Approximately three of every five organizations engage in application development outsourcing, which has been on a sharp rebound since the bottom of the recession. But now that recovery is leveling off and may even be starting to decline as IT organizations gain authorization to fill positions, embrace software as a service, reduce capital spending, or bring work back in-house because of poor customer experience.
The percentage of companies that outsource at least some of their application development rose from 39% in 2009 to 66% in 2012, as shown in Figure 2 from our study, Application Development Outsourcing Trends and Customer Experience. The frequency rate then declined to 60% in 2013.
It remains to be seen whether this trend will continue or merely mark a leveling off after the post-recession bounce. Whatever the cause, some companies did not renew expiring application development outsourcing agreements and fewer companies signed new application development outsourcing agreements.
Although it is one of the more frequently outsourced IT functions, our findings also show that the customer experience has been less than spectacular. Every application development project carries risk, but outsourcing, especially if done offshore, can increase that risk in the absence of proper management controls.
In light of current trends, the full study will help IT executives compare their outsourcing activity and experience with other IT organizations. The study uses three metrics to measure application development outsourcing activity: it determines how many organizations outsource application development (frequency), how much of the workload is typically outsourced (level), and the change in the amount of work being outsourced (trend). We also measure the cost experience and service experience of companies that outsource this function, and determine how outsourcing activity and experience vary by organization size and sector.
This Research Byte is a brief overview of our report on this subject, Application Development Outsourcing and Customer Experience. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).
Avasant’s research and other publications are based on information from the best available sources and Avasant’s independent assessment and analysis at the time of publication. Avasant takes no responsibility and assumes no liability for any error/omission or the accuracy of information contained in its research publications. Avasant does not endorse any provider, product or service described in its RadarView™ publications or any other research publications that it makes available to its users, and does not advise users to select only those providers recognized in these publications. Avasant disclaims all warranties, expressed or implied, including any warranties of merchantability or fitness for a particular purpose. None of the graphics, descriptions, research, excerpts, samples or any other content provided in the report(s) or any of its research publications may be reprinted, reproduced, redistributed or used for any external commercial purpose without prior permission from Avasant, LLC. All rights are reserved by Avasant, LLC.
Login to get free content each month and build your personal library at Avasant.com
