Outsourcing is a business model that has been around for ages. Ever since humans settled down from their nomadic ways and began domesticating animals and planting field, the need for specialized services increase, and these contracted services became the first forms of outsourcing. Even in an everyday household in America, you can find forms of outsourcing, for example, the gardening service that trims your hedges, mows your lawn and maintains your flowers is an outsourced service. The gardening service owns specialized equipment that you do not have and it takes a lot of money to buy with few occasions to use. The service works to improve your property, and then leaves with all its bulky equipment, saving you lots of valuable storage space.
For now, outsourcing is often linked with technology development, especially in IT. There are different areas of IT development which can successfully be outsourced: development, QA, tech support, DevOps, digital marketing, and others. However, along with the development, outsourcing is also suffering a lot of misunderstandings, which leads potential clients to falter:
1. Low work quality
The provider’s staff didn’t put much effort into the task, their capability was overrated or they just focused on ticking it off as done, it may happen that the delivered service or product is of insufficient quality. It is often a problem from outsourcing companies. They try to have as many clients as possible, and the amount of projects that each employee works on must be large to gain more profit, which leads to less focus and less effort from each particular staff member to optimize the value for the client.
That’s more a problem with the team choice from the client’s side, not all outsourcing companies work like that. The lack of experience in choosing the right team cannot determine the quality of outsourcing companies.
There are many outsourcing companies who prefer fewer long-term partnerships compare with constant rotation of small projects, which allows them to build dedicated teams tailored for each project’s needs, so that each team member would feel more responsibility and “ownership feel” for the project they work on, as a result they will focus more on value developing rather than trying to tick current task as done and move on.
2. They concentrate on the wrong thing
A client of an outsourcing company may do one or all of the following: does not provide enough input or resources, or fully detailed specifications and expectations, doesn’t set an intuitive goal isn’t available for questions and status updates, but for entrepreneurs are quite busy it is understandable; changes the scope of project or the whole concept over and over again during the work (happens with early startups), interrupts the work with unrelated requests or constant change requests, puts an inexperienced manager in charge of the project who is hard to follow and give recommendations. In such conditions even a great outsourcing company might not be able to deliver a high quality service or product.
3. They don’t understand the customer or customer value
If the outsourcing company doesn’t get the client value or project meaning, the problem is most often not with the outsourcing itself, but either with the team that is doing the outsourced work, or with the poorly established communication channels and project management workflows. So be careful from the start!
Unfortunately, there are significant amount of people conclude when they meet such issues, outsourcing doesn’t work for them. So who can make outsourcing work?
Someone has the budget
The quality comes with the price. One of the reasons why many companies are disappointed with their outsourcing partner is because they thought they could accomplish more with less spend. Yes, that is true to some extent, but outsourcing is already cheap for your company! In average, it costs less a month than having one high qualified in-house staff, it couldn’t be cheaper or you must be alert because of schemes hidden behind! If you don’t even have the budget for that, it’s impossible to hire a quality partner, and the result will let you down. You spend, not much but still significant, money for nothing, which will be a big waste. Always go for quality, and prepare a budget to deserve it.
Someone knows what they need
How can outsourcing company know what to do if you don’t know what you need yourself? A person that goes to an outsourcing partner and can’t explain what they need will never be satisfied with the service. If you don’t know what you need, hire a consultant or a consulting agency first, find out what you need, then find an outsourcing partner based on those needs.
Someone who is active in the collaboration
Active means caring, following the process of the collaboration. You need to be involved in the work even after you hire your partner. Most outsourcing companies have project manager who is in charge of ensuring the workflow and all matters go with it. But do not depend completely on the project manager, they are not a part of your company so you have to actually take up the time and guide them, give them directions, tips, information, discuss their recommendations, read their reports, etc. You need to evaluate your outsourcing partner at least once every quarter.
IT outsourcing becomes more and more popular globally, according to Statista, we may see that large organizations have increased the percentage of their IT budgets spent on outsourcing from 6.3% to 8.7%; small organizations spent 7.8% of their IT budget on outsourcing in 2017, compared with 6.7% in 2016; midsize companies have increased their spending on the average from 4.7% to 6.5%. As you can see, if IT outsourcing did not work, all types of organizations would not spent money for it.
The Bottom Line
Outsourcing works well but not for all. However, it will be unfair if we assume outsourcing is bad after hearing some people who don’t know how to manage it share their bad experience because it really depends on the processes and execution. Outsourcing saves a lot of money and efforts, as you don’t need to look for engineers and set up workplaces for them while you can go to a company that already has them. Usually they value their customers a lot, and work hard on presenting the best results. Although you have to be careful, when picking a company to work with, you need to take into account factors like time zone, communication channels, cultural differences, how easy it is to travel for them and for you. Check the rating and comment on popular outsourcing sites, consider the low cost is not always a good sign, at the end you might spend even more money fixing what such developers have done. What you need are the good balance of price and quality of outsourcing activities, and the heart in your idea.
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