Survey Explains Why German Companies Still Refuse to Outsource

Posted: September 20, 2010 in Market Research

IT Sourcing Europe highlights the major reasons keeping the German companies away from the outsourced software development.

IT Sourcing Europe, a UK-based research and nearshore IT sourcing consultancy company, announced the completion of its German In-House Software Development Best Practices Survey 2010, conducted in the frames of its All-European IT Outsourcing Research . The research is aimed to explore the major reasons keeping the German companies away from the outsourced software/web development as well as key trends and challenges of the in-house development. The survey was completed by the 286 companies. The survey sample was comprised of innovative companies, IT start-ups and representatives of all major verticals from telecommunications to retail to entertainment to travel etc.

The survey findings suggest that most of German companies do not outsource because of the following main reasons:

  • they want to have 100% managerial control of their software/web development function and project team;
  • they think that outsourcing will eventually cost more money and “headaches” than in-house development;
  • they’re quite satisfied with the way their software products are developed within own house;
  • they don’t believe that low-cost countries are able to deliver high quality software products;
  • they are afraid of putting their intellectual property at risk and creating shared environments;
  • they think they are too small and/or immature for outsourcing
  • they don’t want to cope with change management.

On the other hand, German companies point out that in-house software development and implementation are a way too expensive and the German IT resources are quite scarce. Other frequently cited challenges are: slow time to market, lack of sustainability and flexibility, staff turnover and extra costs and time associated with software bugs/errors fixing.

Almost 30% of companies polled admitted the fact they would outsource their software development if they ran out of specific skills within Germany, needed to free in-house resources for other core needs and if there were pressure from investors/executives to accelerate time to market and reduce operating costs.  Only 2% of companies agreed that outsourcing is an unethical practice and 3% confessed they would never outsource their software development to a 3d party.

More thought-provoking findings are available in the German Software Development Intelligence Report 2010 which can be downloaded from here .

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