Can agencies benefit by developing and building apps in countries where wages are lower?

Casper Bierman of Van Diemen Communication Brokers in the Netherlands wondered if agencies could take advantage of building apps in lower-wage countries. By surveying the agencies within Worldwide Partners, Inc., representing all regions of the world, he shares what he discovered.

New product technical development can be very expensive. Fifteen years ago such was the case with developing websites. Nowadays, we see the same trend when it comes to apps. Almost all our clients want them, until they realize what they cost. As an agency, we are interested in outsourcing certain stages of the technical development to countries where wages are lower. This is why we asked 20 leading Worldwide Partners, Inc. agencies in 20 countries to share their experiences about this topic. To get even more input, we asked them to share experiences with outsourcing web development as well. Our expectations were that the results would be similar to app development.

We received a lot of interesting responses. However, not all of them were positive. It appears rather difficult to transfer the advantages of low wages into profit for the end product. In some low-wage countries, a lot of people utilize smartphones, which has resulted in a rise of reliable suppliers. Nevertheless, most of the agencies have run into managerial issues that make outsourcing less interesting. For example, language creates a problem in terms of correspondence and translation costs. Another problem agencies experience pertains having to communicate so many times with the foreign agency that all cost advantages disappear.

A slightly more positive attitude exists among the agencies when the concept and design phase are developed by the lead agency. “The coding and building phase can then be done anywhere in the world,” one agency claimed. The agencies perceive lower costs as being most interesting, and also the possible chance for faster development. However, these same agencies also see potentially higher costs, as every item needs to be checked more extensively when outsourced. In general, it can be said that the outsourcing of app development is not always cheaper. And this is without taking currency fluctuations into consideration.

Most of the experience that the agencies have had come from mismatches in quality and communication. It could be interesting to utilize outsourcing when the agencies have local representation, like is the case when using local network partners. This helps eliminate many of the problems with communication when the partners know each other personally and share the same values and working methods. Skype, too, can play a key role to communicate better.

Nonetheless, when an agency finds the right partner, they can get first-class work for their customers. Outsourcing also offers the key advantage of allowing the business to focus on its core abilities, enabling them to perform better, save time for clients and provide agencies with more resources that can present different ideas and applications. In conclusion, outsourcing can help build a mutually beneficial relationship that provides sustainable growth for both parties.

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