What is Outsourcing(Benefits and Risks of outsourcing)

Outsourcing your IT is often used as an effective business strategy to reduce cost, bring in innovation and get access to better software products.

In simple word, it refers to the way in which companies entrust the processes of their business function to external vendors. However, any business process that can be done from an offshore location can be outsourced.

There are many functions like transaction processing, payroll, order, call center services data conversion, transcription services, OCR clean up services, image manipulation services, etc that can be outsourced.

Outsourcing benefits

There are many benefits of Outsourcing:

• Cost advantages
• Increased efficiency
• Focus on core areas
• Access to skilled resources
• Time zone advantage
• Faster and better services

There are various benefits of Outsourcing but it has some risks also. Let’s examine the main Outsourcing risks and ways to migrate them.

The Ability of the Company to Complete Your Project

The main risk of an Outsourcing company that comes to mind “Is the company actually able to complete the works needed?”. Most of the companies here and there are only shouting about their “high-end”, technologies, expertise, and possibilities.

But how to decide that the company you are choosing is capable of efficient achievement of the goals you set?

Solution:

Here we described some point, you will need to spend some time to research on it.

• Collect some information about the maturity of the company. For example, how long is the company presented on the market, the average size, the quantity of the employees, etc?
• Collect proper knowledge about the number of long-term projects/clients and the number of successful projects for the past year.
• keep an eye on social media activity of the company. That means if its IT provider’s will to share its knowledge and its inner life with the society then it is a good sign.
• Absorb the information about the knowledge sharing process and technical skills development inside the company and the company’s participation in global events.
• Take a look at the company’s ranking on the independent review platforms.
• Study the Case, those include clients overview, history of the cooperation, problems that client wanted to solve, challenges appeared, the solution itself, and the technology stack used.
• Get feedback directly from current clients and past clients. Past clients are especially important to talk with because they have nothing to lose by telling the truth.
• Make an on-site visit to validate your compatibility, if possible. You’ll need to cooperate with those people in the future. And discuss the project related topics with people in the office directly.

Loss of control/ visibility over the project

Do you know losing control over the outsourced is one of the biggest fears that haunt CIOs? In a costly product, lack of communication or slow responses is the biggest factor.

Solution:

• The key to facing the impact of this risk is to understand that your outsourcing project should be equally managed by your company and the vendor.
• After improving the communication with your outsourcing team, start the project and also confirm that your in-house team understands that how to handle the outsourced project.

Hidden costs

Although outsourcing is cost-effective, it is not an end-all to your problems. If you are want to see success in your outsourcing relationship, you will still need to incur the cost, like the cost of transitioning or the salary of the project manager.

Solution:

The ideal way to control this risk is to keep yourself aware about the potential hidden costs in your new outsourcing venture. This will give you a clear view of the exact cost reduction that can bring to your business because of outsourcing.

Language problems

You might already know that communication is a crucial factor in outsourcing. probably communication can falter if your development team is unable to speak your language.

Solution:

To prevent this risk, carefully choose the outsourcing country and vendor. Choose those service provider who can guarantee that their remote team will be able to communicate to you in the preferred language.

INFORMATION LEAKAGE

Fraud and leakage of information are common in Indian and Asian outsourcing companies. While Ukraine has an excellent reputation when it comes to intellectual property rights.

Ukrainians companies understand that the IT outsourcing market is highly competitive, so they have established high-security standards to bring new customers in.

Solution:

There are two steps to be taken to eliminate even the slightest chance of information fraud.

1. First, ask vendors about their data protection methods or policy. Reputable companies will provide you with a detailed answer that includes case studies, which you can check.
2. Second, you have to sign a non-disclosure agreement with a vendor to protect your intellectual property.

OUTSOURCING A KEY PRODUCT

Outsourcing your key product seems quite risky. Hiring an offshore team to work on your project, the pitfall is that it’s becoming dependent on a vendor and you losing your product expertise.

Solution:

• The easiest solution is to outsource only some part of your project. Whereas keeping management and key employees in your office.
• It is the best idea to hire a certain specialist, for example, designer or testers, developers, that will be an extension to your team and not a substitute for it.
• When you’ve come up with a list of works to outsource, you need to choose the best service provider. For this, you have to conduct a detailed background check of your potential vendors.
• Contact previous and current customers personally and ask them whether they would outsource their projects to a given company again.

TIME DIFFERENCE

If you outsourcing a project to another country, you should remember that you and your vendors are in a different time zone. For some country’s companies it may not be that noticeable, but for the US-based clients, the time difference is noticeable.

Solution:

• Reputable Ukrainian vendors keep in mind this fact and adapt their schedules accordingly. Local specialists are work in shifts and providing professional support 24/7.
• This fact changes the risk into an advantage since you benefit from an ongoing development cycle, disregarding of your geographical location.

Conclusion:

Outsourcing a project is very risky work. Before outsourcing a project collect all information about the company which is necessary for your project. Although many risks arise at the time of outsourcing a project but also a ways to migrate them.