Top Outsourcing Mistakes and How to Avoid Them
By Space Coast Daily // March 23, 2021
According to the statistics, by 2021, the IT outsourcing market, including app development function, is forecasted to reach almost $413.7 billion.
Outsourcing can be a pretty beneficial decision for your company in case you have the right strategy and knowledge. However, there are some pitfalls to consider to avoid outsourcing missteps and achieve the settled objectives, entering the world of outsourcing.
10 Top Outsourcing Mistakes to Mind
Below we outlined the ten top mistakes that you should be aware of when outsourcing work or projects to offshore teams.
Mistake #1. Not having a clear cost estimate
One of the most widespread mistakes and misbelief is that outsourcing is the cheapest way to go. However, it’s not the truth. Depending on your project’s complexity and scope of work, the costs can vary a lot.
Thus, it’s a common thing when the costs turn out to be much higher than expected. It happens in case you don’t know where you go and/or what you need to do to get there.
The more clearly you can define the tasks to be done, the better you can:
■ Estimate how much time it’ll take;
■ Identify how many professionals you need to hire to complete the project effectively and timely;
■ Estimate how much it’ll cost.
So, to estimate the costs clearly before you start a project, you should define the goals and break the entire project into manageable parts/tasks to outsource.
Mistake #2. Choosing the cheapest outsourcing partner
If you set a low budget for your project as the main priority, then get ready to fail. It’s another common mistake in outsourcing. Keep in mind that, commonly, you get exactly what you’ve paid for. There is always a reason why a provider is cheaper than the competitors like inexperienced specialists, poor quality, etc.
With that in mind, you should always do thorough research on the provider before hiring any development team. Just consider quality over cost so that not to spend more money to fix the problem than just hire skilled developers at the very beginning.
Mistake #3. Starting the process without a clear timeline
When dealing with the in-house team, you clearly know when your working day starts and finishes. If you don’t discuss it with your offshore team, then get ready for delays, bad communication, and other problems to have.
Besides that, you should always plan the work scope and tasks for both offshore and in-house teams in the same way. Herewith, whatever work you need to be done, define how long it will take and when it must be completed. A clear timeline given to the outsourcing team increases your chances for success.
Mistake #4. Choosing a provider with a lack of expertise
Choosing a company to outsource with, the decision is to be based on experience, skills, and extensive knowledge. Certainly, the vendor may not have developed and designed a product exactly like yours, but if it has worked with projects of the same complexity, size and requirements, it’s more likely that the team will succeed with your project too.
That’s why you should always thoroughly analyze the vendors and check their expertise by asking:
■ Domain expertise;
■ Previous clients’ feedback, reviews, and so on.
Mistake #5. Letting your IT partner dictate what you need
When searching the offshore team because you have no skills, knowledge and experience to do what you need, you still know your business inside and out as well as its needs best of all. Having that in mind, it’s a mistake to let the vendor dictate what you need to do.
The vendor should listen to your needs, wishes, goals and develop a solution that meets all of them. Also, the outsourcing team can point out some issues you may miss and suggest ways of improvement but not forcing you to use technologies/approaches/solutions you’re unfamiliar with or to sign on to something that doesn’t serve your company.
Mistake #6. Ignoring cross-cultural differences
It is not the best idea to interview solely for hard skills. Certainty, hard skills matter, but don’t underestimate soft skills. Clear and open communication across the development team is crucial for your success.
Thus, it should be comfortable for all the offshore team members to interact with each other, co-work, discuss problems, find solutions, give instructions, and so on. Consistent and clear communication is the key to developing robust products in an effective manner and meeting deadlines.
Mistake #7. Not knowing what to outsource
As soon as you decide to outsource a project, the next step is to define what tasks to outsource. Keep in mind that some tasks are better to be completed in-house. For example, it’s a bad idea to outsource your security operations.
Thus, if the task requires attention, access to the private/personal/security data, knowledge of insights about the project, and so on, then it must be completed by your office workers. Never outsource activities that are:
■ Unique to your business;
■ Core functions;
■ Strategic initiatives.
Herewith, to outsource successfully and with minimum risk, it’s crucial to:
■ Identify short- and long-term requirements;
■ Break the process into manageable tasks, determine what you can outsource;
■ Prepare written responsibilities, expectations, rules for the vendors;
■ Retain adequate in-house control over critical business functions.
Mistake #8. Lack of tech roadmap and strict planning
Starting a project, strict planning and a strong strategy is a must whether it’s an in-house team or an overseas one. The more details/information/requirements you provide, the better performance you can expect. So, to make the outsourcers more effective, you should define the process/task with guidelines, procedures, and rules:
■ Write down a very clear and descriptive explanation;
■ Take a screen recording of doing the work;
■ Create tech roadmaps, etc.
Mistake #9. Underestimating the role of an outsourcing service provider
If you cut an outsourcer from the process, don’t expect to get the performance you need — they won’t have the broad picture. Give the offshore team talents room for growth.
Not only does it help them fulfill the tasks in a more efficient manner, but they can also offer new effective solutions and share their innovative ideas. In such a way you can turn the overseas members into part of your company and devoted employers who care about your company’s future as well as in-house workers do.
Mistake #10. Lack of preparation for cooperation with a third party
A lot of companies find outsourcing to be key to success and cost savings. And, it’s true, outsourcing can be extremely beneficial in case you’re prepared for it. Don’t think that outsourcers come equipped with all of the required tools, skills and knowledge to complete the task.
So, to get the best results, you need:
■ Plan outsourcing strategy;
■ Determine the right position to outsource;
■ Define the work scope;
■ Decide on the size of the team;
■ Prepare guidelines, training materials, and so on.
No matter whether it is a long-term or a short-term project, you should do thorough preparation to make cooperation effective and successful.
Outsourcing is a way to level up your business, complete the development project more efficiently and prevent cost overrun. However, there are some challenges to meet and some pitfalls to avoid.
Only by taking into account outsourcing pitfalls can you avert failed product launches or delayed product development timelines. In this article, we outlined the most common mistakes made by IT companies when they started to outsource. Save and follow the ways to avoid the mistakes listed above to make outsourcing successful.
DDI Development company brings a unique combination of e-business experience and solid technical proficiency to provide high-quality web and mobile digital solutions in a friendly and creative way. We help businesses achieve their goals by offering professional services.
Our expertise spans into several industries including e-commerce, CRMs, e-learning platforms, recruitment and financial systems, etc. Our experienced team has delivered 150+ completed projects.