IT Sourcing Europe highlights the findings of its ongoing All-European IT Sourcing & Software Development Research 2010 with regards to actions that non-outsourcing companies take to respond to the challenges of the in-house software development.

According to the results of the ongoing All-European IT Sourcing and Software Development Best Practices Survey 2010 , 25% of the UK, 21% of the Danish and 29% of the German companies that develop their software/web applications within own house encourage their software developers to work overtime to accelerate development process and, as a result, time to market.

At the same time, staff turnover is one of the most frequently cited challenges of the in-house software/web development in the countries surveyed. It is obvious that the latter is just a logical consequence of the first. Although overtime work is double-paid, not too many IT specialists are happy with having to “burn the midnight oil” and sacrifice their free time for the corporate benefits.

The possibility that burnout occurs in software development is suggested by studies such as that of Kumashiro, Kamada & Miyake (1989) which showed the stress scores of software engineers to be higher than those of other professionals. Factors in the work situation contributing to the overall high stress scores were pace of work and overtime.

As work in software development is characterized by very high intellectual demands, stressors such as excessive workload, time pressure and overtime increase the risk of project failure due to the human errors caused by the occupational stress and burnout. Tired of increased work hours, many software developers seek new employments with fixed work hours or go freelance. And every project manager knows well how crucial it can be for the team to lose one or more of its members while the development is “in full swing”.

Hiring and training new team members takes extra time and financial and managerial resources. And every time the project is at a standstill competitors will have an advantage of developing and marketing their application more quickly and, thus, taking the lion’s share of the market.

One of the possible appropriate solutions for Western European companies can be in-sourcing part of their software development function to a 3d party nearshore. By ‘in-sourcing’ we mean establishment and growth of own software development team(s) within an outsourcing partner. The idea behind this rather innovative business model is that a Western European company contracts an IT services provider located within or close to its time zone and has this provider act as its agent to cover recruitment and administrative issues.

Central and Eastern Europe, which is a way cheaper than Western and Northern Europe in terms of software development and IT resource costs, is rich in competent software developers who can assist the in-house team with the most critical and core tasks. As the shortage of domestic IT resources is another frequently cited challenge of the in-house software development, not all of the required skills can be found in homeland to develop the highest possible quality application, but they can easily be found nearshore.

Within this model the pricing structure is very transparent as the client only pays each outsourced team member’s salary and provider’s service fee. There are no hidden costs, which will enable the Western European clients to proactively plan and budget their software development process and save significant operating costs in a long run.

However, this model does not work in offshore outsourcing, as it purports frequent client’s visits of the outsourced team and close face to face communication and collaboration. In the end, it is the client that by 100% manages the outsourced team, compensation and retention, not the ITO partner, like in many traditional models such as dedicated development center (DDC) and Build-Operate-Transfer (BOT).