Ready to start outsourcing in 2024? You’re in the right place. This guide isn’t just about the ‘how-tos’ of starting outsourcing; it’s about transforming your business through strategic partnerships. From unlocking efficiency and innovation to scaling your operations seamlessly, outsourcing could be the game-changer your business needs to drive real value from every software development project.
Despite its growing popularity and proven benefits, some business leaders still hesitate to dive into outsourcing. Let’s demystify the process together, showing you not just how to start but why it’s essential for staying competitive in today’s fast-paced market.
Are There Still Doubts About Outsourcing?
These doubts about outsourcing are based on two common misconceptions held by company executives. First, that outsourcing is only for large companies with huge operations and a fully consolidated structure. On the contrary, many startups and mid-sized companies have benefited greatly from outsourcing several aspects of their organization, particularly those related to software development.
The second prejudice about outsourcing lies in the skepticism of the service provided by the vendor. Probably, you have heard of a case where a company hired an unreliable vendor that didn’t deliver the technology product as expected. Or even, the company had to find another vendor to avoid further delays and cost overruns to be able to complete the project. But this is not the norm; these are the exceptions.
That’s why in this article we set out to make a comprehensive guide on how to start with outsourcing reliably, safely, and so that your company can transform itself into a digital age company, improving your products and services and your customers’ satisfaction.
What are the Reasons to Start Outsourcing?
Technology is the backbone of today’s companies, as it allows for accelerating digital transformation to improve the efficiency and competitiveness of the organization. To successfully drive these changes, it is important to have talents with the right skills and experience to help companies in different industries in this journey. Therefore, technology outsourcing brings great benefits in terms of optimizing internal processes, customer management, and obtaining better products and services.
Here are some of the reasons why it is beneficial to start outsourcing:
1. Scale fast
Software development is a dynamic and changing process. If things don’t go according to plan, you may need to increase your staff to meet the deadline. Or you may have periods when the technology team does not have many tasks to do, so some programmers may be left without any project assigned. Herein lies one of the main strengths of outsourcing.
In cases where you need to quickly expand your team or reduce it to adjust costs, the outsourcing model provides great flexibility to companies as it can quickly scale up or down according to your business needs.
2. Focus on core business
While technology has a significant role for organizations, it is important to understand that it is an enabler to focus on their core business. By automating repetitive tasks, for example, employees can spend more time on other valuable activities. By delegating the development of an e-commerce store, the company can allocate more resources and time to strategic issues, improve sales and marketing campaigns, or improve products and services.
3. Spend less money
According to Deloitte’s 2022 survey, one of the main reasons for choosing outsourcing is the need to reduce costs. In the US, software development costs are much higher than in other regions of the world, so outsourcing is a fantastic opportunity to find talent in less expensive locations.
Hiring a supplier from another region, such as Latin America, allows companies to obtain high-performance talent but with salaries and other labor costs much lower than in the US, where talent competition is even more intense.
4. Avoid burnout
In any kind of project, not only in a software development project, if you overload your team with work, it is highly likely to generate negative effects on people.
In the US, rates of employee burnout are rising alarmingly: About 77% of tech workers have experienced burnout in their current job.
Some of the causes are related to work overload and intense stress in the workplace, or the frustration of not having the necessary tools to achieve the desired goals. Therefore, outsourcing can help mitigate burnout by allowing better task distribution between in-house and external teams. It is also important to remember that outsourcing teams have experienced and hyperspecialized professionals, used to working with agile methodologies and working on projects with constrained deadlines.
5. Recruit top developers
Recruiting teams of outsourcing companies have access to the best talent in different regions with salaries that are more convenient than in the US. Some regions have a large talent pool but are untapped markets like Latin America. For that reason, recruiters can quickly recruit professionals with the skills needed to take your project to the next level.
6. Faster time-to-market
Quickly delivering a development project hinges on having professionals with both deep expertise and advanced technical skills. Outsourcing teams, employing agile methodologies, such as agile pods, guarantee continual progress and improvement, ensuring that development is consistently advancing. Naturally, reducing development times leads to significant cost savings.
How to Achieve Good Results by Outsourcing a Project?
The success of a project is never assured because it depends on several factors. Many times, changes arise due to user feedback, or in response to competitive moves. However, these are some general aspects that are important to keep an eye on to ensure that you make the most of the value that outsourcing offers:
A. Fluent communication and workflow
Ensure your outsourcing partner’s developers possess strong communication skills and are proficient in the English language. This precaution can prevent numerous misunderstandings and development constraints.
In the same way, check that the workflows and processes are compatible with the ones you need for your project.
B. Prioritize security
Don’t overlook security protocols. It’s vital to review the data governance policies of your outsourcing partner since they’ll have access to sensitive information. Data is a critical asset for any organization, and safeguarding customer privacy is paramount. Ensuring these principles are upheld is essential.
C. Consider the quality of service
It’s wise to check references, success stories, the industries the vendors have served, and their project history. Doing so will give you a clearer picture of whether an outsourcing provider aligns with your business requirements.
D. Flexibility
Given the dynamic nature of software development, your needs might evolve. Therefore, it’s beneficial to confirm that your provider possesses the flexibility to quickly adapt to these changes.
It’s not only about savings
As mentioned earlier, reducing costs is one of the main reasons for company leaders to consider outsourcing. But it’s not all about saving money.
For example, when buying a house, many aspects are analyzed, and you probably wouldn’t pay less for a place that is in poor condition. You will probably have to invest a lot of money to improve its situation. Perhaps choosing a house that was slightly more expensive but in perfect condition would have been a better choice.
Just as with anything else, the same principle applies to outsourcing vendors. Some providers may offer services at prices significantly lower than market rates, suggesting the possibility of lower-quality service. Given that it’s unlikely to secure skilled developers at wages well below market standards, we might infer that such candidates could be inexperienced or lack essential technical expertise.
It’s important to recognize that there’s no one-size-fits-all rate for projects, as each comes with its own unique aspects. We must take into account the following factors:
- Project Scope
- Complexity of Features
- Location of the Team
- Experience of Developers
- Required Tech Stack
The advice is to gather multiple quotes from various providers to identify the option that offers the best cost-benefit ratio. This approach helps prevent investing in a service that fails to meet your company’s needs and could potentially lead to increased expenses down the line due to project delays or the necessity of engaging a new provider.
How to Find the Right Partner to Outsource Technology
Following the previous point, these are some aspects to prioritize when looking for the ideal provider for your needs. Many companies in the market offer outsourcing services, but it is important to listen to several alternatives and remain only with those vendors that are reliable and can prove that they can deliver results:
1. Do research
To prevent negative experiences and avoidable costs, conducting early research is crucial. It’s recommended to explore the industries the providers have previously served to ensure they understand your market. Additionally, investigating the technologies they’ve utilized and their success stories is essential.
Other critical factors that require attention include cultural affinity, the provider’s communication capabilities, and time zone differences. If these aspects aren’t aligned with your requirements, they can pose significant challenges to team integration and the overall success of the project
2. Ask for referrals
Another way to find the right outsourcing partner is to ask for referrals from other businesses that have worked with the company. Another alternative is to visit company and vendor review websites with customer and employee ratings such as Glassdoor and Clutch.
3. Consider your needs
Before starting your search, it is a clever idea to ask yourself a few questions:
- What kind of service do I need?
- How much is my budget?
- What are my deadlines?
4. Get different quotes
To make any kind of decision, the more information you have, the fewer chances you have to fail. Therefore, it is necessary to contact different suppliers to compare their pros and cons and choose the best cost-benefit option.
What Parts of the Project Should Be Outsourced?
This is another question you should ask yourself since the answer will depend only on what your organization needs. One of the great advantages of outsourcing services is that they provide great flexibility and offer a wide range of options to their clients: hiring engineers to complement your team, ordering a development project, or directly outsourcing the IT department of your company.
Types of Outsourcing
We will now take a closer look at the different options offered by outsourcing providers that meet the diverse needs of each company:
I. Staff Augmentation
In this model, the company augments its in-house team temporarily with programmers specialized in a particular technology. Therefore, your company continues to have full control and responsibility for the project.
The outsourcing provider will speed up recruitment and selection times since it is usually an overly complex process to get highly specialized profiles.
II. Dedicated teams
A dedicated team is the best option when you need developers to perform a particular task. It is usually a team of cross-functional specialists that will help you carry out a project that you do not want to delegate to your in-house team. The management of a dedicated team can be handled by an in-house Project Manager or CTO, or the outsourcing vendor may be required to provide a Project Manager.
III. Project-based
In this case, the customer completely delegates the software development to a vendor. The customer and the vendor agree on the scope of the project and deadlines for sharing progress.
The entire responsibility falls on the vendor’s PM for the delivery of the final product.
Conclusion
In times of economic uncertainty where many companies are looking to adjust their costs, it is no surprise that outsourcing is one of the trends of 2024.
We hope you found the complete guide to start outsourcing useful to find the best technology solutions for your organization. For more insights, follow us on LinkedIn!
If you have any questions or need more information, please contact us!
