Innovations, advancing tech, and global changes are transforming the technological landscape.
Modern problems require modern solutions, don’t they?
IT outsourcing has broken into our new reality as a buzzing trend and a subject of extensive debate. While some are raising concerns about the detrimental impact of outsourcing on domestic job opportunities, others focus on the myriad of benefits that this cooperation model brings.
The business process outsourcing market alone is set to increase in value by around 8.5% between 2021 and 2028.
According to Deloitte, the main reason for outsourcing among 70% of companies is cost reduction.
Referring to ZIPPI, a significant 37% of small businesses outsource their IT service.
And this is no wonder. Companies that opt for outsourcing see considerable gains. These include
- Cost efficiency through cutting unnecessary expenses
- The ability to tap into the global pool of advanced expertise
- Access to cutting-edge technology
- Competitive advantage
As stated in the MarketSplash report, software development outsourcing is a strategic move for many businesses, but it’s not without its challenges and risks.
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Common Bottlenecks in IT Outsourcing
Despite the countless advantages, a lack of oversight and poor planning can get in the way to successful project completion. It’s crucial to single out the challenges first and find effective solutions.
We’ve compiled a list of the most common risk factors that you should watch to ensure a positive outsourcing experience.
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Finding a reliable outsourcing partner
You face the first challenge before you even start working on the project. Relying on the wrong vendor might lead to a catastrophe – without any exaggeration. Partnering with a trustworthy and reliable IT outsourcing team, otherwise, will drive your business’s growth.
So what makes the perfect match? This requires having the necessary tech and domain expertise, fitting your budget, working as per your schedule, and similar.
Finding such an outsourcing team to hire will take time as well as effort. However, these investments will definitely pay off.
Communication challenges
If you still think that all failures happen only due to operational issues, you’re mistaken. Poor communication can also be a critical obstacle on your way to the desired result.
Ensuring continuous communication and complete transparency becomes even more important with offshore outsourcing. Different time zones and language barriers complicate the cooperation process significantly.
If you don’t communicate your expectations, requirements, and goals accurately, the external team will be left guessing. The result? Misunderstandings and unmet needs.
According to a global study of 305 buyers and service providers, 25% of outsourcing projects fail due to inadequate communication.
Quality assurance implementation
Quality assurance is a must. You should never let a product go live without checking it properly first. Inadequate testing processes result in a number of critical bugs and errors that might cross your efforts and investments.
Security сoncerns
Cooperation with an outsourcing team involves sharing some private information and intellectual property. That is risky. Ignoring the necessary security measures might end up with sensitive information leakage. This will have a detrimental effect on your brand image and bottom line. Or even worse – this will get you in legal trouble.
Lack of transparency
Transparency is crucial for building trust, establishing clear and consistent communication, and ensuring a mutual understanding of project goals, scope, and timelines. It’s especially important when working with a remote team. Lack of transparency means limited visibility into the outsourced team’s progress and difficulty in tracking project milestones and deliverables.
Expectations and goal mismatch
Confuses related to objectives and expectations often happen when requirements are not established precisely at the very beginning. You should set clear and realistic goals as well as make sure the vendor sees eye to eye with you. This will save you from misunderstandings and unmet demands eventually.
Inadequate experience
Lack of relevant experience and skills will get you in huge trouble. You might invest time, effort, and funds but end up with a poor-quality product that doesn’t align with your requirements whatsoever. Not the thing you’d like to go through, right? This usually happens when you choose and hire an outsourcing team in a rush so you don’t pay enough attention to their skillset, tech expertise, and experience in your domain. As a result, they just are not able to complete a project as per your expectations.
Lack of experience with outsourcing is one more challenge to face. When first working with an outsourcing team, it can be overwhelming. You are not familiar with the team’s workflow, practices, and concepts and struggle to figure everything out.
Wrong outsourcing model selection
For the workflow to be as productive and successful as possible, you should take numerous factors into account such as specific requirements, budget, scope, and deadlines. These will impact your decision on the appropriate outsourcing model. Make sure it is profitable and comfortable for both parties. Going with the wrong model may severely affect the working processes and the quality of the software product.
Outsourcing core competencies
Do not forget that one of the major advantages of outsourcing is the ability to focus on core business processes while an external team is responsible for secondary tasks.
Outsourcing core competencies is a mistake that some companies, unfortunately, make to scale as quickly as possible. But the outcome might be surprisingly sad.
Core competency holds the brand’s strength and uniqueness. Letting an external vendor cover it is risky. This means giving an outsourcing team complete control over your revenue-driving functions. These are also what form and regulate your customer base.
If a team fails to meet your expectations somehow, you will have to deal with serious consequences like revenue loss, customer churn, reputation damage, etc.
Cost overruns
Cost overruns occur when the actual costs of outsourcing IT services exceed the initially estimated or budgeted costs. This is usually due to poor project planning and estimation, unexpected expenses, and difficulties in tracking costs.
It is not always such a serious problem yet it is important to be aware of this potential and have a plan in place to overcome any overruns.
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Strategies to Overcome IT Outsourcing Bottlenecks
With such a list of challenges those who have little to zero experience of outsourcing might think it’s too complicated, risky, and stressful. But don’t rush into panic. All these issues are solvable as long as you know the effective strategies. But in case you don’t, we’ve brought together the most useful tips to help you fight the challenges painlessly.
Thorough research of candidates
How do you identify the most suitable outsourcing partner that gets your vision and goals perfectly? You cannot do without comprehensive research that focuses on several essential factors.
First, go to industry-specific directories and online platforms, seek referrals and recommendations from other businesses or professionals, leverage networking, and consider reviews.
Make a decision based on the following factors:
- Expertise in the specific area
- Market reputation
- Portfolio
- Testimonials
- Location
- Cost
- Available cooperation models
Communication enhancement
Effective and ongoing communication should never be underrated – it solves more problems than you might think. It ensures a seamless and productive workflow, a clear understanding of tasks, needs, and objectives as well as the ability to meet these.
High-quality communication can minimize the impact of cultural and language gaps, eliminate misunderstandings, and reduce the risk of unmet expectations and cost overruns.
It’s highly recommended to implement effective communication tools (Asana, Trello, Slack, JIRA, and similar), hold regular check-in meetings, ask for updates, and establish a clear communication policy that outlines protocols and guidelines for both internal and outsourced teams.
Quality assurance best practices
All-embracing quality assurance process is a must for confirming the project’s success. Follow these best practices to stay on the safe side:
- Set clear and concise requirements
- Define standardized testing processes
- Test systematically and regularly
- Document QA procedures and practices accurately
- Harness automated tools
- Continuously upgrade the quality control processes
Make sure QA takes place throughout the entire development cycle – applying it only to the final product is a mistake. Detect and resolve issues before they become more complex and costly to fix.
Transparency improvement
Achieving complete transparency when outsourcing IT services means fostering effective communication, managing risks, and ensuring successful collaboration between the two parties. For this
- Communicate goals clearly
- Encourage information sharing
- Define everyone’s responsibilities and roles
- Provide regular reports with updates on project status, key milestones, and any challenges encountered
- Maintain transparency in contracts
- Make a backup plan to deal with problems
Figuring out outsourcing models
Picking an outsourcing model that matches your project’s requirements is essential to achieve the following:
- Addressing varying complexities adequately
- Cost-effectiveness
- Flexibility
- Efficient resource utilization
- Advanced project management and timely delivery
Hold the reins of the core functions
It’s in your best interest to maintain control over your core competencies. Outsource secondary tasks and activities that take up your team’s time but place a strong focus on your core processes yourself.
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Endnotes
Outsourcing can be a game-changer for businesses looking forward to scaling up and gaining competitive advantage on the most favorable terms. It can be a smart solution for a small business or startup as well as for a large enterprise.
Before you make the decision to outsource certain tasks, study the pros and cons scrupulously.
Despite all the big gains, pitfalls are there anyway.
The good news is that you can avoid these pitfalls by partnering with a reliable and experienced team that will ensure proactive planning and flawless execution.
At Pecode, we can empower your in-house team with deep expertise and vast experience. Our highly skilled specialists will guide you through the huge ever-evolving world of innovations and help unlock new exciting opportunities.
We will make software development processes seamless and stressless for you.
Have a project in mind? Then reach out to us via hello@pecodesoftware.com right now and let’s discuss it in detail.
