Outsourcing has been improving the efficiency of companies since the 80s. We all know technology disrupted most business models over the years, and that included the outsourcing market. Today, outsourcing, especially in IT, shows no signs of slowing down. From SaaS online models to full outsourcing of a software build, there are a variety of ways to leverage outside resources to benefit your organization.
How has IT outsourcing changed over the past few decades and why do companies still seek outside resources to cut costs and improve efficiencies? As long as you know how to maintain a relationship with your external partners, outsourcing your IT software project is a smart move.
The Current State of IT Outsourcing
Outsourcing has been around for decades and despite the current economic climate, revenues from business process outsourcing are predicted to end this year at the $220 billion mark. (“Adoption of value”)
In the field of software development, outsourcing has become a business norm. From startups to enterprises, companies look to local developer shops like AWH to bring a full onshore Agile team to bear on whatever digital product they’re trying to build. However, some companies choose to look outside the U.S. for cheaper, faster solutions. Is this still the right approach?
A recent study shows that even small companies and startups have climbed onto the IT outsourcing bandwagon. 52% sent their development projects to India last year. Ironically, many of these businesses also chose to bring their work back in-house, a process called back sourcing. (Hicklen & McKeon) Why? Dun & Bradstreet published their, “Barometer of Global Outsourcing” a few years ago and reported that “20 to 25% of all outsourcing relationships fail within two years, and 50% fail within five”(Ladan). Given the intricacies of a software development build, it’s no wonder these relationships are difficult to maintain.
All of the organizations that continue to outsource their IT have one thing in common — they seek the digital disruption that software can bring to a company or a market. But because these firms lack the internal expertise to make it happen, they turn to external experts whose singular focus is on building a better digital tool. Given the statistics, some of these projects will fail but many will succeed.
As many c-suite executives decide to undertake what they call “digital transformation,” they will increasingly seek the help of both onshore and offshore IT partners to help them mine data, add automation, and build new software that solves their business problems. There are high-level benefits to these partnerships that hold true no matter the size of your business. That is, if you know what to watch out for.
5 Benefits of IT Outsourcing Your Digital Product
As long as companies try to solve problems with software, they’ll look for the best resources to help them build their digital solutions. Outsourcing is a less expensive way to get the job done when you lack the internal resources or time.
Some of the benefits of IT outsourcing include:
1. Access to human and technology expertise
2. Frees up your internal teams to focus on the core business
3. Cuts overhead related to hiring additional in-house staff
4. Reduces your time to market, especially when you’re dealing with a large or dispersed bureaucracy
5. Experience with software builds, something your internal teams may never have undertaken
The level of complexity with any digital software build can’t be emphasized enough. Bringing in an external team with experience in building these tools will ensure both a better product and a faster time to market.
In 25-years, AWH has built more than 4,500 digital products. It’s all we do. This level of specialization certainly doesn’t exist in a startup and 9 times out of 10 it doesn’t exist at the enterprise-level either.
How to Ensure The Success of Your Outsourced IT Project
Outsourcing your IT build is here to stay. But many of these relationships sour, which certainly affects the digital product and the end-user experience. Ensuring the success of your outsourced digital product requires a seamless relationship between you and your third-party vendor. But the keyword here is “relationship,” and when IT projects fail it becomes the fault of both parties, not just the outsourced vendor, whether they’re in India or Columbus, Ohio.
In our experience, outsourcing is a delicate process that can be tripped up by many variables:
· The software vendor lacks the technical expertise to fulfill the job requirements.
· The client has unclear expectations about the deliverables.
· The software vendor works too quickly in order to cut costs and deploys a product that is buggy or unwieldy for the end-user.
· The client initiates multiple change orders, putting the project well over time, budget, and/or scope.
· The software vendor fails to document properly so when the project finally comes back in-house, it’s a snarl for your developers to unravel.
Don’t assume signing a statement of work turns the burden of the IT project to your external resource. We’ve found the best outsourcing relationships are true partnerships between our Agile build teams and your stakeholders. This relationship, as much as the software itself, is key to building a better product. Without proper management and supervision by both parties, the outcome will be less — sometimes considerably less — than what you had envisioned.
The bottom line? To achieve the benefits of outsourcing your IT project, it’s critical that you form and maintain a true partnership with your vendor. This requires consistent and open communication not hampered by global time zones or language challenges. Why would you tack on these added hurdles when building software is difficult enough on its own?
AWH has the right team to maximize the benefits of your outsourced software development project. Find out why our team is different. Click here to start the conversation.
“Adoption of Value Added BPO Services to Drive Gains in the Business Pr.” PRWeb, 2 Apr. 2015, www.prweb.com/releases/telemarketing_services/procurement_bpo_market/prweb12627933.htm.
Hicklen, Hannah, and Kelsey McKeon. “Small Business Outsourcing Statistics in 2019.” Small Business Outsourcing Statistics in 2019 | Clutch.co, clutch.co/bpo/virtual-assistants/resources/small-business-outsourcing-statistics.
Jafari, Ladan. “Why Software Development Outsourcing Fails Most of the Time — WINaTALENT: Blog.” WINaTALENT, 14 Sept. 2020, winatalent.com/blog/2020/01/why-software-development-outsourcing-fails/.
-Greg Huddle, Principal, AWH