing decisions.
Cost or budget concerns ranked dead last among key considerations in deciding whether or not to outsource—apparently owing to IT managers’ improved ability to accurately forecast and budget for outsourced software development resources. Top decision-making criteria factors included concerns that managers believe they may have insufficient control over contract personnel to ensure successful projects, followed by worries that the client’s in-house development process and procedures were ill-defined and, therefore, not conducive to effective outsourcing.
Eastern Europe will receive the highest consideration in future offshore software development outsourcing engagements.
Eastern Europe ranked highest among key offshoring centers, with 71 percent of participants indicating they would consider engaging resources based in this region for their future offshore outsourcing needs. India dropped to second place with 67 percent, followed by China with 43percent and the South Pacific region with 37percent.
About SoftwareMinds
Headquartered in Minneapolis, SoftwareMinds is a leading provider of business growth and go-to-market strategy consulting, in addition to syndicated and custom research. Founded in 2002 by veteran IT company executives to address the lack of in-depth syndicated research on operational best practices and benchmarks for IT products and services companies, the company specializes in studying overall business metrics, as well as the go-to-market areas of marketing, sales and product management for North American companies. Today, it is one of few firms that provides IT company executives both in-depth best practices research and high-level strategic consulting. Please visit: http://www.softwareminds.com.
About Coherent Solutions
Since 1995, Coherent Solutions has helped over 100 technology clients successfully create and integrate an affordable outsourced software development capability—even those without a formal product development discipline or well-documented software. With permanent offices and highly experienced teams in both Minneapolis and Minsk, the company’s high-touch relationship approach includes dedicated local personnel and a commitment to surpassing expectations and to redefining the software development outsourcing experience. For more information, please visit: www.CoherentSolutions.com.