China Software Outsourcing Company

Will SaaS impact traditional software outsourcing service?

14 Mar, 2010
Written by Effie Sha
Beijing RayooTech Co., Ltd.

SaaS stands for Software as a Service which is a new technique in the field of software technology. It is a software delivery method that provides access to software and its functions remotely as a Web-based service. SaaS is an on-demand software service provided by the vendors to its customers. With SaaS application license, one application can be used by just one user or shared by multiple users.

What kinds of advantages does SaaS offer to users? SaaS will reduce company’s cost for technology. SaaS provides monthly fee to access application instead of having to invest thousands or millions to create, implement, and maintain software/ application, hardware, help desk or any other internal IT issues. To access to current technology and business applications by paying affordable access fee. SaaS also enable companies to cut IT headcount and save cost. Most SaaS solutions can provide guarantee because they invest in high-end hardware and operating environments. SaaS just looks like supermarket, it provide one-stop shopping model for users, and users can take care of all IT needs in one place. If users want to upgrade or fix applications, they do not need to pay any extra cost for it. There is no worry about virus protection, data backup, data recovery, encrypted data, firewalls, ID and password access, application updating, help desk, technology support, IT training, etc., all in one with SaaS.

As the growth of SaaS or web-based business applications business models, a serious question has come to the surface: Will SaaS impact traditional software outsourcing service?

It is true that there will be more and more companies choose SaaS to reduce their monthly or annual cost on IT services, especially small and medium companies. And probably, many large companies include Fortune 500 companies will consider to use SaaS to against high IT cost. If more companies choose applications from SaaS, than definitely SaaS will threaten traditional software outsourcing industry. It seems that software outsourcing companies is losing customers.  However, SaaS is a service tool which provides various common applications. One application is suitable for many companies’ needs. Because SaaS is a new technology service model, it is not mature enough to satisfy every business needs, and every new stuff must have bugs while it develops, so custom software development services still have large market and will not be impacted in short term. Try to think, every new Microsoft operating system has bugs and Microsoft has to release system patch or package to solve the system problem. So SaaS will be the same, SaaS has long way to go to develop itself, test itself and expand its market. Companies have different business requirements and most of them are special requirements just in this company or a particular industry, so large numbers companies still need traditional software outsourcing services. Furthermore, SaaS will not completely instead of traditional software outsourcing services because many companies live for selling their software products and these companies will outsource their software to software outsourcing companies.

To sum up, I think SaaS will both help build up and compete impact software outsourcing service. SaaS and software outsourcing service are complementary. We should not against new things, SaaS can push software outsourcing companies move to the next step in the new technology generation.

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