10 problems of outsourcing and ways how to solve them
The penetration of digital technologies into an ever-widening number of spheres has put IT service providers on top of the most-wanted job list in the early third millennium. Today, for any organization that aspires to keep abreast of the times having an imprint in the virtual world is a must-have.
In the realm of commerce, paraphrasing Bill Shankly, IT know-how isn’t a matter of life and death; it is much more serious. The big-time efforts of any modern business venture are doomed to defeat unless it makes extensive use of state-of-the-art software to streamline its workflow and facilitate rapport with customers.
However, many firms whose core activities have nothing to do with modern technologies or startups on short commons can’t afford to have an IT department on their permanent payroll. Bigger businesses often face another kind of problem – the inability to find competent specialists locally. The third category of companies considers the current cost/quality ratio of the national IT talent pool disproportionate. Outsourcing came as the universal solution to all of these predicaments.
At first sight, the model seems perfect. You find a vendor from any corner of the globe whose expertise and service rates suit you to a tee, entrust them with an assignment, obtain the commissioned product, and enjoy its performance reaping revenues aplenty. Yet, being present in the IT services market for a decade, we at DICEUS know very well that the map is not the territory. In real-life conditions, companies encounter some problems with outsourcing software development.
Read more on the topic:
What is application outsourcing? Data, definition, and services
Project initiation and project execution monitoring: Essential checklists
IT outsourcing problems and solutions
When you plan to outsource a software project, you can choose to try the suitable old trial-and-error method and suffer lots of bumps and bruises along the way. You can heed the advice of a seasoned expert in the field and save the lion’s share of efforts and money that otherwise would be wasted. What are the most frequent issues with outsourcing that clients experience?
You might find it interesting:
Custom software engineering best practices and niches
How can I find a reliable software vendor?
This initial step is crucial for fruitful cooperation and successful project completion. How do novices in the field go about selecting an outsourcer? For most of them, seeing a cool website is enough to include the company in their shortlist of candidates. And talking to a manager seems to be the only move they are to make to finally settle on this vendor.
Solution: More haste, less speed. Hurrying to pick the first available option instead of shopping around a bit, you are in for all kinds of trouble.
It all starts with intelligence. In all senses of this word: as in understanding and as in reconnaissance. While looking for a vendor, most internet-reliant people start with a Google search. Well, you can’t do without it, but you shouldn’t also neglect other sources of information.
First of all, leverage the grapevine. Ask people in your near and far environment – acquaintances, clients, colleagues, former teachers, social media friends, and business partners. The huge odds are that some of them have gone through the same routine of finding an IT outsourcer and can advise you on the choice (or dissuade you from the one you are about to make).
Augment your Google search by perusing specialized sites that furnish data-driven analytics related to IT outsourcing vendors. Clutch and GoodFirms are the top two resources to help you to relieve your selection throes and get objective information on the company you are interested in.
Having limited your choice to a couple of vendors, look into their portfolio, rewards and certificates, tech stack of individual specialists, rates, cooperation models, extended benefits, and reviews of previous clients.
Only after taking into account all these parameters your final decisions can be as intelligent as possible.
Download our free guide on how to choose a reliable software vendor!
Is the vendor the right size for my company?
On the one hand, enlisting a smaller-size outsourcer is more financially attractive. Such vendors are conventionally more enthusiastic about the projects they are recruited for and display more flexibility in approaches and collaboration. Yet, they usually have less experience in the realm and limited upscaling opportunities.
On the other hand, large companies possess greater expertise and can field a team of any size and composition, augmenting it if the project requires it. However, the cost of their services is higher, and, being deluged with assignments, they tend to pay less attention to “just another project.”
Solution: You should take stock of what you are and what you want to get by outsourcing. How large is your organization? How big is the project you want to have implemented? How much are you ready to spend on it? What is the size of the team that can handle it?
Once you realize the lay of the land, try to find an outsourcer that matches your vision and expectations. Clutch can be extremely instrumental in this since it divides IT services vendors into three categories depending on their size – small (under 250 employees), medium (between 250 and 1,000 employees), and large (over 1,000 employees). Choose from within the group that suits you most.
You might be interested in IT outsourcing trends 2023.
How do I keep successful communication with the vendor?
Being engaged in remote employment is always fraught with communication challenges. These kinds of outsourcing issues can be related to culture clash (both on the corporate and national level), inadequate command of English by one of the stakeholders (or even both), time zone discrepancy, failure to establish communication rules and channels, etc.
Solution: Each mentioned problem with outsourcing should be dealt with piecemeal. Some of them must be taken care of at the vendor selection stage. Minimize such issues by hiring a partner with a culture, language, and time zone close to yours. Or make sure from the outset that the outsourcer of your choice can adjust to your requirements, work ethic, and schedule.
Once these aspects are taken care of, develop and agree upon a comprehensive communication strategy that would stipulate the frequency and manner of communication sessions, comfortable for both parties, the media to be used for it, and emergency contact points. Modern technologies offer a whole range of collaboration and communication tools (Slack, JIRA, Trello, etc.), and IT industry workers are obliged to make the most of them.
How can I ensure the quality of the final product?
You can’t. Since most customers don’t have any expertise to monitor the development process and see whether the vendor does everything right (that is the main reason they outsource, in fact), quality assessment is one of the trickiest things about software development outsourcing.
Solution: Quality risks are essentially mitigated by choosing a competent outsourcer. Before signing a contract, you should make sure your future partner has the skills and experience to handle this particular task. If a company has an excellent record in app development, hiring it to build a banking solution would be an imprudent step indeed.
Moreover, all deliverables are to be spelled out in the contract to clearly realize the look, feel, and functioning of the final product. And meticulous testing of all aspects of it is a sine qua non.
How do I know that the project will be delivered on time, within scope, and budget?
You know well what the maximum sum you can spend on the project is and how soon you want to get the product. And the vendor is ready to swear they will keep within the budget and deadlines. Yet, wishing to cinch the job, some unscrupulous developers can promise anything, but once the deal is closed, they start complaining that the project’s scope is too large to be finished on time or overhead expenses pop up. How can you be sure they will abide by their initial bargain?
Solution: Count ahead. To check how realistic the promises made by the vendor are, submit your project for parallel estimation by another developer (or better several of them) as far as the cost and the implementation time are concerned. Ask other teams about the numbers on similar-scope projects and inquire about extra payments that may creep in. For customers who like to be dead sure of the final amount they will have to fork out, there is the fixed price outsourcing model where all contingencies are reckoned in.
What about the legal issues involved?
Hiring an outsourcer, you sign a contract – a legal document of a kind. How can you be sure that yours is consistent with laws regulating the industry?
Solution: In fact, legal considerations encompass several parameters, including liability, regulation compliance, and intellectual property rights. Moreover, terms of legislative foundations differ depending on the model of cooperation (dedicated team, time and material, fixed price) and the country outsourcers hail from. Although typically, it is the vendor’s area of responsibility, it is recommended to learn at least bullet points of this aspect of cooperation.
Another thing you should check in advance is the certificates of the vendor, validating its regulatory compliance and thus its ability to provide certain services and have access to specific data. Several such documents (GDPR, ISO, and PCI DSS are among the most important ones), so inquire about them at the stage of negotiations.
Will be my project and corporate data safe?
Enlisting the third-party help, you will inevitably compromise the security of data and software belonging to your organization. And it is not just the project-related data. Other information concerning your business, core activities, and assets may also run the risk of undesirable exposure. Is there a guarantee that your critical information and intellectual property won’t get any further than that?
Solution: It is necessary to institute a security risk management policy and adopt a system of technical safeguards and protocols that would protect your sensitive data and valuable software. Conventionally, it is implemented in the form of a data processing agreement that stipulates how the relevant data must be stored, accessed, transferred, and processed. GDPR compliance is one more measure that ensures the absence of leakages.
How can project team churn be mitigated?
Having found an outsourcer and kicked the project into action, many companies think that now they are over the hump so they can relax and rest on their oars. Don’t fall into this trap. Modern life is extremely volatile and your hired developers may leave the project quite unexpectedly. You would have to wait until the vendor replaces the employee. And when such a person is found, some adjustment period is imminent. During it, the onboarded worker is coming to grips with the essence and details of the ongoing project and sorting out his/her scope of duties. All this boot camp routine leads to delays in the execution and delivery.
Solution: In fact, you can’t do much about employee turnover, since HR management is largely the vendor’s responsibility zone. However, such unpleasant developments can be forestalled by the provident customer in the Service Level Agreement (SLA) appended to the contract. It should require the vendor to have a certain number of off-project skilled personnel on the payroll that can immediately step into the breach when necessary.
Also, when choosing a vendor, opt for the one with a robust certification and instruction scheme that allows to train staff on a permanent basis and form an immediate reserve for emergencies.
How can knowledge transfer mess be avoided?
The previous woe often translates into this one. Personnel come and go, taking the relevant store of knowledge with them. Moreover, projects aren’t something carved in stone. They can evolve and change while their vision or details are recalibrated. How can the integrity and continuity of the project data be provided, whatever personnel or concept fluctuations occur?
Solution: The rule of thumb says that any information that isn’t documented is lost. To prevent this loss, a knowledge transfer plan aimed at maintaining institutional memory should be prepared and implemented. This document should identify the knowledge to be collected and transferred, determine the people responsible for it, define the ways in which it should be done, and establish the place to store it. The client-side should also be involved in the process (at least at the control stage) since knowledge transfer failure puts at risk the terms of delivery and even the operational quality of the final product.
Who is in control of the project?
This may be a bewildering question. On the one hand, outsourcers who do the job for you understand the nuts and bolts of the development process better, so they feel entitled to make independent decisions. On the other hand, it is going to be your product which conditions your right to exercise control over its development. So, who will have the ultimate upper hand in crucial questions concerning the project?
Solution: Either choice has its fortes and shortcomings.
Keeping decision-making power in-house retains your total control of the process and outcome but hamstrings agility of the workflow and flexibility of the development team, who will thus have to contact you on every tiny issue that crops up.
Delegating total control to outsourcers facilitates the development immensely but leaves you in the position of the anxious on-looker who can only hope that the hired team will do everything as you expect them to.
What is the course to be taken? Well, the alternative you take greatly depends on your governance style – whether you like to micro-manage things or prefer to rely on your employee’s self-sufficiency. Or you can try to balance the two approaches and grant your hired development team a certain degree of technical and operational autonomy while reserving the key decisions for yourself. But whatever you opt for, you should remember that all solutions to outsourcing problems of this kind are to be regulated in the contract where responsibilities of stakeholders must be explicated crystal-clear.
Outsourcing in the IT sector is an undeniably advantageous and cost-effective business approach that provides global access to qualified personnel. All major pitfalls of leveraging its best practices can be avoided by meticulously choosing a reliable and competent outsourcer and signing a detailed contract with it, where responsibilities of the customer and the vendor are clearly delimitated.
