Outsourced development helps UK companies save up to 60 percent of their operating costs

Posted: August 11, 2010 in Market Research

IT Sourcing Europe highlights some of the findings of its recent UK IT Sourcing Survey 2010.

IT Sourcing Europe, a UK-based IT Sourcing research and consultancy company, has recently completed its UK IT Sourcing Survey, conducted in the frames of its All-European IT Outsourcing (ITO) and In-House Software Development Best Practices Research 2010. The survey questionnaires were filled out by the 250 UK companies with different ITO experiences.

The survey finds that 30% of UK companies outsource 90% to 100%, while 14% outsource less than 10% of their software/web development. Most of the outsourced projects fall under the Web (Web 2.0, Microsoft ASP.NET, Java, EpiServer, open source etc) and Enterprise (J2EE, J2SE, C#, MySQL etc) areas of expertise. Fifteen percent of companies outsource Mobile development (iPhone, Android, Blackberry, Windows Mobile etc), 10% outsource embedded development and 8% – Software as a service (SaaS) and Cloud Computing.

Comparing the actual incurred annual costs of the outsourced development to the contracted ones, 51% of companies say their actual incurred costs are almost equal to the expected ones, 28% say the actual costs of the outsourced development are up to 25% higher than the expected ones, 15% report their actual costs to be 25%-49% higher and 2% – 50%-75% higher than expected.

Regarding the actual savings from the outsourced development, 35% of companies save 40-59%, 29% – 10%-24% and 16% – 25%-39% of their operating costs from the outsourced software development. Only 8% of participants save 60% and 4% – less than 10% from their outsourced software development.

Other survey findings and reduced UK Report version can be downloaded UK ITO Report 2010

  1. There is no precise definition of outsourcing however; it is often viewed as involving ‘the contracting out of a business function to an external provider’. Thus a business enters into a contractual agreement to outsource a specific business function to a third party (usually in offshore destinations) over a substantial period of time. This third party organization then takes control of the function and becomes responsible for its success.Outsourcing allows Companies to concentrate on what they do best, be more flexible and manage growth effectively. If managed successfully, outsourcing can help reduce business costs tremendously whilst also making effective use of outside expertise and technologies. Many well known companies such as IBM, Microsoft, T-Mobile and Prudential outsource various business functions to offshore destinations like India, China, and Philippines etc.

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