Over the last few years, outsourcing has transformed into a necessity. It provides smarter suppliers, improved automation, and a long-term relationship between the company and vendors.
The global market size of outsourced services has skyrocketed to $92.5 billion and is expected to reach $100 billion by 2025, according to Statista.
However, along with the various benefits of this option, it also has its pitfalls that businesses need to consider when dealing with an outsourcing partner.
A seamless working relationship can be built by asking the right questions. It goes without saying that any business has its own goals to achieve and weak points to develop.
Things To Consider When Outsourcing Software Development Projects
Here are some factors that you can consider while making an outsourcing decision. Considering these tips before opting for outsourcing can ensure increased profits, stronger outsourcing relationships, and higher customer satisfaction.
1. Cost Effectiveness
While it is true that outsourcing is often done to maintain high-efficiency levels and to meet the deficiency in technological demands, the majority of outsourcing is done with an eye on profit margins. That is, by offshoring certain tasks, companies eliminate the requirement of hiring in-house experts, freeing up capital, which can be used elsewhere.
You need to analyze and examine thoroughly how much you are investing in hiring an outsource team versus the cost involved in hiring in-house employees, IT infrastructure expenses, and others. After all, outsourcing should be a profitable decision.
2. Communication & Collaboration
Regular meetings with project managers and developers are unreasonable, especially if you are offshoring, daily iterations will be difficult to manage due to time differences.
Agile communication and continuous collaboration become an essential element in your business relationship and will ensure that your projects remain on track.
If, on the other hand, you choose a Nearshore Development Company, then the time difference won’t be a problem, and regular communication with the development team would make much more sense.
Depending on the duration of the project, weekly or daily status updates should be maintained. This is one of the main reasons why companies prefer nearshore outsourcing over offshore.
3. Resources & Technology
Resources and technology play an important role in gaining efficiency and high speed of completing tasks.
When evaluating vendors’ technical capabilities, compare it against those skill sets that are deficient in your company and those that align with your project needs. If you are looking for a long-term arrangement with multiple projects in mind, then a broader range of skills may fit your business needs better.
4. Consistency in Quality & Delivery
While costs and contracts may be critical when outsourcing, most vendors compete on their ability to produce results.
While conducting due diligence on an outsourcing company, make sure to evaluate their past work and pursue references to understand how well they have delivered on their promises.
The best way to validate the vendors’ timelines and their ability to deliver consistently is by giving them one or smaller projects and seeing how they handle those.
5. Industry Experience
Checking the real experiences of the outsourcing vendor can greatly assist in hiring professional developers that are aware of the projects and trends of your industry.
When evaluating their past work in the above step, you will get a good impression of whether or not their products or services are meeting required standards, and that it is maintained continuously.
Taking into account the reputation of a vendor will tell you a lot about how easy or difficult working with them could be.
6. Work Process & Culture
When it comes to outsourcing, you have to create a set of deadlines for the completion of projects. Do not hesitate to ask questions to your outsourcing provider about the project that you intend to assign to the company and the scope of work.
Although outsourcing can be greatly beneficial to companies, you need to be wary about picking the wrong partner, like one that does not align with your culture.
While working closely with the company, they should operate like an established business, but work like a startup. That is, they must be agile and able to rapidly adapt to ever-changing business needs.
Conclusion - Collaboration With An Outsourcing Vendor
Most organizations look for cost-effective solutions to run the business operations with effectiveness and maximizing the performance of an organization.
Rushing into the outsourcing decision without clear goals can result in misaligned expectations and management overhead. To find the best candidate from the list of numerous outsourcing companies, you should follow a well-planned strategy that covers your main goals, needs, and expectations for your future outsourcing partner.
Although there is some risk involved in outsourcing, the level of risk involved depends on the type of processes that you choose to outsource. Without outsourcing core business practices as mentioned above, outsource development projects instead.
This can be a well-calculated risk that can give your business an opportunity to innovate and grow.
Outsourcing can be a great challenge, however, knowing all the pitfalls of this process can greatly assist in choosing the right candidate for the cooperation and make the most of it.
At SOPHiLABS, our professional team, empower various companies and their workforces from different industries with innovative solutions and approaches.
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A software design and development agency that helps companies build and grow products by delivering high-quality software through agile practices and perfectionist teams.
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