Tips on How to Avoid IT Outsourcing Failures

With the economy going global and constantly evolving technology many companies find it increasingly hard to develop the whole spectrum of software solutions in-house. They are forced to maintain a competitive advantage by continually optimizing their operational efficiency, improving customer service, and bringing new products to the market.

Deloitte’s survey shows that 78% of companies that outsource admit that their choice is beneficial for their business.

In today’s business environment, you absolutely must outsource business functions and activities that someone else can do faster, cheaper or more easily than you to stay competitive. Unfortunately, when they start outsourcing, most entrepreneurs and small business owners make several mistakes.

In today’s article, we are going to dwell upon possible outsourcing problems that may arise in the process of outsourcing and tips on how to avoid them.

1. Time zone differences

When you live in different time zones, the communication issue arises, as most of the time, your work hours don’t coincide. That’s why while choosing an outsource partner, take into account time zone differences, as you’ll need to talk on a daily basis to make sure your expectations match deliverables.

2. Determine your outsourcing goals and scope

If you don’t know where you are going, you will never get there. After you’ve made up your mind to start an outsourcing project, you’d want to decide what exactly you want to outsource. Analyze your project to see what you can do in-house and what skills you don’t have.

For a successful outsourcing strategy, it is critical to identify both long-term and short-term requirements, make sure you have a clear vision of the software development project that you’re outsourcing, and prepare written responsibilities and expectations for your overseas team.

Consider the future of your software product and how you expect your outsourcing development team to handle any developments. Doing this ensures that your project remains organized and that your outsourcing team is clear on all the tasks.

3. Estimate the costs

The more clearly you can define exactly what you need to be done by breaking it into parts, the better you can estimate how much time it will take – and therefore how much it will cost at the person’s typical hourly rate. You don’t want to just hand a bunch of work to someone and then get surprised when you get their bill and/or incorrectly assume they took too long to complete a project.

Without a deep analysis of all the pricing for the services provided, you can end up spending much more than you actually planned before. Therefore, count ahead, ask the vendor about any possible extra charges and read the clients’ reviews.

4. Focus on value

Outsourcing allows you to save costs, but this shouldn’t be the only reason why you’ve turned to it. Never approach outsourcing as a cheap and easy way to offload the work. Outsourcing should optimize your business to free up time for strategic focus.

The rates of your outsourcing company are often a reflection of skills, experience, and work quality. Placing value over price reduces your risk of wasting your money and ending up with a product you are not satisfied with.

5. Choose the Right Vendor

A service provider that not only understands your industry but is also fully aligned with your business objectives and culture is your best bet. Thus, spending a little bit more time while choosing a partner may save you a lot of trouble in the future.

Your role is to describe the end result you want to the software development company, ask for and listen to their suggestions, and rely on their expertise and talent to achieve it according to your description.

6. Establish a Good Communication Model

Studies have shown that ineffective communication is one of the leading causes of project failure. Communication is vital, especially when dealing with an offshore outsourcing team that probably operates in a different time zone. You need to establish a good communication model, and this starts by establishing a communication channel with the offshore team.

You could employ tools like video conferencing and instant messaging platforms. You will also need to schedule regular meetings and have follow-up conversations to ensure that all details are addressed.

7. Build Relationships, not just Software

Quite often it is easy to neglect the importance of personal relationships while applying all forces to the project execution. But the irony is that a great relationship will do far more to ensure the success of an outsourcing arrangement than the most scrupulously written contract.

Remember that personal relationships built upon trust and respect bring your remote team additional motivation. So, put some effort into creating a positive, engaging, and inspiring atmosphere to give your remote team some energy to go the extra mile in their work. Open door policy, when everybody feels free to approach you and express their concerns, will also help avoid conflicts, misunderstandings, and mistrust.

Final Thoughts - Tips on How to Avoid IT Outsourcing Failures

Pitfalls can be avoided by establishing proper communication between partners and clearly defining what you expect from the offshore team. You also need to compile a detailed written contract, addressing any cultural or technical clashes head-on while being involved in your project’s management.

The most common cause of problems is companies setting their expectations too high for the outsourcing team. Luckily, there are several ways outsourcing can be improved. Some include carrying out adequate research on vendors so you can hire the right fit for your business. You also need to set realistic project goals, communicate effectively with your outsourcing firm, and have a defined scope of work.

All in all, while there always will be software outsourcing challenges and difficulties on the way to a successful project, just like in any other business, the benefits of it exceed the risks for many companies.

Well-skilled dedicated software developers can ensure faster, cheaper, and easier development of your project. Understanding the risks and having a strategy for nearshore outsourcing provides the roadmap to the success of your business.