In this article, you will have a complete guide to start outsourcing in 2023. We will discuss the advantages it will bring to your business, as well as the steps to find the right provider, best practices, and types of outsourcing.
Although outsourcing is a growing market and is becoming more common among companies of different types and sizes, some leaders are still hesitant to start outsourcing.
Are There Still Doubts About Outsourcing?
These doubts about outsourcing are based on two common misconceptions held by company managers. 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 the company even 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 necessary 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:
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.
Focus on core business
While technology occupies a significant role for organizations, it is important to understand that it is an enabler for companies 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.
Spend less money
According to Deloitte’s 2022 survey, one of the main reasons for choosing to outsource 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 competition for talent is even more intense.
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 a better distribution of tasks between in-house and external teams. It is also important to remember that outsourcing teams have experienced professionals with the necessary knowledge, used to working with development methodologies and working on projects with constrained deadlines.
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.
Rapid delivery of a development project needs the use of experienced professionals with advanced technical knowledge. Furthermore, outsourcing teams use agile methodologies to ensure continuous improvement and development that is always moving forward. Shortening development times will, of course, result in less money spent.
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, some general aspects that are important to keep an eye on to ensure that you make the most of the value that outsourcing offers:
Fluent communication and workflow
Make sure that the outsourcing partner has the necessary communication skills and is fluent in English. This will avoid many misunderstandings and development problems.
In the same way, check that the work processes are compatible with the ones you need for your project.
Don’t neglect security protocols when partnering with an outsourcing provider. Review data governance, as they will have access to sensitive data. Remember that data is one of the most important assets of organizations, and taking care of customer privacy is one of the most important principles.
Consider the quality of service
It is a good practice to consult references of vendors, success stories, industries they have worked with in the past, and other projects they have been involved with. This will help you decide if the outsourcing provider is compatible with your business needs.
In the dynamics of the development process, your needs may change. Therefore, it is a plus to make sure that the supplier has the flexibility to adapt to changes quickly.
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.
The same thing occurs with outsourcing vendors. Some providers offer cheap services way below the market, but this also implies that the service is low-quality. Since it is impossible to hire competent developers for a salary that is significantly below the market, we can assume that the candidate may be inexperienced or lacking the necessary technical knowledge.
It should also be noted that there is no standard rate, since each project has its particularities, and we must consider the following aspects:
- Project’s scope
- Features’ complexity
- Team’s location
- Developers’ experience
- Needed tech stack
The recommendation is to seek different quotes from different providers until you find the best cost-benefit option. This way you will avoid wasting your money hiring a service that will not help your company and could even cause higher expenses later because you will have delays in the projects or directly the need to hire 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 with only those vendors that are reliable and can prove that they can deliver results:
To avoid bad experiences and unnecessary expenses it is important to do early research into outsourcing companies. It is advisable to find out what type of industries they have worked with before, to know if they know the market in which you work. Also, it is important to find out about the technologies they have worked with and their success stories.
Other issues that should not be neglected are cultural affinity, the provider’s communication skills, and the time zone since these are factors that if they are not compatible with your needs can generate great difficulties for the integration of the teams and for the project to be successful.
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.
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?
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 to 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:
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.
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.
In this case, the customer completely delegates the software development to a vendor. The customer and the vendor agree on 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.
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 2023.
We hope you found the complete guide to start outsourcing useful to find the best technology solutions for your organization.
If you have any questions or need more information, please contact us!