IT outsourcing started in the 1980s and since that time dominated the services sourcing industry by taking 60 percent of it.
There is outsourcing growth expected in the nearest future, so it’s the best time to learn more about this topic. It’s critical to compare the pros and cons of outsourcing before implementing it in your company. And we encourage you to understand how it can affect your business.
The most popular outsourced functions are:
- Programming/application development
- Website development
- Project management
- Business intelligence/analytics
- Helpdesk/technical support
- Security/compliance governance
- Big data
Now the question is, are these skills already present in your in-house team? Or will you be outsourcing it? And do you actually need to outsource it or is it better to hire people locally?
Cons and pros of working with outsourced IT companies
When we’ve defined the main functions you can outsource, let’s dive into some pros and cons of outsourcing IT.
Pros of IT outsourcing
Cost is the strongest “pro” and the key reason for companies to outsource IT services. Developers in third-word cost a few times less than in the US, for example. The average salary for a software engineer in Ukraine is $12,000 per year. There are some reports that salaries in such countries as Ukraine and India will grow and the price will not differentiate so much, but there are other reasons to outsource IT development.
There are situations when you need to build some project or just finish the job in strict deadlines. You can hire more people and management for contract locally, but this process will take time and effort by interviewing and selecting specialists. The right company could provide the skills and manpower necessary to meet any strict deadlines, you just pass them the task.
If you don’t have some skills inside your company, an outsourcing company could provide you with the skills that you lack. For example, maybe you want some software to be coded in a particular technology but you don’t have developers or your developers don’t know it. The outsourcing company could provide you with these skills. But keep in mind that outsourcing the skills can lead to problems with maintenance and support, but in most cases maintenance is part of the contract while working with IT outsourcing companies.
Empowers Individuals in the company
Now, when an outsourcing company is handling the development part, your employees can have more time to concentrate on other tasks, such as strategy, vision, and marketing. Outsourcing the development part will give your employees a chance to show them in other challenging and interesting tasks.
Cons of Outsourcing
Needs constant management
This is the most common reason why outsourced projects fail. You need a skilled manager, who will be in constant contact with the offshore company. This person has to understand the requirements and goals and be sure all the time that the outsourcing company understands the requirements too. The lack of management can lead to a project going out of control. But most of the professional outsourcing companies have their own management team in case customer doesn’t have it in-house and don’t have much time checking every step.
Increase in frustration
There is a number of reasons why frustration can increase:
- Time zone difference: Usually, there will be 6–8 hours difference between you and an offshore vendor. This creates delays in communication. Weekly meetings at scheduled time solve this problem and if there is some issue on the project, you can schedule one more call. Any serious outsourcing company will meet on your schedule and the time most suitable for you.
- Low quality: There is a chance that you will start working with an unskilled company and low-quality code will increase frustration. To prevent it, there should be frequent code review and quality assurance. If you don’t do meeting and code reviews often, then there is a chance the product will not meet requirements, be poorly written and not maintainable.
But remember that nobody is perfect. If a mistake is made by the outsourcing company you should find out reasons and ways of solving it.
As a business owner, it’s easy to be fascinated by the benefits of outsourcing, but keep in mind the impact it can have on your company’s morale. If you plan to outsource, do it carefully not to harm your in-house culture.
A positive environment leads to a higher level of productivity, so you don’t want to mess it up. There are some of the ways outsourcing can affect your company’s culture:
• Your employes may feel they are being replaced, or they are “not good enough”
• Some of the employes could not understand why you outsource some tasks
• Add more challenges and tasks to your daily work
Usually, outsourcing shouldn’t have a negative impact on company culture, but you should discuss your decision with any employees who could be impacted to prevent this to happen.
Tips and best practices for outsourcing IT
We at Elligense are sure that you have had or will have challenges working with outsourcing IT companies. We have some recommendations and best practices to make your cooperation productive and successful:
- Set clear goals and objectives, and make sure they’re documented in your contract.
- Request project management, a clear plan and regular meeting to be updated. Ask your vendor to use a reliable project management tool, like Jira, and that you and your related employees have access to it.
- When seeking out an IT outsource company, get a reference from a trusted colleague. Moreover, do online research for complaints and feedback. You also can use such websites as Clutch and Sortlist.
- Plan your collaboration with an offshore vendor with your decision-makers to make sure there will be no delays during the work.
- Stay involved in the IT development process. You don’t need to micro-manage the outsourcing team, but make sure everything goes as planned by staying involved during the development process. Weekly meetings will play well.
- Documentation is critical when developing the project outside your office. It helps to track progress and functionality. The well-documented project can be easily passed and help your internal team easily start working on the project after the end of the contract. Project documentation includes manuals and user guides, code comments, API documentation, etc.
- Don’t choose the cheapest IT company. We understand that you outsource development to save money, but there is a risk you lose more money if choosing the wrong vendor. The best way to select the software development outsourcing company is to look if it matches your needs and culture. A decent IT vendor will suggest you reasonable balance between price and quality.
Congratulations, now you know the main pros and cons of outsourcing IT. Make a weighted decision on whether to outsource an IT part of your company or not.
This content was originally published here.