Outsourcing Technology Development Fears – Bah Humbug

According to an article in Forbes recently Ellie Cachette thinks the fear of outsourcing technology development is holding back entrepreneurs. In the article she focuses on female Chief Executives like herself, but thinks fears about outsourcing technology development is wrong for all tech innovators.

She points to investors as being the first that seem to automatically dismiss the concept of outsourcing technology development. She writes in Forbes, that so often “outsourcing technology” is seen as a turnoff for investors. When a founder is trying to raise money, especially on the West Coast, the first question is often, Who is your technical co-founder?”

Outsourcing Fear

In fact she goes so far as to say that in some cases it is the successful start-up’s “dirty little secret”. She writes “While it’s often only talked about in hushed voices, many successful start-ups leverage outside development agencies, and until your business has high security needs, this might work for mid-term company growth as well as short term.”

Yet CIO magazine in it’s article “10 IT Outsourcing Trends to Watch in 2014” sights number two as the concept of “hybrid offshoring” heating up. In a quote from Atul Vasithsha, chairman of outsourcing consultancy NeoGroup, he indicates that “In 2014, offshoring to a supplier will not be the default.”

Rather it will be a hybrid of insourced and outsourced offshore development services. “Companies are starting to invest more in global business services models, [which combine] the best of shared services and outsourcing under a common governance model. This is seeing processes being offshored in captives by industries that have traditionally been reluctant, such as media and entertainment,” Vasithsha is quoted to say in the CIO article.

With a number of industries beginning to feel the crunch to catch up technology wise 2014 is likely to be full of initiatives in retail, insurance and manufacturing. Increasingly there is a need to do a better job of protecting customer data and both of these industries have been “patching up” aging systems for too long.

The recent security breaches at Target and Michaels were just the latest of a long line of breaches dating back to TJ Max several years ago. A combination of lax physical security and old firewall technology that had far too many holes in it have led to more retailers experiencing breaches by now well experienced data thieves.

And the thefts and types of retailers affected are not likely to end soon. Smaller and smaller firms are being attacked and many an analyst believes this is just the tip of the iceberg.

To catch up and get ahead of these criminals has more than one major retailer seeking new technologies to protect themselves. This has already driven firms in both retail and insurance to begin outsourcing at least a portion of their systems development and deployment to offshore firms. All in an effort to speed up the process of protecting themselves and their customers from credit and debit card data theft.

So despite the average investor’s fear of outsourcing technology development, the practical folks faced with real world issues don’t seem to agree. 2014 is going to be a busy year for development and the winning companies will be those who balance internal resources with external services successfully.