North America has become a continent with a consumerist economy where manufacturers, retailers, and service providers compete fiercely for customers.
As we know, one of the most effective ways to attract customers is to lower one’s prices without the impact on the quality of the goods or services being offered. Thus, North American companies outsource software development to lower-wage regions such as Eastern Europe, Latin America, and Southeast Asia.
As there is much debate over whether or not to outsource software development, and what is the best way for companies to outsource, the article will address these questions with a special focus on Eastern Europe, and Ukraine, as a quality option for North American companies.
The Reasons Why North American Companies Outsource Software Development
- The primary reason why companies choose to outsource software development is to save costs. In competitive industries, such as healthcare and IT, these savings are often passed on the consumers as companies aim to offer a more competitive solution in their specific field or niche.
- The introduction of a ‘minimum wage’ some decades ago caused companies to look elsewhere to fill certain positions. “The debate over minimum wage is mainly regarded as how much, not whether there should be one. Once this crossed a certain cost threshold, many companies found certain roles no longer offered value to the company if they had to pay such staff a certain amount. Examples of this could be unskilled customer support, certain manufacturing positions, and some factory jobs,” writes Ben Davison, an outsource manager at Draftbeyond and Lastminutewriting. Being able to move some jobs overseas initially allowed companies to bypass the minimum wage laws.
- Outsourcing increases a company's access to intellectual capital. Education levels in many countries have surpassed economic conditions. Places such as Eastern Europe, parts of Asia, etc, now have a large educated, English speaking talent pool that companies can draw from. Because of the lower wages, it allows them to get more for their money than they would in North America. Software development has become a major field that companies have been outsourcing in recent years. This practice has so far been a great success, as the outsourced developers can deliver the same level of quality as those in North America.
- Outsourcing solves capacity issues. Capacity here is the amount of work an organization produces under the current conditions. “Many companies, especially manufacturing firms, have limitations to the amount of production they can achieve. These limitations can come in many forms. For example, production may be limited by the amount of physical space available to them. There may also be laws or regulations that hamper production or access to human capital that is lacking,” writes Henry Horan, a tech writer at Writinity and Researchpapersuk. Companies that are looking to grow, but are held back by their current production capacity, often outsource software development to solve these issues.
- The ability to keep a business running constantly. The opening hours of most businesses in North America are usually limited to what is reasonable for the people employed at the business’ physical location. However, having staff in another country, a company can be kept open 24/7. Outsourcing software development lets companies greatly boost productivity through continuous work.
Today’s Minor Obstacles for North American Companies When Outsourcing Software Development
Quality control. When a comprehensive training program is put together, it can be hard to ensure that management on the other end implements it effectively. It may happen because unlike North American employees, remote employees are managed by a third party. Therefore, any issues in overall quality or effectiveness can result in loss of customers and lower revenues.
Solution: Quality control is no worry when you work under the extended team cooperation model. Besides, tech specialists in countries with large tech talent pools, like Ukraine, are well-educated, so the results clients receive are of high-quality.
Transparency issues. Today’s consumers are more conscientious than ever. Two decades ago, very few people thought about where the products they purchased were manufactured, or what environmental impact the process had. But today, everything has changed.
Solution: These transparency issues can be minimized if you use the extended team cooperation model — the client is in constant contact with each member of the development team, ensuring there are no gaps in work management.
Why North American Companies Outsource Software Development To Eastern Europe
Many companies, like Google and Apple, have a proven track record of successful collaboration with remote software development teams. Eastern Europe, and Ukraine in particular, are quickly becoming one of the best options for companies. Ukrainian developers are well-educated people who have a long history of tech industry development.
Another major benefit is that Ukraine, and many countries in Eastern Europe, already have a well-organized infrastructure ready to facilitate the needs of North American companies. With its visa-free travel for the first 90 days, 6% of the world’s certified IT experts, and a vast quantity of available outsourcing partners, it makes sense for North America to outsource to Ukraine.
Conclusion: Outsourcing can be a viable solution for North American companies looking to save costs, improve customer support, and break beyond capacity constraints. Choosing a reputable outsourcing provider with experience in the specific area is also of great importance.