The True Cost Of Custom Software Development In Ireland

Offshore Software Development due to high costs in Ireland

Onshore and Offshore Software Development – Best of both the worlds

Mitigating High Onshore Development costs in Ireland

Ireland has abundance in skilled IT resources but due to the rising hiring costs, it is essential to strike a balance between offshore software development and onshore quality control and project management.

Takeaway 1:

The global trend in IT is towards agile, outsourced remote developer and support teams.

Takeaway 2:

Ireland has an abundance of skilled IT resources, but the tech boom has overheated onshore hiring costs.

Takeaway 3:

Offshore development teams offer the best value for money in the early stages, but overall project ROI depends on sound onshore management.

If the aim of your business is to be exactly the same as every other business, an off-the-shelf software solution will fit comfortably. But comfort in business is short-lived. If you aspire to disrupt the market, carve out a competitive edge, and grow, you’ll need custom software development. It means taking the more arduous road, but you’ll be following in the footsteps of almost every successful global brand, from  Apple to McDonalds.

Custom software development liberates the business to address more complex challenges, the ones that are vital for driving growth and competing internationally. If your business is looking to disrupt the market through chat bot, AR or machine learning technology, for example, it’s unlikely a commercial software solution will stretch to the task. Off-the-shelf software keeps the lights on. Custom architecture lets the business shine.

PC: pexels.com

The problem is that most businesses in Ireland don’t have the in-house resources to build, test and deploy a variety of custom software apps or platforms, let alone update, optimise and resolve issues on a regular basis.

The cost of doing business in Ireland is high. According to the National Competitiveness Council, labour costs already average €30.90/hr, but increased by 6.1% in ICT in 2018. In order to expand, invest and compete globally, business have to find a proactive solution to taming the rising cost of labour.

An uncertain climate in software development

Business CEOs and CIOs considering the custom software development route find themselves wrestling with two opposing forces. On the one hand, enterprise software spending is the fastest growing sector in a worldwide IT industry valued at $3.8 trillion, according to Gartner. Even smaller businesses are swept up in the rush to invest in custom CRM or mobile software solutions in order to differentiate.

On the other hand, confidence in the process is low. In one study by Geneca, 75% of IT managers and business leaders expected their software projects to fail, either because they are delivered late and over budget, or because they are not aligned with business strategy.

Late delivery and bloated budgets, however, are a management not a software problem. Often the fault can be traced back to the planning stage, and a failure to get buy-in across the C-suite, or to set realistic goals. That’s why it’s crucial to understand what custom software development involves.

Why outsource to an onshore software development company?

If resources don’t stretch to an in-house development team (and not many SMBs can afford a bench of developers) the closest match is to outsource onshore. Essentially, that means contracting software development to a team in Ireland or the UK.

It’s certainly the more comfortable solution. Post-GDPR, many businesses can’t afford the risk of sharing data or IP with providers outside the EU regulatory jurisdiction.

On a purely human level, many businesses favour a collaborative approach to custom software development, resolving issues and planning strategy through a series of sprints.

But here’s the big problem for companies in Ireland who want to outsource to onshore software development companies. These software development companies are competing for talent with the global multinationals who have set up EU headquarters in the Republic. These multinationals are big beasts armed with big budgets, and they’re pushing hiring rates sky-high. For the software development company to source and retain top talent, they have to deliver a salary package that is competitive. Ultimately this means passing on higher service costs to the end client.

The average salary for Facebook employees, for example, stands at €154,000. Add the other tech and software giants into the mix and the result is that hiring custom software development using onshore teams means paying premium rates.

What are the advantages of offshore development?

Offshore IT outsourcing is no longer an innovation. It’s been the standard strategy for at least 10 years, to the point where IT is a $140bn industry in India alone, according to figures from The Economist.

A survey from the Global Leadership Summit found that a third of business leaders expected more than half their company’s workforce to be working remotely by 2020.

To see where the savings can be made, let’s look at the typical time assigned to each phase or skill set of a project, and what the typical hourly rate (in Euros) would be.

ExpertiseSr Software ArchitectSr UX DesignerSr Software developerSr QA Test EngineerProject ManagerTotal Cost
Hours2002501000250200
Ireland97726056150146,200
India412121212143,900
Eastern Europe434330123058,350

Hourly costs taken from www.payscale.com

Clearly, Ireland is the most expensive option for hosting the entire project. Bear in mind, however, that different areas of expertise carry more weight than others when it comes to the overall success of the project, namely the Software Architect and Project Manager. Consequently, companies in Ireland can gain a competitive advantage by outsourcing less critical tasks to countries that can offer the same standard but at a better cost, while investing budget in project-critical tasks in Ireland.

A warning about outsourcing offshore...

In the grander scheme of software development, code is cheap. Mistakes, on the other hand, can be extremely expensive. But poor quality control is nearly always a management issue, caused by project scope that is badly aligned with business goals.

How to get the best of both worlds – Offshore and Onshore Software Development

Seeing a custom software development project through from initial plans and wireframes to delivery and lifecycle management requires a top-down strategic approach. The software code itself is only one of the commodities being traded. Source code at one end needs to be balanced by support resources at the other.

Some of the most innovative companies in Ireland are achieving success by hitting the sweet spot between offshore software development and onshore project management. This arrangement allows the business in Ireland to set fixed costs for with overseas development teams building whatever mobile or cloud-based apps are required.

By outsourcing UX design, Software Development and QA Testing to India, the project illustrated above now comes in at almost half the cost:

ExpertiseSr Software ArchitectSr UX DesignerSr Software developerSr QA Test EngineerProject ManagerFinal Cost
Hours2002501000250200
Ireland96---150
India-212121-
Total Cost19,2005,25020,0005,25030,00079,700

Hourly costs taken from www.payscale.com

The Irish management team is then free to focus on extracting value and maximising customer experience from the software solution. The higher operating cost can be absorbed into increased ROI through added value senior expertise and relationship building.

To Conclude…

The true cost of custom software development in Ireland is as big as you want to make it. Companies can offset the costs of software development with smart investments, which give them more value in the long term.

While software development can seem intimidating as an initial outlay, the truth is these apps and solutions pay for themselves if executed correctly. They do this through maximising customer experience, and freeing up key staff to focus on other areas.

Software is an investment that scales with the business, anticipates competition, and (most notably with AI and mobile technology) improves productivity.

If your business could use either a customer-facing or business-only software solution, we’d be delighted to help you.