Questioning the Reshoring of Software Development

Sometimes our clients say that it becomes harder to work with software development offshore companies. The reasons differ from strategic to tactical ones. What happened?

Recent research of reshoring phenomenon determined that changes in the exogenous wage rates and currency or changes in the managerial valuation of the true total cost of offshoring relative to producing locally, based on experience with offshore production could have led to the reversion from offshoring to reshoring.

Based on this research, companies have moved activities offshore based on price quotes, which exclude hidden costs. Later, these companies have reshored after experiencing the risks and hassles of offshoring (e.g., midnight phone calls, delivery delays, communication challenges). Does low price come at a cost?

This situation is a very valuable insight to strategic management of software development company and a good example of how outsourcing, as one of the strategic decisions, shouldn’t be simplified and chosen only by price. Moreover, reshoring of software development should be discussed as an alternative. The software development outsourcing company, which is concentrated on a long term partnership, should offer accurate calculations of the project time and costs, return on investment calculations, that would also include important hidden costs.

Research also stated that “it is possible that some reshoring decisions are suboptimal due to assigning too much “cost” to the hassles and challenges recently experienced.” Therefore, clear and reasonable decisions could improve the management of the software development offshore activities as opposed to reshoring of software development.

It is said, he who goes softly, goes safely; he who goes safely, goes far. Slowly but surely. Maybe reshaping the way your company plans and makes insights on strategic software development outsourcing can make a difference.

 By Vilija Buteniene, Simplanova Marketing Manager

About Simplanova

Simplanova is a development outsourcing company working only with Microsoft Dynamics Partners, specializing in Dynamics NAV (formerly Navision) upgrade. We help Dynamics Partners by giving the ability to acquire the skills needed, cut overtime costs and increase the efficiency of Microsoft Dynamics NAV development services.

Our services: Microsoft Dynamics NAV upgrade (all versions), Microsoft Dynamics NAV development, Microsoft Dynamics NAV RTC Add-in development, Microsoft Dynamics NAV integration, Microsoft Dynamics NAV localization, Microsoft Dynamics NAV (Navision) development outsourcing.

Learn more about our Microsoft Dynamics NAV services for Microsoft Dynamics partners

For more information about Microsoft Dynamics NAV outsourcing, contact our service representative here.