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Saving Money from Outsourcing Beats Expertise

Cost savings from outsourcing development trump acquiring special expertise, according to a new survey by Evans Data, a market research firm. Nearly 400 enterprise developers working in companies of 1000 or more employees participated in the firm’s Summer 2005 Enterprise Development Survey.

Twenty-eight percent of respondents say saving money is their main reason to outsource, up from 15 percent 5 years ago. In comparison, 19 percent of respondents outsource development to acquire special expertise, a dramatic reduction from 44 percent 5 years ago.

"Outsourcing once made use of high-level experts to bring particular expertise to a development project but now we're seeing that outsourcing is much more likely to be used to save development costs," says John Andrews, Evans Data's COO.

One-third of the survey’s participants indicate they expect to increase their use of outsourcing next year; only six percent believe they will decrease their reliance on outsourcing.

"Most companies outsource less than a quarter of their development, most likely lower level programming tasks that are more cost-effective to outsource rather than devoting an in-house programmer to such jobs, Andrews says. Only 7 percent of survey participants say they outsource more than 50 percent of these projects.

Other findings from the August 2005:

  • Sixty one percent of enterprises have increased their IT budgets this year, up from 53 percent a year ago. Only 10 percent plan to scale back their IT budgets.
  • Forty nine percent of enterprises and 29 percent of SMBs say they run their applications for more 5 five years.
  • Almost 60 percent of enterprise developers intend to use open source code in the next year.
  • More than half (54 percent) of enterprise developers plan to mobilize business processes to allow remote access to mission-critical applications in real-time.

Additional results from the survey can be found at www.evansdata.com.

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