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The Challenges of Custom Software Development in Western Europe and the USA

Today’s software development companies invest a massive amount of time, effort, and capital into developing unique products and services also called custom software development. Why? Because most software solutions within the IT industry are becoming saturated with similar products.

This is an extremely competitive space, and software companies have no choice but to build custom software that’s tailored to the needs of individual customers, or types of customer. The need for custom software development is only becoming more pressing into 2019, making businesses look into offshore development companies to help them out.

What is custom software development?

For decades, companies have used off-the-shelf software and hardware: ready-made products designed for integration into existing systems. Microsoft Office is a great example of a universal, off-the-shelf commercial software that’s packaged up nicely, ready for any company in the world to use it.

While off-the-shelf software has proved invaluable in the past, IT businesses have become more complex. Companies are offering highly-specific solutions to address unique requirements – and that’s where custom development comes into the picture.

Simply put, custom software development is fully adapted for the specific needs and requirements of one group of users. Customers not only get complete ownership over this product, but they can also request extensions or additional features by coordinating with the developers.

If you’ve ever tried convincing Microsoft to add a new feature, you’ll know what a significant advantage this can be!

Why aren’t all businesses developing custom products?

Put simply, it’s not an easy job and there are quite a few challenges down that path.

A shortage of talented developers

The fact that developers are in demand is no secret: research conducted by the App Association shows that nearly a quarter of a million software engineering jobs in the US remain unfilled.

250,000 Software Engineering Jobs Remain Unfilled

The question is – why? According to reports, the US only produces 35,000 computer science graduates every year. At this pace, it would take at least 8 years to fill the open positions. The UK software industry needs 1.8 million trained engineers by 2025.

There just aren’t enough software developers coming into the industry. The situation with employed developers isn’t much better: they regularly work 60+ hours a week, sometimes with impossible deadlines, just to keep up with the workload. It can be a demanding industry.

Programming custom software requires long hours of intense concentration, dedication, and of course consummate skill. However, there are now far fewer senior developers available than the number of companies looking for them!

Graph of types of outsourced jobs

Modern tech stacks can be quite complex: the wide array of frameworks available today are typically not taught in formal education. So when companies take on green developers without that broader-world experience, it can take them a lot longer to hire the right people to build a quality product.

High cost of operations

Hiring top-quality engineers – the kind that can build effective custom software – doesn’t come cheap.

First things first, the average salary of an experienced engineer in the US is roughly $100,000. That’s fairly expensive. To gain access to talented engineers in the first place, you need to engage with recruitment agencies whose fees are typically 20-25% of the developer’s annual salary. And of course there’s all the secondary costs of taking on new employees: office space, equipment, training, benefits and so on.

If you’re a tech company looking for a good software solution, it is significantly easier and cheaper to just buy something off-the-shelf. You might have to adapt your processes to make it work, but the custom software development route just can’t be justified by most organisations.

Other options for building custom software

Outsourcing

If we rule out building an in-house team, some companies will instead draw up rough plans and outsource development to specialists. If this is an established software company, then it’ll probably work out fine, if a bit expensive.

The problem is that when most businesses turn to outsourcing, they’re turning to the cheapest labour they can find. These developers will have neither the customer focus nor the technical skill to build a reliable product, nor are their deliverables up to the mark.

Graph of project Performance of Outsourcing Agencies

According to the Project Management Institute (see the figure below), only 70% of outsourced projects meet their intended goals. The rest are either not completed on time, overshoot the budget, or simply fail.

Price is always the deciding factor with outsourcing. In many cases it delivers poor results and is rarely sustainable beyond one-off, isolated projects.

The Countries with the most STEM Graduates

Offshoring

One alternative is to invest in an offshore development team: a handpicked team of engineers who are employed full-time by your company, but based ‘offshore’ in another country.

You might think that if finding good developers for your custom software development in the US or the UK is difficult, then moving further abroad will be even harder. Turns out, it’s quite the opposite.

India produces roughly 1.5 million engineers every year – a number that is unrivalled across the globe. Not only that, but these engineers are highly-trained, experienced, and fluent in English. Because the talent pool is so huge and largely untapped, you’re guaranteed to find the skills you need in these young tech economies.

1.5 Million Highly Talented Software Engineers Graduate in India

Cost is still a factor here. After all, all the associated costs of hiring new staff are lower in India – it’s a huge attraction. What separates this from outsourcing, however, is that the emphasis is still on top-quality developers.

No matter how skilful and talented an Indian developer is, they’ll still cost a lot less than their equivalent in the US. It’s not a reflection of ability or experience, but rather a substantially lower cost of living.

By partnering with an offshore software development company that takes care of the recruitment process on your behalf, you might find building custom software is a whole lot easier than you first thought!

If you’re new to the concept of offshore software development, you can check out our blog post: The 2019 Guide to Offshore Development Services, which highlights everything that you need to know about offshore development, specifically in India.

Custom software development can be intimidating, but it doesn’t have to be.

If you have any questions about offshoring or building software for your business, you can hop on a call with one of our senior executives and talk through them whenever suits you.

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