I have compiled two lists of Pros for each of the two options you
stated in your question. Since the points themselves are stated in
relative terms, the pros of one option can be seen as the cons of the
second solution. In other words, all points listed differentiate
between local and non-local vendors.
Here are the two lists as you requested:
Buying Software from a local vendor
1. Higher likelihood that the vendor will offer some sort of technical
support and/or maintenance clause as part of the purchase contract.
This is due to the fact that product experts working as employees of
this company would be able to provide onsite support with relative
ease. Such cost effective means of support are looked upon positively
as value-added services that can be package with the software by many
2. Availability of product experts who are not employed by the
originating firm. This is useful when the technical support contract
is non-existent or expired. For products whose popularity is no more
than moderate (ie. no global following), experts are more likely to be
available in the regions near the firm's offices.
3. Reduced travel time if hands on support is needed - this is fairly
4. Reduced travel costs; often contractors will build in the cost of
travelling to the client site explicitly into the overall support call
cost. Another extreme is that contractors will only travel beyond
their local area if the client is willing to arrange travel and
accomodations for them.
5. Higher liklihood that personal relationships can be built and
maintained will specific individuals as a result of in=person visits
and contact throughout the life of the product. This can clearly lead
to benefits down the line in terms of establishing a partnership.
6. Minimal likelihood of a language barrier; since there will probably
need to be significant interaction between the personnel of the
software company and the client company, this is very important. Since
all parties involved live in the same region, they are far more likely
to be able to communicate effectively (especially in the US).
7. Stronger legal recourse - in the case that anything goes awry and
the vendor does not live up to their end of the contract, the client
company will be able to take more effectlve legal action since you
will not have to cross into international legal arenas. In some cases
it is extremely difficult to obtain recourse on a company (especially
in countries that do not cooperate with the United States) unless they
have an operation within the country's borders.
8. Easier facilitation of reference checks - when deciding among
software firms, a suggested step in the process is to obtain referrals
and validate them. In many cases, local companies will have had
clients that are easy to reach, still in business, and even in the
9. Easier facilitation of business process initiation - when dealing
with a software firm who will be customizing an "off-the-shelf"
solution to meet the client's needs (as is done with most accounting
packages), the software company needs to have a firm grasp on the
processes already in place and how they should be incorporated into
the customization efforts. Local software firms are more capable
because they have likely encountered similar processes. For example,
an American company is far more likely to be capable of comprehending
US accounting practices, standards, and commonly implemented best
practices. Such business knowledge makes it much easier to handle the
10. Information protection and security - local firms (particularly
those with ISO certifications) have a higher tendency to treat
sensitive client data with care relative to non-local firms.
Furthermore, there is a higher emphasis on background checks of
Buying Software from a non-local vendor:
1. Larger number of vendors to choose from - since you are no longer
restricting potential firms to just those in your local region the
number of options increase exponentially.
2. Generally a lower cost solution - many out-of-region firms are
willing to provide a solution for a relatively lower price. To break
this down further, let's consider the reasons for this:
a) Lower or non-existent minimum wage legislation for workers
b) Strength of US dollar in most offshore development hotbeds
c) High motivation for penetrating (client's) local market
3. Time zone difference - in cases where there is a significant
difference in employee working hours for the client firm and software
firm, this can reduced overall cycle time. Essentially, development
efforts can take place while the clients firm's employees are not at
work, and reviews and changes can be done by local employees when the
development firm's employees are not working. This essentially
eliminates the wasted time where employees at one end are waiting on
deliverables (idle time). The magnitude of importance of this is
proportional to the effort required for the initial
4. Higher potential for fixed cost contracts - many non-local firms
will be willing to provide a concrete quote regardless of any issues
that arise along the way. This places the onus on the software firm to
provide fast, high-quality work the first time around. This is clearly
beneficial to the client.
5. Flexibilty of staffing levels (scalable resources)- often the
problem with dealing with local vendors is that required personnel
variances cannot be effectively leveraged. With non-local firms, you
are interacting with only a few key people and the varied amount of
time/effort required by the software firm is transparent (they
interally handle resource allocation).
6. Flexible skill sets - if your desired solution requires broad
knowledge of numerous technologies, you will need either a lot of
people to support your efforts or fewer people who are skilled in many
areas (the latter is often a costly endeavour as such individuals are
not easily obtainable and very expensive when they are. Offshore firms
typically employ many people with very different skill sets, and they
can afford to due to wage differences. Combine this with the general
practice of internal resource allocation, and you have obtained your
objective far more efficiently.
7. Ability to manage the project, not the employees - while many local
software vendors "lend" their employees to clients as consultant
figures, offshore development centers around the client managing the
project, not the employees. This reduces internal workload and allows
higher-paid employees to focus on more value-added tasks.
8. Focus on quality assurance and deployment - since client firm
employees will not have the deal with the granular details of
development, they can place more focus on ensuring that the received
product meets the expectations and requirements of their business
1. Personal knowledge
2. How to Choose An Offshore Software Vendor:
Hopefully this gives you enough information to make an informed
decision - if any of the above information is unclear please do let me
know with a clarification and I will respond promptly.