How govt entities can benefit from offshoring?

Learn how govt entities are benefited by hiring offshore software development companies

The annual IT spending of the US on its government establishments is staggering and it’s interesting that the US government spends almost $500,000 billion dollars a year on private businesses. This includes infrastructure, security, human resources, finance, and IT. Out of these IT spending can consume a fair share of costs – perhaps more than other areas that we mentioned. Apart from that, IT funding of most governments is now shrinking due to redirection of the majority of their monetary resources for COVID19 preventive measures. So how do government entities maximize the chances that their software development projects deliver the expected value on time and within their predicted budget? Where does offshoring fit in this equation? Let’s find that from this blog post:

According to a study by McKinsey, it is estimated that roughly half of all large government software development projects that are completely done onsite exceeds its initial forecasted budget to a minimum of $15 million USD. The study also revealed that over a quarter of these projects deliver only 56% less value than the forecasted value. They can significantly achieve cost savings by outsourcing their software development project to offshore software development companies instead of building them in their onsite environment.

It’s interesting that the practice of outsourcing was initially adopted by the government, not by private companies. However, outsourcing government projects to a foreign vendor can bring its own challenges. While offshoring is an attractive option for many companies including government entities, there are a few setbacks( legal and security hurdles) involved in this practice, especially when it comes to government projects. They include regulatory issues, privacy policy, data security(only for projects that handle highly sensitive data) liability agreements for the work to be performed. Although security breaches are not common among reputed offshore software development companies, it’s still important to do the groundwork. After all, it only takes a single data breach or violation to create a project nightmare. However, government contractors can easily alleviate the security challenges involved by following some standard procedures that we mentioned below, especially when hiring an offshore vendor.

• Offshore vendors must sign strict IP agreements
• Only choose countries that have mature IP protection laws.
• Offshore vendors must have certifications like CMMI any other international standards that guarantee process quality
• Production support should be excluded from the offshore contract.
• Data should be scrambled or mocked before giving to the vendor

Offshoring govt projects: Advantages

The unavailability of skilled tech resources who can rescope and breakdown the project’s technical requirements can ruin huge software development projects. Let’s illustrate this with an example of a public-sector administration. In order to avoid variations in their databases, they wanted to build a common data warehouse that stores all their administrative and financial data. Despite these requirements, their in-house development team concentrated completely on building the data warehouse rather than focusing on the end goal, which was to address data inconsistencies. The result heightened project cost and discrepancies in the delivery time triggered by the unnecessary retrieval of information from other databases, which in turn increased the complexity and total budget of the project. This example clearly illustrates the lack of critical thinking within the project’s internal development team. This can cause significant disruptions and derail the project from its actual scope. Below are some of the top 10 reasons for IT project failure:

• Lack of performance monitoring
• Inaccessible data
• Inadequate governance
• Ineffective Contracts
• Lack of alignment in the expected and final output
• Manual & labor-intensive Processes
• Incompatible delivery culture
• Inadequate collaboration
• Lack of scalable development team
• Deviation from forecasted project cost

These tradeoffs can be easily reversed by substituting or hiring developers that can deliver the highest business value. This is where offshoring really outshines other practices in software development. A lot of offshore software development companies have untapped pools of qualified and less expensive developers who can instill rigorous testing and rollout plans to ensure quality at every stage of the software development lifecycle. Offshoring is now all about getting the right resources in the right place at the right time.

Offshoring can precisely answer these questions as it helps the project management team/stakeholders to instantly ramp up/ ramp down production as needed. Offshoring also eliminates the need for the mundane practice of recruiting and training additional resources, government contractors can quickly and effortlessly onboard new resources to complete assignments. These highly skilled offshore tech talents can boost output and make project turnaround times much faster. Most importantly, once the project is complete, private businesses/government entities can either decide to keep the offshore developers in action – or end the contract with no further liability.