Why Should You Outsource - Even When You Don't Need It?
“Do what you do best and outsource the rest.” - Peter Drucker
Global IT outsourcing generates 52.9% of the total outsourcing industry’s revenue. However, we’ve seen a rather frightening recent trend that threatens this percentage.
Countries across the globe have taken on a nationalistic attitude. From Brexit to “MAGA” to the Freedom Party in Austria, there’s a new herd instinct that erodes global ties.
India, in particular, bears the brunt of this trend.
What people fail to realize is that global outsourcing is more about innovation and adding capabilities than cutting costs.
Shape Up with Outsourcing
IT is a highly specialized space. You need to find the best people for the job, and that may very well come from a different country.
While many companies outsource to save money, Deloitte Global Outsourcing has shown that outsourcing will grow even stronger in future years. Mature functions like IT, human resources and finance will experience transformation benefits thanks to global outsourcing.
But here are the big questions:
Should You Outsource, and If So, What Should You Outsource?
Start-up ISVs are always caught juggling time and resources. They are often reluctant to create a formal business structure with fixed overhead costs.
Outsourcing lets start-ups focus on their core product or service, while also providing scalability to react quickly to new opportunities.
SMBs are often restrained due to a lack of resources, intellectual capital and expertise. They can outsource for timely resources, for expertise or to scale up quickly.
While the sky is the limit for enterprise ISVs, a timely go-to-market is their main cash cow. It makes sense to look beyond in-house developers to get the best intellectual capital available for new product development, reengineering and international expansion.
However, this is easier said than done.
You can’t just tinker with outsourcing. You must be able to justify it by erasing its pitfalls and risks.
How to Manage Outsourcing
Just like software development, managing outsourcing requires a proper methodology. You need to ensure that the offshore technology partner matches your need to deliver on time and on budget.
Here are some tips for a smooth outsourcing relationship:
- Schedule regular engagement with your offshore team
- Communicate, communicate, communicate
- Be empathetic towards another’s culture
Most importantly, don’t be afraid to ask questions. As Vanessa Redgrave said, “Ask the right questions if you’re to find the right answers.”
Creating Your List of Potential Partners
Ask yourself the following questions:
- What are your priorities that need outsourcing?
- Are you looking to cut costs or do you need someone else to lift weight so you can focus on core business?
- What’s more important, the project budget or a faster go-to-market launch?
Answering these questions will help you concentrate on your time frame, the expertise and experience needed for the project, the size of the vendor, the technology stack and procedures, and the framework of managing product developments.
Don’t forget to thoroughly research each company’s background. Put in this early work and you’ll soon be able to zero in on the right vendor.
Have an Eye for Details
Assess key areas like time zone, the number of employees, the average years of work experience, and the average length of employee time with the company.
Also see if the vendor has a project manager based in the U.S., Australia or Europe – whichever is closest to you – for better coordination early on.
Work on a Small, Paid Test Project with Your Shortlist of Vendors
Basically, give them all an assignment. A little upfront cost here will go a long way toward saving money in the end. Trust your instincts and analyze the competence and professional accountability of your shortlist vendors.
Determine Which Outsourcing Engagement Model Is Right for You
Your outsourcing engagement model determines the level of control and responsibility of which you are assigning. The key is to identify which works best in the context of your project:
Offshore Project Model – this time-bound engagement model is the preferred choice for reducing production costs and increasing time to market.
Dedicated Team Model – This model is instantly scalable based on the project requirements.
Staff Augmentation Model – The recommended model if you possess solid product knowledge and the know-how to lead and manage developers.
Don’t let outside factors dictate what’s best for your business. If global outsourcing is going to give you the technology and expertise for the best quality product and get you to market faster, go ahead and do it.
If you’re undecided or have more questions about global outsourcing, talk to our experts. They’ll be happy to address your concerns. Write to us at firstname.lastname@example.org or call us at +1-609-245-0971
Cygnet Infotech is a CMMi level 3 and is ISO 27001:2013 and ISO 9001:2008 certified, 18 year old global technology provider enabling ISVs & enterprises through emerging technology, software engineering, technology consulting, SAP Implementation, advisory & maintenance services. It’s proven 18-year track record boasts of successfully delivered 1400+ valuable software solutions to its diverse clientele across the globe using a global delivery model.View All Posts