The outsourcing conundrum

SA MAY BE a good software development outsourcing destination, but its is also a major exporter of work.

Much of this work is flowing to India, but a fair amount is being "north shored" to Nigeria, Kenya and even Uganda.

But Steve Lauter, new business development head for The IQ Business Group says offshoring has failed dismally, but only because of the countries SA is offshoring to, primarily India. "I'm not knocking that country or its talent, in fact IQBG SA has a JV with an Indian company.

"The main failure in the offshore model has been language and culture barriers. If you dig into that a bit deeper it is about the translation of a business requirement into a technical specification correctly," Lauter adds.

Saratoga technical director Mark Gebhardt agrees that South African software companies are now more prudent about offshoring. "Like every other fad, offshoring was overdone. There is now a bit more sanity in the debate."

SA is a preferred outsourcing destination in part because there are few language and cultural barriers between us and many western countries and in part because of the favourable time zones and geographic issues. "The rand is very sweet for guys paying in US or Australian dollars," says Lauter.

But George Battye, director of product development at EdgeEvolve warns: "These advantages are going to be irrelevant quite quickly."

He feels open source initiatives have levelled the technology playing field. "On the one hand we have seen an enormous improvement in quality and scope of local developments as we gain experience and exposure from others."

"On the other hand just about everyone else on the planet has the same ability to access the same source and so do the same work."

On the question of in-house software development, Lauter notes the key issue with organisations that do it themselves is that it is a deviation from their core business.

He says business needs some internal expertise to remain a knowledgeable buyer, "but to actually create a full-blown software engineering in-house is a waste of funds. It sounds like a shameless punt but that investment would be better spent on core business processes."

It can also be pricey, adds Lorge MD Errol Wills. "The undefined costs of development can be huge, as can constructing a system from scratch," he says. "Companies should be wary of going with custom development just to obtain features that are not critical because here the rarity factor comes into play - if an element of a custom development needs to be changed, probably only the original developers can do it and they may not be around any more."

For those who do not wish to heed this advice Mirror Business Solutions GM Gustav Oberholzer recommends the "Mirror Technique" a new approach devised with simplicity in mind.

Brian Harding, executive director of Airborne Consulting, says there has been a great deal of growth in the South African software development recently. He attributes this to several factors:

* Lessons learnt from past product failures - it seems many companies have the battle scars from hasty and ill-advised product implementations. While software products have their place, it is often the case that product vs. development ends up being product plus development.

* Companies are starting to realise that unless the product offering matches their requirement in as close to a vanilla implementation as possible, it is often better and more practical to go the development route.

* Technology advances are allowing for easier and faster development and implementation. This, - coupled with a robust methodology and process, allows customers to tailor make a solution for their business ... and often has a lower total cost of ownership. They end up owing the solution, the IP, the code and provided they choose a mainstream technology - they will not have maintenance and skills issues down the line.

* Changing business requirements - a tailor-made developed solution allows for ongoing changes and adjustments in line with business strategy and objectives.

It goes without saying that the key to a successful software development project is choice of the right partner, Harding notes.