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Software outsourcing in government - A survey

Mathew George
East West Software Services Inc
12810 Palm Desert Ln
Houston, TX 77099
281-498-4383
Email: Mathew@eastwestsw.com
Web: www.eastwestsw.com
Suvra Basu
HOPE Consulting Inc
One Exchange Place
Jersey City, NJ 07302
201-309-4820
Email: Suvra.Basu@hope-consulting.com
Web: www.hope-consulting.com


Abstract
Many public and private sector organizations are faced with a growing backlog of software work and an acute shortage of experienced software personnel with expertise. Software outsourcing is seen as a solution by many. The authors conducted a survey among all the 50 North American states on their software outsourcing activities. The authors are very thankful to all the state agencies for their support and encouragement.

Introduction
Harvard Business Review has identified outsourcing as one of the most important management ideas and practices of the past seventy-five years. Today, more than 90% of the organizations outsource one or more activities. To savy executives the real question is no longer, “should we outsource”, but how best to ensure success in this new outsource world.

This survey was conducted among all the states in North America about the status of their software outsourcing in their organizations, how much they knew about software outsourcing and what additional information they needed to make correct decisions.

Business Drivers
Many organizations are outsourcing their GIS data maintenance and other Information Technology (IT) activities to reduce costs, improve turnaround and operate their systems with near 100 percent reliability.

In the GIS environment, the very nature, size and complexity makes data maintenance a difficult challenge. In addition to the challenge of maintaining the database with the latest changes, the organization must also control costs in order to be competitive. The situation is referred as “doing more with less.”

Some of the quantifiable benefits of software outsourcing are:

Economy and Efficiency
Instead of paying a fixed cost for a dedicated staff, organizations that outsource pay only for actual work accomplished. The service provider is dedicated to data conversion, whereas the organizational staff have a variety of functions. In addition, since the service provider has many years of data conversion experience working on a variety of projects, they can offer a number of unique data processing techniques that lead to a more efficient process.

Currency and Quality
Knowing that data would be accurate and up-to-date would allow organizations to focus on value added activities.

Flexibility
The service provider is able to support fluctuations in the maintenance work cycle, providing quicker turnaround time, reducing rework for users and relieving checkout pressures.

Double Productivity By using the “Follow the Sun” Strategy
For example, organizations, by outsourcing to global IT service providers in countries like India, would enjoy double productivity due to the time difference between the U.S. and India.

Priority Reengineering
Through the off-loading of non-core activities, the organization can refocus its resources to activities that provide higher value and return on investment.

The number of companies that are leveraging global resources and looking beyond national boundaries to meet their IT needs is growing. More and more organizations are turning to service providers that use resources outside the U.S. In many cases, these services are purchased and managed through service providers headquartered in the U.S. The service provides three delivery and execution models:
    Onsite
    Offshore
    Hybrid (Onsite followed by Offshore)
These companies are not only looking for outsourcing partners but actually at “rightsourcing partners”.

Results of the Survey





Observations From The Survey
Eighty four percent of the senior executives interviewed stated that they have used or are currently using software outsourcing. Outsourcing was mostly used for design, requirements, coding and testing. Contrary to popular opinion, cost was not one of the significant factors driving the growth of outsourcing services (only 16%). Acquire expertise, insufficient in-house capacity, reduce development cycle and speed up process were the major reasons for outsourcing. Top management drove most of the outsourcing effort.

Comparing Outsourcing Work With In-house work
For software outsourcing the senior executives gave high marks for the following:
    Development schedule - faster
    Intellectual capacity - better
    Scheduling flexibility – better
    Product quality – better
The States Which Participated In The Survey
  1. Alabama
  2. Arizona
  3. California
  4. Colorado
  5. Connecticut
  6. Delaware
  7. Florida
  8. Idaho
  9. Illinois
  10. Indiana
  11. Iowa
  12. Kansas
  13. Kentucky
  14. Louisiana
  15. Maine
  16. Maryland
  17. Michigan
  18. Mississippi
  19. Missouri
  20. Montana
  21. Nebraska
  22. New Mexico
  23. North Carolina
  24. Oklahoma
  25. Pennsylvania
  26. Rhode Island
  27. South Carolina
  28. Texas
  29. Virginia
  30. Vermont
  31. Wisconsin
  32. Wyoming
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