A little explanation of cost vs. expertise in software development

What do Western European companies want out of software development partners?

A few weeks ago, we found some research on the top five reasons that Western European companies use outsourced software development, so we’re working our way through a look at each topic, from cost efficiency to flexibility to quality of service and embrace of new technologies. Those were the first four factors. Pretty logical, right? The fifth factor -- this article -- is also pretty logical. It is “industry knowledge and expertise.”

Here is what is interesting, though

On the survey we worked from, “cost efficiency” (the No. 1 reason that Western European companies outsource software development) was cited by 85% of respondents -- almost 9 in 10. This topic, “industry knowledge and expertise,” was only cited by 48.9% of respondents -- 1 in 2. Some of that was about how the survey was formatted, yes.

But is cost that much more important to people than expertise? That’s interesting to consider. One possible factor is that expertise was ranked lower by some respondents because they assumed every software development outsourcing option would have a degree of expertise, so they ranked this one lower. Hmm. That’s one possibility. Another is that this survey was conducted as COVID-19 was first coming into Europe, so if respondents saw a potential economic downturn in later 2020 (which is happening now), maybe they prioritized “cost” in their responses. Still, the gap is interesting to observe.

It’s interesting because expertise is obviously still crucial

Any project needs to absolutely start with expertise. A software development partner needs expertise. Without expertise, it will be hard for you to achieve your goals, find cost efficiency, flexibly move between projects, etc.

Because most complicated projects end up being more collaborative in nature, though, it’s not just “expertise” you are looking for. It’s more like a combination of expertise and teamwork and planning. In bullet point form, it looks like this:

• Excellent individual Devs
• Those same Devs can work on a team together
• Those same Devs can work as an extension of your team
• There is a great deal of domain expertise
• They work as a consultative model, helping propose business solutions to you -- not just fixing code

So sometimes we think of “industry knowledge” and “expertise” along narrow lines. We almost hear the words and think of professors or academics who know a lot about a topic, say the cloud. That’s a form of expertise, yes. But if you are talking about getting business projects done, you need a different definition of knowledge and expertise. In a business context, you need people that know what they are doing (conventional expertise) but also people who can work together (collaborative expertise) and work with lots of different teams (diversity) and also be a consultant, not just an order-taker.

When you have all those things together, then the idea of “expertise” is likely going to be selected on a survey by more people than just 48.9%. Full-scale expertise including team building, backlog management, sprint management, revenue project proposals, consultation, etc? That’s definitely more important than just cost.

Remember: cost is different from value.

If you have a team that has domain expertise but can also work together and build projects out into robust profit possibilities, that is valuable. At that point, you are no longer worried that much about “cost efficiency,” because the outsourced software development team has paid for itself and more.

What does all that mean for you? How can you find this team, this outsourced partner, that has expertise? You need to pick the right software development outsourcing partner. You need flexibility, expertise in technologies, ability to grow into new technologies, cost efficiency, high quality of delivery, and more. You don’t only need it, but you deserve it -- this is your business we’re talking about!

One place to start is this checklist of ways to evaluate software development outsourcing partners. If you have any questions, reach out!