10 Tips On How To Avoid IT Outsourcing Failures

Apr 12, 2021

outsourcing “If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business”.

This statement from the Singaporean Prime Minister, Lee Kuan Yew, cannot be more relevant today.

In this swiftly evolving technological landscape, there is no room to overlook the significance of outsourcing. It is nearly impossible to develop a range of technological solutions in-house. As such, businesses are forced to rely on external services to handle a part of their back-end development.

Although it can be wise to outsource IT work to a reputable team outside, it still poses some critical challenges for your team. From communication to integration, there are several points where things could go wrong, costing you time, effort, and capital.

This article will look at why outsourcing fails and what you can do to prevent such mistakes in your projects.

1. Define Clear Objectives

The most important aspect to consider is what you are hoping to achieve through outsourcing. This is where you need to have clear and consistent objectives.

The first step is to define what you want, and the second step is understanding what resources you lack. Figuring this out in the early stages will help you set the outsourcing process onto the right course.

Consult your team to consider the different needs you have. For instance, do you want an external team to design an IT solution for you? Is there a need for the outsourcing team to assist you in the maintenance and running of the program? Is it possible to use the in-house development team for some of these tasks?

Identify both your short-term as well as long-term needs so that you can effectively communicate them with your offshore team.

2. Consider any Communication Barriers

This is, perhaps, the most common reason for outsourcing failures among western businesses. While working with an external team can give you access to a wider pool of talent, it can also come with challenges of coordinating.

For instance, countries such as China and India have very different cultural priorities. The time zone and language will also differ.

That said, today, you can find outsourcing companies anywhere in the world. For example, Ukraine has a well-established hub with reputable companies. One prominent example is Develux that has offices in both the US and Ukraine. Meaning, you will have no trouble in maintaining effective correspondence or communicating your project requirements with clarity.

3. Select the Right Vendor

While communication channels are one of the main concerns, that should not be the only factor you account for while choosing the vendor. The provider should be able to deliver on your project objectives, as well as have a system that aligns with your business culture. They should also be able to deliver prompt service in case of emergencies.

Therefore, make sure that you have five or six companies shortlisted. Analyze them based on their user reviews, portfolio, and expertise in the field. Make sure that they have worked for companies similar to your sector.

4. Look into the Code Quality

It is necessary that you have an in-house employee who is well-versed in the software you are outsourcing. If you do not have any coding expertise, you will not be able to analyze the code quality.

Code quality is an ambiguous term. It refers to a set of attributes that will make the software easy to understand and easy to maintain. As you can guess, this is crucial when it comes to long-term projects. A well-documented and well-tested code that follows good formatting practices will make things simpler for you. Therefore, it will be best to put forth benchmark standards right from the start of the project.

5. Prepare for Internal Resistance

One of the common outsourcing failures examples is conflicts within your company, as well as between the internal team and the outsourcing company. There could be several reasons for this – ranging from cultural differences to gaps in communication.

It will be best to have the right incentives that will motivate your internal team. Make sure all the related departments are kept in the loop, and there is clear communication within your teams.

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6. Prioritize the Value

In most cases, companies prefer outsourcing teams in order to cut costs. However, that should not push you to compromise on the quality. A cheaper option might not work out well for you in the long run. You are looking at defective products and ineffective maintenance services – which might cost you more money later.

Focus on the value, work quality, and expertise over the costs, which will reduce the risks of future issues that might arise.

7. Avoid Fixed Prices

In many ways, a fixed budget is attractive. It leaves out the need for overpays. However, you also have to worry about the costs that will occur in case you need more work done. Moreover, your requirements might change as the project progresses. As your scope changes, the fixed budget might not cover it.

This will require you to change the project, which can cost you even more.

8. Frame a Detailed Written Contract

Your outsourcing contract should reflect every minute detail of the project. This is crucial to avoid any communication, management, and technical issues. It should state the clear scope of work. If not, you might subject the vendor, your customers, and your internal teams to tons of unnecessary headaches and yourself to additional expenses.

Most importantly, you should also have an exit strategy in place in case any issues prevent you from finishing the project or if the outsourcing team fails to deliver on quality.

9. Prepare your Internal Team

Among the many reasons for outsourcing failures, many businesses tend to disregard the importance of preparing the in-house teams. If there are cultural differences involved, clear them out with the team as soon as possible. Start with explaining why you are adopting an outsourcing strategy and how you can effectively communicate with external employees.

It is imperative that your team accept the changes so that you can gain more efficiency in the process.

10. Build Relationships

To successfully complete the project, you need to build solid professional relationships with your offshore team. It will ensure that the conception, as well as the execution, runs smoothly.

Take some time to get to know the members, and make an effort to establish mutual respect and trust. Building a long-term relationship will benefit your project and the business in the future.

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