- When is outsourcing a good option?
- Resource and skill gap
- Cost inefficiency
- Focus on core competencies
- Scalability challenges
- Lack of access to global talent
- Short-term projects
- The issues solved through development outsourcing
- The main points of an outsourcing offer
- The questions Clients ask about the outsourcing model
- Sample projects in the software development outsourcing model
Software development outsourcing has emerged as a strategic approach that leverages global talent and expertise for enhanced business performance. We have covered a detailed list of topics concerning this model of cooperation, based on our experience in the field.
When is outsourcing a good option?
Companies consider many factors when deciding if outsourcing is the best option for them. Here are the most common reasons based on our experience with Clients.
Resource and skill gap
One of the most common reasons companies choose to outsource is when there is a clear resource and skill gap. This situation can arise when projects require specialized knowledge or expertise that doesn’t exist within the company. Instead of spending time and resources training current staff or hiring new employees, outsourcing can be a faster and more efficient option. By doing so, the company can ensure they have access to expert skills, leading to high-quality output.
Outsourcing can be a strategic move when the cost of maintaining certain internal operations surpasses the cost of outsourcing those tasks to an external provider. Sometimes, internal processes are simply too expensive to maintain due to overhead costs, high labor costs, or the requirement for expensive, specialized equipment. In such scenarios, outsourcing those operations to countries with lower labor costs or to companies that specialize in those operations can significantly reduce expenses while maintaining or even improving the service level.
Focus on core competencies
Outsourcing non-core functions has increasingly become a strategy used to keep the focus on areas that truly distinguish a company in the market—its core competencies. By offloading tasks integral to operations but not central to the firm’s strategy, such as administrative functions or customer service, companies free up resources and energy to focus on what they do best. This enhanced focus on their strategic differentiators can lead to improved competitiveness and market positioning.
Businesses often face challenges when scaling their operations, especially during periods of rapid growth. Building capacity to handle this increased demand is typically expensive and time-consuming. Outsourcing helps businesses overcome this hurdle by providing the flexibility to quickly adjust the workforce and operational capacity according to needs, making it a viable solution for growth and scalability.
Lack of access to global talent
In an increasingly global economy, having multilingual and culturally diverse team members is a valuable asset. Outsourcing allows businesses to tap into a larger, global talent pool and gain the diverse skills and perspectives needed to operate in a global market successfully.
With short-term or one-time projects, it hardly makes sense to hire full-time staff or spend money on training current employees. These projects often require specialized skills that may not be useful beyond the project’s completion. Outsourcing is an ideal way to complete these projects effectively and efficiently by leveraging external specialists who have the right mix of skills and experience for the task at hand.
The issues solved through development outsourcing
Development outsourcing can help solve a number of issues and augment your team in different ways.
Cultural and Language Differences
Navigating cultural and language barriers within a company may be challenging. However, with adequate preparation and understanding, these differences can create a diversity advantage. Quality outsourcing providers invest in cultural awareness and language training to ensure smooth communication and mutual understanding, driving effective collaboration despite geographical boundaries.
Time Zone Differences
When managed well, teams working in different time zones can provide almost 24-hour productivity and faster turnaround times. Skilled outsourcing providers have considerable experience in managing these differences to keep operations running smoothly.
The key to ensuring high service quality is a well-drafted contract outlining clear service-level agreements (SLAs), rigorous quality assurance practices, and regular performance audits. Many outsourcing providers guarantee high-quality services that adhere to international standards. See our article on the importance of a good SLA.
Data Protection and Security
Outsourcing might bring about data protection and security concerns due to physical and digital distance. However, reputable providers of outsourced development services often have robust security protocols in place. They follow strict data security procedures and comply with recognized international standards, ensuring the safety and integrity of your data.
Experienced outsourcing companies usually have established onboarding processes utilized for seamless transition and adaptation, helping the team get up to speed with the tools, technologies, and methods specific to the project.
The fear of developers going off the grid during a critical project phase is a concern in any project. This problem is largely mitigated by establishing proper channels of communication, accountability measures, and by working with a reputable outsourcing company. Such firms ensure their personnel are readily available, responsive, and committed to the project’s success. The best outsourcing companies find replacements when an employee becomes unavailable for any reason.
Mismatch between a project’s needs and a developer’s skill set is another potential issue. Reputable outsourcing companies address this by having a wide talent pool, allowing for developer selection that closely matches the project specifications. They also often provide ongoing training to their staff to ensure their skills remain up-to-date, effectively eliminating this concern. At createIT, we organize face-to-face interviews between the contractor and potential employees.
Work environment familiarity
Top outsourcing companies make efforts to understand your company culture and align their teams accordingly. Regular communication can mitigate cultural gaps and build a sense of belonging, even in a virtual work environment.
The main points of an outsourcing offer
It’s crucial that the conditions of such partnerships are precisely defined for optimal cooperation and results.
The foundation of any successful business relationship is clear communication, and outsourcing is no exception. Both parties should be on the same page about what is expected in terms of deliverables, timelines, and performance. The outsourcing offer should include communication strategies, preferred channels, frequency and methods of updates, and points of contact, ensuring smooth, continuous collaboration.
An effective outsourcing offer should detail realistic, mutually agreed-upon deadlines. Unattainable or vague time frames do a disservice to both parties, leading to missed deadlines, poor performance evaluations, and strained relationships. The inclusion of realistic deadlines in the offer assists with project planning and ensures expectations are clear.
Clearly defined roles and responsibilities
In an outsourcing scenario, clearly defining the roles and responsibilities of both parties is crucial to avoid confusion, overlap, or neglected tasks. The scope of work, including details about each task with reference to the required resources, personnel involved, expected output and timelines, should be meticulously outlined in the outsourcing offer.
Even though the two parties in an outsourcing agreement are distinctly different entities, fostering a sense of teamwork can greatly enhance the working relationship. The offer should consider aspects that support team-building exercises, shared goals, and strategies to encourage teamwork.
Regular meetings and updates
To ensure accountability and keep the project on track, regular meetings and project updates should be a part of the outsourcing offer. These can help in identifying and addressing issues promptly, providing constructive feedback, and adjusting project plans as required.
Access to necessary resources
An outsourcing offer should detail what resources will be provided by the hiring company and what the outsourcing partner will need to provide themselves. Ensuring the outsourced team has access to all required resources is crucial for maintaining efficiency and meeting project goals.
Quality assurance and review process
Quality control is critical in outsourcing agreements. The offer should include details about quality assurance measures, review processes, benchmarks for performance, and remedies in the event of subpar service quality. This not only maintains high standards but also assures accountability.
Regular performance assessment
An outsourcing offer wouldn’t be complete without a provision for performance assessments. The contract should outline how and when performance will be evaluated, including key performance indicators (KPIs) used to measure success. Regularly assessing performance helps maintain high levels of service, identifies room for improvement, and ensures each party is upholding their end of the deal.
The questions Clients ask about the outsourcing model
Here are some of the frequently asked questions we receive.
- What is your experience in software development?
- Can you provide references or case studies from past projects?
- How do you handle communication during the project?
- What project management methodologies do you follow?
- How do you ensure the security of our data?
- What is your settlement method?
- How can we be assured of the quality of the software?
- What about Intellectual Property rights?
- How do you handle project timelines and deadlines?
- Can you scale up/down resources according to the project’s needs?
Sample projects in the software development outsourcing model
We have conducted a number of projects in the outsourcing model. See some of our highlights:
It’s easy to see why software development outsourcing is fast becoming a go-to strategy for businesses. It offers a cost-efficient way to leverage global talent, stay abreast with the latest tech developments, and focus on the core aspects of business operations.