13 IT Outsourcing Best Practices

Published On: May 19, 2022
Last Updated: August 29, 2023
13 IT Outsourcing Best Practices

Businesses are leveraging the power of IT as innovation and efficiency become the cornerstones of success. But, for many business owners, managing complex IT operations in-house can be daunting. This is where outsourcing comes in.

IT outsourcing means leaving technical complexities to external partners so you can focus on core competencies while tapping into a vast pool of IT talents and resources.

It has emerged as a strategic approach for business owners seeking to optimize their operations, enhance efficiency, and reduce costs. According to a study, the global IT outsourcing market is projected to reach $725.6 billion by 2030.

So, it is an increasingly popular strategy that holds potential. However, the realm of IT outsourcing is not without its complexities. Without a well-defined strategy, outsourcing efforts can stumble, which compromises the outcomes.

Business owners who are eager to leverage the benefits of IT outsourcing need to implement the best practices to mitigate the risks. This guide will provide you valuable insights whether you are considering outsourcing for the first time or aiming to optimize your existing outsourcing strategy.

Let’s explore.

11 Best Practices for IT Outsourcing

1. Define a Proper Objective

It is essential to define all the objectives and specifications of your outsourcing project before reaching out to the IT outsourcing companies. Make proper documentation that mentions accurate details about the project with your business goals.

It includes a detailed project description, contact information, budget overview, performance expectations, and skills required.

When you possess a list of all objectives and specifications, you will be able to identify the best provider who meets your requirements. Also, it makes the further development process smooth and efficient.

Moreover, defining your project needs will set strict guidelines for your outsourcing team to follow.

It helps you save time by resolving predicted queries from your hired professionals and minimizing mistakes by offering specific guidance through each project development life cycle stage.

2. Select a Provider You Trust

Choosing the right IT outsourcing service provider is highly important for web development, app development, or any other project. To find the right provider, you should define what you want from a service provider.

Here are the following qualities that you should consider in your IT outsourcing service provider:

  • The experience that matches your business requirements
  • Quick turnaround time
  • Utilizes the latest tools and technologies
  • Transparency and quicker communication
  • Confidentially along with the security
  • Works on the most popular coding practices
  • Ownership of IP rights

Want to Unlock Efficiency with IT Outsourcing?

Leverage our expertise in IT outsourcing to enhance productivity and stay ahead in the competitive landscape.

3. Choose a Suitable Outsourcing Engagement Model

There are different types of engagement models available in the market whenever you decide to outsource your project. One of the best IT outsourcing practices is to choose the engagement model according to your project requirements and goals.

Here we will look at these engagement models in brief:

Fixed-price model
Here, the working relationship is decided considering the budget. You have to pay a fixed price for the project. To define the price for the project, the outsourcing team wants complete details about the project with the budget. As a business owner, you have to communicate all things clearly.

The main drawback is you cannot change the scope after the project gets started.

The primary advantage of this model is that you have the option to hire the best professionals and plan your project well. If you have issues in planning, the outsource vendor helps you with that.

Time & Material Model
In the time and material model, the hourly cost is decided based on the real-time need for the project and the resources utilized. You are fully engaged in the development. The pricing model relies on the time the developer team invests in product development. It is challenging to predict the final product, as you have the flexibility with the scope.

As the requirement changes in real-time in this model, you get a functioning product at each stage.

This engagement model is highly suitable for a business with a changing environment, modifying requirements, and wanting to build a new-age-developed product.

Dedicated Team Model
Whether you want to develop a small or long-term project, we recommend you go with a dedicated team.

When you hire a dedicated team, they will work on your project from start to finish. You may think it is expensive, but it saves money in the long run. The entire team has to understand the project once, and they are good to start your project instantly.

The monthly charge is decided depending on the experience, size of the team, and hourly rate of the outsourcing vendor. Here, you have complete control over the software development process, and you get the desired output as per the need.

Moreover, the outsourcing vendor helps you with the recruitment, and infrastructure and provides administrative support for the project. Here, you have to remain engaged with the development team. Hence, you might have to look after project management sometimes.

At Guru TechnoLabs, we have a dedicated team of developers for hire. You can manage the entire team, and we provide support to get the desired output.

4. Don’t Forget to Take Hidden Expenses into Consideration

IT outsourcing is cost-effective, but business owners should remain careful about hidden expenses that can catch them by surprise.

The service fees are evident, but hidden costs can arise from areas like transition and onboarding, communication tools, quality assurance, data security, and unforeseen changes.

To direct this challenge, thorough cost analysis is essential, including both visible and hidden expenses. However, it’s wise to address potential hidden costs during contract negotiations, which ensures transparency.

By choosing a reputable outsourcing partner, businesses can reduce the impact of hidden costs and ensure their outsourcing remains financially sound.

5. Check Company’s Portfolio

Explore the earlier work done by an IT outsourcing provider to ensure that they can fulfill your project requirements according to your expectations. If you have analyzed the provider’s portfolio, experience, and references and still have any doubt, request them to offer a quick mockup or highlights about how they will execute your project.

An experienced service provider who truly wants to get your business may be able to provide a simple idea by which you can understand their method of executing a problem.

6. Begin with a Small and Simple Project

If you are dealing with an IT outsourcing service provider for the first time, consider outsourcing a project that is probably small and simple to build. With this, you will get an overall idea about the service provider’s style and work before you think of allocating a big project to them.

Maximize ROI Through Strategic IT Outsourcing!

Invest wisely in IT outsourcing to achieve higher returns. Our strategic approach
optimizes resources, minimizes risks, and ensures long-term success.

7. Check Outsourcing Vendor’s Reviews on Different Platforms

Even though ratings do not determine how a company works, they are essential. For selecting the best IT outsourcing service provider, it is recommended to check the company’s reviews on popular outsourcing ratings and review platforms such as Clutch, Goodfirms, etc.

8. Establish Proper Communication

Communication is vital to bridge the gap between both parties and keep them hooked on the latest updates in the project.

Communication can be challenging if your IT outsourcing service provider belongs to a different country. Also, language, culture, and time zone are some of the crucial factors that have a high impact on communication.

However a project’s success highly relies on communication. Development issues and frequent updates can adversely affect a project if you don’t communicate at the proper time.

With the availability of various tools, there should be no excuse for teams not to communicate. If you are unable to fix a video call, go for a phone call, send an email, start a chat room, or access any messaging platform.

It doesn’t matter which method you choose; you should keep cooperating with the outsource vendor.

9. Develop a Good Relationship with the Service Provider

Establish a relationship of partnership with the IT outsourcing company that emphasizes the growth of both firms. The way you hold the relationship with a provider contributes a lot to the success of a project.

Here are some of the ways by which you can build this kind of relationship with a partner:

  • Detailed understanding of the project
  • Valuing each other’s commitments and abilities
  • Strictly following the contractual terms
  • Staying alerted about the project’s progress
  • Admiring each other on successful completion of project milestones

10. Ensure Data Security & Regulations are Fulfilled

Whenever you are starting a project with an IT outsourcing service provider, understand how they would protect the data of your company and the customers. Also, check that the company follows the latest practices to decrease any risk of a data breach.

Build strong service level agreements so that all the tasks regarding your project work are accomplished as per the latest industry standards, and your data remains completely safe.

Secondly, you should check that the service provider fulfills the data security regulatory needs of the specific market. For instance, if your goal is to outsource mobile application development for the European Union, then your outsourcing service provider should be able to fulfill all the things mentioned in the General Data Protection Regulation (GDPR).

11. Think About The After-release Support

When you are working on a software project with the vendor, you should think about the after-release support. By this, you have a guarantee that you will get support from the vendor for a specific time.

The best time to talk and finalize the after-release support for your project is before it starts.

Final Words

Here we conclude some of the best IT Outsourcing practices for every business. By following the best practices for IT outsourcing, you can find the most compatible IT outsourcing vendor and build a reliable & effective product for your business.

If you are not sure about an IT outsourcing company, you can begin by allocating a small part of the project. Depending on the results of that, you can later outsource your critical project.

By doing this, you can share risks and by any means, if you haven’t got results as per your needs, then you can transfer your project to another company.

If you still have any doubts about IT outsourcing best practices, then contact us.

Guru TechnoLabs is a professional IT outsourcing company. We provide web and mobile app development services to varied industries at a cost-effective price. Share your project details with us today to get a free quote.

Ravi Makhija
Ravi Makhija

Ravi Makhija is an entrepreneur, an IT professional, tech geek, founder & CEO at Guru TechnoLabs - Globally Trusted Web & Mobile App Development Company. He loves writing about new technologies and the latest trends in the IT field.