IT Outsourcing: Pros and cons, Best Practices, & Services
IT outsourcing is getting a lot of traction all over the world. It gives freedom to startups, individuals, and businesses across the globe to focus on the most critical work and delegate all the other time-consuming tasks to expert companies across the world.
Let’s look at some of the latest statistics about IT Outsourcing:
- As per Deloitte, 59% of businesses across the globe choose outsourcing to reduce their expenses.
- According to Spending and Staffing Benchmarks Study for 2018-19 discovered that raised on software outsourcing from 6.3% to 8.7%; yet, medium-sized companies have raised their investment in IT outsourcing from 4.7% to 6.5%.
- According to statistica’s 2019 report, the global market for outsourcing was $92.5 billion.
These statistics prove that companies around the globe love outsourcing to get high-quality work in less turnaround time and at an affordable cost.
In this blog, we will provide detailed information about the following things:
Before we move ahead with the benefits and challenges of outsourcing, let’s have a brief introduction to IT Outsourcing.
What is IT Outsourcing?
IT Outsourcing refers to a custom of seeking resources outside of an organizational structure to get part of or full IT functions. An organization utilizes IT outsourcing for different functions such as software development, managing infrastructure, directing strategy, maintenance, and support.
An IT Outsourcing service provider that takes complete responsibility for IT maintenance as well as support; then it is referred to as fully managed service. However, if they only provide extra support for an internal team, then it is called co-sourced support, and big enterprises generally prefer it.
Whether you are an entrepreneur or running a small/medium/big scale enterprise, you can take help from a single provider for IT requirements or multiple service providers to obtain various services.
The Pros And Cons Of Outsourcing
There are a lot of reasons why outsourcing is popular. The advantages of outsourcing differ based on the location of the company that provides these services, its business goals, and available investments.
Let’s have a look at IT outsourcing advantages one by one.
Advantages of Outsourcing
Here are some of the essential reasons why companies prefer IT outsourcing:
1. Highly-Experienced People
At times, your core team might not be familiar with a particular skill or technology. Hence, outsourcing allows you to reach out to professionals across the globe who have expertise over a specific task.
2. Enhances speed of Development
One of the most essential benefits of outsourcing is that the project will be completed on or before time as you don’t have to go through the cumbersome process of hiring employees which includes an interview, selection, and training in-house employees, which is very time-consuming.
3. Reduce Costs
There is a lot of difference in the outsourcing cost when we compare it with developed and developing countries. One of the essential advantages of outsourcing to developing countries is that you can save 30% of the cost on a project. But, when you choose to build an in-house team, you have to look after different expenses which include salaries, government taxes, and much more.
IT outsourcing is very much useful for not only for enterprises but also for small businesses, as they will be able to save their development cost. Moreover, leading companies like Alibaba, Telecom also outsource their IT services to reduce costs.
4. Focus on Core Operations
Every decision in business is made by doing a lot of research. With the help of IT outsourcing, businesses can focus only on the core processes and delegate all the work that is not possible from them.
Due to this, businesses can further enhance internal processes and utilize resources in those tasks that directly help to improve the performance of the company.
5. Disaster Recovery
In case of flood, fire, or cyber-attack, important business data might get lost. The majority of businesses or individuals don’t possess enough resources to recover from these disasters. This will in-turn force the company to stop it’s operations ultimately.
One of the essential benefits of outsourcing is that you will be able to resume your operations quickly. Disasters can occur at any time and if you seek help from an professional IT outsourcing vendor, then you will get support from experts who are equipped with the latest disaster recovery and backup tools & technologies.
6. Divide your risk
Another essential Outsourcing benefit is risk assessment and analysis. By outsourcing different types of tasks to experts in various IT outsourcing firms, you will be able to gain an advantage over their ability to plan & thus divide potential risks.
One of the vital benefits of outsourcing is that you have the power to react to the updates in the business environment instantly. In case an IT outsourcing service provider does not deliver work as per your expectations, then you can immediately switch to another provider rather than searching for a full-time employee with a particular skill set.
8. Unique Ideas
An outsourcing employee can help the hiring company in various ways. One or the other member of the outsourced team might be able to look at the issue from a different angle. If you have faced a problem, then there is a strong possibility that other firms also have faced the same issues.
An outsourced service provider looks after various challenges daily; thus, they can provide unique solutions to problems that you may not have faced until now.
9. Ability to access different technologies
Technology in the software development field is changing at a never-ending rate. In case of an in-house development team, you may need to provide a lot of training & support about the latest technologies and tools.
On the other hand, an outsourced IT company might have experienced a team of developers familiar with modern technologies and tools. Thus, IT outsourcing allows you to access new technologies and implement them instantly in your future projects.
10. Round the clock
One of the most essential offshore outsourcing benefits is to overcome considerable differences that you might face due to time zones and holidays. Even though you might face some problems in the initial stage, as soon as you overcome it, your business will operate round the clock.
Disadvantages of Outsourcing
Although there are a lot of outsourcing benefits, various companies are still skeptical. So here we will provide not only potential risks involved in IT outsourcing but also how you can overcome it.
1. Less control over operations
You may be thinking, when you outsource your work to the external company, you are losing control of how things are tracked and controlled.
Solution: This happens only because of poor communication. But it can be resolved by a well-thought-out process and regular communication. Hence, you will be aware of various operations that are done by an IT outsourcing company.
2. Hidden Costs
Even though outsourcing is available at a lower cost, you should keep your eyes open for not getting pulled off. Outsourcing companies request small business owners to sign lengthy contracts and include a lot of hidden charges in it.
If you don’t read the agreement properly, you may get imposed on a lot of unexpected charges. This, in-turn, increases the cost of web or mobile app development.
Solution: To don’t get hit by such hidden charges, you should carefully understand all the allegations of the projects and also payment models. By this, you will know in advance whether you have to pay additional costs in the end or not.
3. Uncertainty about the service quality
The constant fear about IT outsourcing is that the company will not be able to deliver the expected outcome more or less stops you from exploring the opportunity available in the industry.
Solution: Identifying the best quality at an affordable price is essential for the success of any project. You can achieve your business goals by reviewing feedback from the vendor’s previous clients and comparing the estimated cost of your project with other companies.
4. Data Security Risks
One of the significant problems of outsourcing your project to an IT company is data security. It can adversely impact the reputation and may leverage penalties on your business if not taken care of. Hence, it is essential to choose the IT outsourcing company carefully.
Solution: It is vital to look after the established process that stops data loss, breaches, and privacy if you don’t want to face any of these issues in your project.
5. Insufficient coordination between business goals and IT goals
Outsourcing companies don’t possess a constant understanding of the company’s business. They can easily sort out any of the IT or business sector problems; however, they don’t work directly with your customers or employees.
Solution: You can continuously pass on your business values with the outsourcing company. By this, coordination issues can be resolved.
There are many challenges while you outsource your projects but how Guru Technolabs overcome these challenges!
Here, we complete, benefits and risks of outsourcing IT services. Now, we will discuss IT Outsourcing Best Practices.
IT OutSourcing Best Practices
Here, we will present some IT outsourcing best practices that you should consider before allocating a project.
1. Identify Whether Project is Good for Outsourcing
Not every project is meant for outsourcing. Outsourcing is beneficial when you have particular project requirements, or you have to build a project that doesn’t belong to your core business.
For instance, various companies opt for cloud services such as Microsoft Azure or Amazon Web Services to host their websites. The company might have expertise in developing web and mobile applications; however, they don’t possess enough resources to establish a hosting environment.
Therefore, they purchase cloud service providers to handle the entire infrastructure for them. By doing this, they get the advantage of a highly-organized environment without any cost of keeping their systems.
Do you have an awesome idea in your mind? Then reach out to Guru Technolabs. We are an offshore outsourcing center with a talented pool of engineers. We will provide a free analysis and quote for your project. Don’t worry your idea will remain confidential.
2. Define a proper objective
It is essential to define all the objectives as well as the specifications of your outsourcing project before reaching out to the IT outsourcing companies. Make proper documentation that mentions accurate details about the project, along with your business goals.
When you possess a list of all objectives and specifications, you will be able to identify the best provider who meets your requirements. Moreover, you don’t need to explain your requirements to the outsource vendor. You can just send the documentation to them and instantly choose the vendor that understands your project property.
3. Select a Provider you Trust
Choosing the right outsourcing service provider is highly beneficial for web development, app development or any other project. To find the right provider, you should define what you want from a service provider.
You must consider the following qualities 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 most popular coding practices
4. Hire a dedicated team
Whether you want to develop a small or long-term project, we recommend you to go with the dedicated team.
When you hire a dedicated team, they will work for your project from start to finish. You may think it’s 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.
5. Don’t make your decision based on price
It would be best if you did not choose IT outsourcing to reduce development costs. However, this should not be your main goal.
The primary purpose is to find an outsource provider that is less costly than an in-house team; however, it provides a similar kind of quality and service. It might be challenging for you to find an outsource vendor, but please note that you get service as per your price.
Various experienced outsource buyers who analyze hundreds of bids always suggest neglecting the lowest and highest priced bid. Later, select the best outsource vendor suits your project requirement and budget.
6. Check Portfolio
Explore the earlier work done by an outsource provider to ensure that they can fulfill your project requirements as per your expectations. If you have analyzed the provider’s portfolio, experience, and references and still have any doubt, then request them to offer a quick mockup or highlights about how the project will be executed.
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.
7. Begin with a small and simple project
In case you are dealing with the outsource service provider for the first time, then consider outsourcing a project that is probably small and simple to build. By doing 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.
8. Check Outsourcing vendor’s review on different platforms
Even Though, ratings don’t determine the overall work of the company. For selecting the best outsourcing service provider, it is recommended to check the company’s reviews on popular outsourcing ratings and review platforms such as Clutch, Goodfirms, etc.
9. Establish Proper Communication
Communication is vital to bridge the gap between both parties and keep them hooked about the latest updates in the project.
Communication can be challenging in case your outsource 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.
But 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 of the messaging platforms.
It doesn’t matter which method you choose, keep cooperating with the outsource vendor.
10. Develop Good Relationship with the service provider
Establish a relationship of partnership with the IT outsourcing company that emphasizes on the growth of both the firms. The way you hold the relationship with the providers 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
11. Negotiate about ownership of your project in advance
One of the best practices in outsourcing project work is negotiating regarding the ownership of your project. Before outsourcing your project, make clear-cut decisions about who owns the final product and any essential elements of a product. Inform clearly to the service provider that you are the sole owner of the project and how you will use the project.
12. Make sure that data security and regulations are fulfilled
Whenever you are starting a project with an IT outsourcing service provider, understand how they protect data of your company and the customers. Make sure 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 outsource service provider should be able to fulfill all the things mentioned in the General Data Protection Regulation (GDPR).
Different Types of Outsourcing IT Services
Now, here is the list of all the IT services that are outsourced by individuals, startups, or SMEs across the globe.
4. Website/ Application management or maintenance
5. Technical Support/ Help Desk
6. Database Administrator
7. Data Center Operations
8. Disaster Recovery
9. Network Operator
IT Outsourcing is famous all across the globe. However, if you want to get the best-quality outsourcing service at an affordable price, then Asia is the most preferred destination.
Outsourcing companies located in countries such as India are well-known because of high-quality service, experienced developers, etc.
Before allocating your project to a professional IT outsourcing company in India, here are some of the key highlights which you should not forget.
- Find out all your business and technical goals
- Make the proper structure of budget and deadline of the project before execution
- Verify that the service provider utilizes the latest development tools and technologies.
- Establish the payment method in advance
- Sign up NDAs and other agreements
- A methodology that should be implemented in the project
If you are not sure about an IT outsourcing company, then you can begin by allocating a small version and 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.
Guru Technolabs offer staff augmentation services according to the client’s requirements. We connect businesses with top-notch developers who have experience in web and mobile app development services. We have a fully-equipped infrastructure and utilize the next-gen tools & technologies to deliver exceptional solutions as per industry standard. Contact us now to get a free consultation about web and mobile app development services.
Throughout the 7+ years of IT experience, Guru Technolabs has developed an efficient services system, which assures support on every stage of the development.