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Why Software Outsourcing in Romania?
Why software outsourcing in Romania?
Learn why software outsourcing in Romania is a good option for your project.
Romania, an Excellent Choice for Software Outsourcing
Any company that makes custom software applications may need outsourcing at times. This situation comes from tight deadlines, peak workload, or the lack of internal specialists. Whether done locally, nearshore, or offshore, software outsourcing is a handy solution to this problem. You will learn in this article why and when to outsource. In addition, you will find out how Romania compares with other major destinations for software outsourcing.
When Is Software Outsourcing Justified?
Let us imagine the following scenario. You are the product owner of a new SaaS solution. Naturally, the faster you implement it, the higher your chances to penetrate the market are. Thus, one of your primary concerns is to assemble a big team and make it efficient. Assuming your company is based in New York City, locally recruiting all the specialists would be expensive. So, what options do you have? If funding is readily available, you may consider doing the project only with in-house specialists. But what will you do with all the people on your payroll when the project is over? Letting them go could hurt your company’s image. A more sensible option might be to turn to software outsourcing. Using globally distributed teams and up and down-sizing them at will sounds promising. So, what should you consider when deciding where to outsource?
Software Outsourcing Costs
Depending on your level of funding and quality requirements, you may have different cost constraints. Of course, software outsourcing costs vary from continent to continent. Surprisingly, the differences in hourly rates are not significant for small teams, as the data suggests.
Keep in mind that labor makes for 50 to 70% of your outsourcing costs. Thus, each stage of the collaboration requires additional investments. First, you select the provider with research, interviews, and visits. You might need an experienced consultancy firm to assist you in the process. Next, you negotiate contracts and plan the work. We recommend you use an experienced lawyer unless you are familiar with legal documents. Your next cost components are project management and communication. Finally, you may need frequent face-to-face meetings with the software outsourcing provider.
Service Quality
Top-quality is critical in any SaaS business. Naturally, quality is equally essential in any other type of software. Therefore, make sure you choose a software outsourcing partner that can meet your quality requirements. Thus, it is vital to have an effective process in place to select the IT partner. This process should focus on several areas. First, you need a few experienced, proven software professionals in the development team. These people handle the most challenging parts of the project and guide the less experienced specialists. Next, your partner must have well-established, effective engineering, recruitment, and compliance processes in place. If you lack the required in-house expertise, have a consultant assess these aspects for the companies on your shortlist. Requesting references from a few relevant customers of each company on your shortlist can also prove invaluable.
Project Management
Agile SCRUM and microservices delivery took the software development world by storm. With microservices, you need not deploy everything together. Therefore, you can improve the code or fix a tiny error without waiting for the next release cycle. However, taking advantage of microservices requires multidisciplinary skills that are available in a few organizations. Of them, DevOps and continuous delivery are critical. By breaking up your solution into microservices, you may have independent teams work on individual services. Thus, you need not manage a single, large team.
Furthermore, you can implement each microservice using a different technology. For example, Java may work best for a service, while Python for another. Whether Agile SCRUM or microservices is the right approach for your project depends on a multitude of factors. We recommend you trust an experienced consultancy firm with the decision.
Collaboration Models
Software outsourcing providers usually offer two collaboration models. The first is called dedicated team and means team augmentation. Thus, you can add any specialist you need to your team. You give that engineer tasks, and the software outsourcing company manages them. By managing, we mean tracking their activities and providing training and support when necessary. Typically, you pay the outsourcing partner only for the number of hours worked. You can also opt for monthly rates and cover vacation time and sick leave. In this model, your only warranty is that the engineer fits your needs. If they do not, all you can do is request a replacement. The second approach is called fix price. Its main feature is that it includes error fixing in the rate. Of course, you get no real cost-benefit from this model. In fact, the dedicated team model tends to be less costly
Scaling the Team
In the fixed-price model, you need not worry about team scaling. Thus, the software outsourcing company commits to delivering features at dates set well in advance. All you need to do is make sure your partner keeps its promises. As the classic fixed-price model has drawbacks, we recommend relying on Agile contracts. Such contracts set the stage for long-term win-win collaborations. In the dedicated team model, you may expect high flexibility in team scaling. Unsurprisingly, things happen a bit differently. Like you, the IT partner is risk-averse. A small provider is unlikely to have other paid projects for staff downsized from yours. Furthermore, market factors may prevent up-scaling a team at short notice. To build a lasting partnership, be prepared to accept a fair downsizing scheme. Besides, make long-term plans and notify your partner well in advance of any expected changes.
Team Outsourcing Versus Software Product Outsourcing
If all you need is to augment your existing team with specialists, you are relatively safe. There are plenty of software outsourcing companies that can quickly fill your positions. When you need to outsource an entire software project, things get a bit complicated. Thus, a small proportion of the software companies in traditional outsourcing destinations can handle such projects. Those companies usually have extensive experience developing software products all by themselves. They understand the customers and can manage all the project activities, throughout the entire project lifecycle. Finding companies with such expertise may prove challenging. The only advice we can give you is to request comprehensive project case studies. Those materials should describe in detail all the project components handled by the provider. After reading the cases, have the providers’ customers confirm what you learned.
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Data Security
Since the introduction of the GDPR, data protection in the European Union (EU) has become more tedious than before. While ensuring confidentiality for the data you share with the software outsourcing provider is paramount, the GDPR adds complexity to the process. Your due diligence will depend on the application area and market for the software product. To ensure the software outsourcing partner takes data security seriously, consider the following process. First, include strong provisions on confidentiality and data protection in the contract. Then, if either party processes personal data of the other party, meet the data protection requirements from the country where the data owner resides. Last, if you need reliable data security measures, look for a provider with an Information Security Management certificate like ISO-27001. Such certification indicates mature security processes, which are prerequisites for a high degree of personal data protection.
Cultural Affinity in Software Outsourcing
The term cultural affinity refers to a multitude of aspects. Thus, it can mean the business etiquettes followed by the business partners and their management systems. Of course, a software provider with a rigid bureaucracy is not the right choice for highly complex projects with tight deadlines. Furthermore, you will most likely prefer a partner with a structure and processes that match yours. Cultural affinity also refers to the understanding and acceptance of the other party’s values and traditions. It can also mean seamless communication with the software outsourcing company. Choosing an IT partner familiar with different cultures that successfully addressed cultural gaps in its projects will help. Due to space limitations, we will touch next only three components of cultural affinity.
Communication
Speaking the same language as the software outsourcing provider is mandatory. By this, we mean the language itself and the subtle, non-verbal aspects of communication. Of course, understanding each other’s vocabulary and pronunciation is the first step in establishing a connection. Then comes the outsourcing partner’s ability to understand and make itself understood. This ability relies on the so-called “soft skills” and can make or break a partnership. Software engineers are notorious for speaking a language that resembles the code they write. Therefore, it is essential to test the communication before starting a long-term outsourcing partnership. You may begin by collecting info about the soft-skill training programs implemented by the providers on your shortlist. Then, request permission to speak with a few software developers like those you would communicate with. If all seems right, do a short test project with the partner to validate your first impression.
Frankness and Transparency
This aspect is crucial in your collaboration with the software outsourcing partner. For the relationship to work, both you and the partner must be transparent and frank. Thus, it would help if you gave the partner accurate, on-time feedback throughout the project. Furthermore, consider notifying the outsourcing well in advance of any projected up- or down-sizing of the team they allocate to your project. Ignoring this aspect can put unnecessary pressure on the partner and jeopardize the relationship. The software outsourcing company should also show frankness and openness. For example, they must tell you how often and how much they expect to increase the rates. Besides, the outsourcing partner should warn you when they think you are on the wrong track. Not being told by the partner that your specifications for the project are far from the best can have serious consequences.
Proactivity
This delicate aspect often makes the difference between mediocre and outstanding products. Thus, proactive people shall constantly challenge your ideas and suggest improvements. Unlike them, the passive ones shall invariably say yes to everything that comes from you. The source of this attitude is of little importance. What matters is to screen an outsourcing partner with proactive people. While this is easier said than done, there are a few tricks on which you can rely. First, ask your prospective outsourcing partners about their company values and culture. If you find strong evidence of learning programs, encouragement of self-improvement and frankness, and tolerance to mistakes, continue the discussion. Then, ask a few employees of the partner how they feel about these aspects. To validate what you learned so far, speak with a few customers of your potential partner.
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Software Outsourcing - Romania Versus the Rest of the World
To compare Romania with the rest of the world, you can look at price, quality of the engineers, and size of the talent pool. As already mentioned, differences in the hourly rates for vetted freelancers around the world are relatively small. You will find similar differences at software houses. Speaking of quality, Romania enjoys high places in many rankings. Thus, it ranks 20th in a research report released by SkillValue. Of course, quality comes from the code, effective communication, and proactivity. These are areas in which Romanian software developers score high. Last, it would help if you compared the talent pools by size. Romania is the third strongest software outsourcing destination in Europe, with over 120,000 professional developers and about 7,500 IT college graduates each year. Worldwide, only India, Brazil, Poland, Ukraine, and Mexico have significantly larger pools of software engineers.
Romania Versus Ukraine
The criteria from the previous paragraph place Ukraine slightly above Romania. With a talent pool of over 200,000 professional software developers, a software house from Ukraine is likely to find the right people for your project a bit faster than one from Romania. However, labor costs are slightly lower in Romania. Furthermore, the English spoken by Romanians is easier to understand than that of their counterparts from Ukraine. The difference comes from the fact that Romanian is a Latin language and Russian Slavic. Latin languages seem more compatible with English than Slavic. Of course, we are not trying to say that mastery of English differs significantly between Romania and Ukraine. The only noticeable difference is in pronunciation. While none of the above places Romania way ahead of Ukraine, its EU membership can do it. This situation occurs when your software product processes personal data belonging to EU residents.
Romania Versus Poland
With roughly 300,000 professional software developers, Poland has the largest pool of IT talent from all the outsourcing destinations in Europe. Furthermore, it is an EU member and thus a good choice for projects that use personal data belonging to EU residents. The only obvious plus of Romania is its labor cost, which can be 20 to 30% lower than in Poland. Strategically located in Central Europe, Poland is the closest outsourcing destination to countries in Western Europe. Besides, it is one hour closer in timezone to the United States than Romania. All these aspects made Poland a top destination for software nearshoring. Remember that the country’s success means you may have difficulty finding the right people for your projects. Fighting for them with giants like Google, Microsoft, SAP, and Cisco is not for the fainthearted.
Romania Versus South America
Brazil and Argentina are the stars of outsourcing in South America, while Mexico takes the central stage in Central America. With over 400,000 professional software developers, Brazil is second only to India. While the size of the talent pool and the time zone in South America are clear advantages for businesses in North America, demand for developers exceeds the offer. Besides, the English skills in some South American countries might not meet the expectations. While a time zone difference of 2 hours is way better than one of 7, Romania can still enjoy at least a 2-hour overlap in business hours with clients from Eastern US. As mentioned before, many Romanian developers prefer working late hours, making it easy to schedule live meetings with US-based clients. Furthermore, labor costs are slightly higher in Latin America than in Romania.
Romania Versus India
With over 5 million professional developers, India is second to none in size among popular software outsourcing destinations. Furthermore, roughly 500,000 of these developers are outstanding. In contrast, the total number of professional developers in Romania is 120,000. Besides, labor costs in India are 20 to 30% below those in Romania. So, what would determine you to choose Romania? First, the entire world is fighting for Indian talent. This “war” will lead to a shortage of people and cost increases. Next, doing your project in India has hidden costs. Cultural differences, for example, can cause misunderstandings and delays or even wreak havoc on your product. Thus, Indian professionals can approve any decision from the client, even when they are fully aware of the dire consequences this may have. Last, the time zone difference, the long flights, India’s climate, and tropical diseases can increase the cost of your project.
Conclusions
You learned from this article when to choose Romania for software outsourcing. We assumed you need a SaaS solution and have the company headquartered in New York City to build the arguments. Then, we touched on several drivers of outsourcing that apply to your case. Of them, costs, quality, cultural affinity, speed, and data security have the biggest impact on your project. Next, we presented the main collaboration models used in software outsourcing and the differences between team and product outsourcing. Last, we compared Romania with a few other major destinations for software outsourcing.
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