Are you sure the development company you hired is really local?

There have been many horror stories that Australian businesses have hired what they think are local firms to take on their development projects, only to find that these firms are shells which outsource builds overseas. They have sales and services offices in Australia yet all the development work in actuality is done overseas. The exact issue a company with a development project is intending to avoid in the first instance is exactly the type of firm they end up hiring.

If outsourcing development overseas directly, or by going through these shell companies, there are many financial and operational risks at play to the company hiring to complete the build. A major issue is that a company may no longer be eligible for Government grants or R&D concessions because the build is not local. 

Another glaring issue is the lack of transparency and trust. A local shell company is still outsourcing the build overseas. It is misleading to customers engaging in a relationship and the lack of transparency can lead to many operational and project management problems further down the track.

This extends to the facade that is being carried out. At the end of the day it is highly likely that as a customer of this type of development shop, you will get burned by poor management, poor communication with too many lines of information exchange and shoddy workmanship.

Whenever you're vetting a development shop, it's important to always check what's really going on. Ask the right questions. Where is the build done? Who works on the build? And meet your development team in person. Make sure you understand what's going on before you make any decisions.

Take it upon yourself to check the requirements for R&D grants in Australia. The following links are helpful in understanding eligibility and making sure you abide by those guidelines:

• Australian Business Website, R&D Tax Incentive: https://www.business.gov.au/assistance/research-and-development-tax-incentive
• The R&D Tax Incentive Snapshot: http://www.randdsnapshot.business.gov.au/Pages/default.aspx
• Australian Tax Office R&D Program: https://www.ato.gov.au/business/research-and-development-tax-incentive/
• ATO Eligibility: https://www.ato.gov.au/Business/Research-and-development-tax-incentive/Eligibility/

Sources

Campbell R, Posse, What I've learned about Outsourcing so Far, September 24 2013, http://www.rebekahcampbell.com/2013/09/24/what-ive-learnt-about-outsourcing-so-far/ Sirianni A, DCodem Outsourcing Your Software Development - Is It Worth It?  https://www.dcode.com.au/blog/outsourcing-is-it-worth-it