14 Aug Why IT outsourcing is a strategic decision you can make for your business today
In the US, the IT talent shortage is growing by the day. A Gartner report had stated that in 2020, there will be 1.4 million job openings. And it will create a talent shortage that technology universities won’t be able to fill by even 30%.
The increasing adoption of digitization across industries has raised the need for resources. This need is forcing businesses to turn to alternative approaches to hiring like outsourcing. A recent study shows that 84.2% of the total number of outsourced projects originated in the US.
Quite evidently, the outsourcing industry has been growing in popularity. Statista stated the global outsourcing industry’s revenue to be US$92.5 billion in 2019 and this is only set to grow with time.
How outsourcing helps businesses
Outsourcing projects to a third-party service provider allows internal teams to put more focus on the core areas of their business. This way, they function better as a team.
Some businesses also consider outsourcing their projects to a dedicated development team to decrease overhead expenditure for the company. They even save on costs for facilities, equipment, infrastructure, and technology while getting the job done well.
Outsourcing also allows businesses to solve capacity issues that they may have. In cases where you are assigned a project and your internal team does not have the bandwidth to complete the project within the agreed-upon timeline, outsourcing is the way to go.
With outsourcing, you can scale up and scale down dedicated teams according to project needs. Most agencies that provide services have expert talent on their teams and therefore ensure quality in the services they deliver.
Major software outsourcing trends
While there are several jobs businesses can outsource, like marketing, staff augmentation and more, 60% of all outsourcing is related to IT.
The commonly outsourced functions include:
- Datacenter operations
- Database administration
- Application development
- Application maintenance
- Network operations
- Systems support
- Web hosting
- Web operations
- Disaster recovery
- Customer support
Apart from these functions, we’ll see more AI- and RPA-driven functions being outsourced as businesses adopt more digital services to step up operations. This will make automation and AI a sought-after workforce skill.
Businesses adopting a customer-centric and experience-based approach to operations will choose partners based on their expertise in these skills.
Some of the latest trends include:
- AI and deep learning expertise
- AI-powered chatbots
- Robotic process automation
- Cybersecurity adoption and GDPR compliance functions
- Cloud migration
What is the future of outsourcing?
The global crisis has forced businesses to adopt outsourcing to complete their projects within time and budget. However, there is much that is changing.
Today, most businesses outsource to have specialist expertise within the team. Cost-cutting while being a driver for decision-making, is not a major concern for dedicated development teams who have specialist skillsets important to the job at hand.
Software development outsourcing trends of the future:
- There are standardized formats in outsourcing relationships today. The engagement is more people- and process-driven, rather than driven by price.
- Costs will decide how SLAs and scope of delivery are customized.
- SMEs will adopt outsourcing to improve their operational effectiveness, improve their time-to-market, and level the playing field with bigger enterprises.
- More very critical business functions will be outsourced.
- Cloud support and development will increase. More businesses will move towards cloud outsourcing.
Outsourcing provides companies access to specialized skills and saves on time and effort, which can be channeled into the other core business activities.
An approach to offshore software development outsourcing
Choose your outsourcing approach based on your motives
Is the job simple to do and can it be done by a team or do I require specialist expertise to accomplish the specific task? Recognize your needs for additional resourcing before considering outsourcing.
Knowing your specific goals and what you aim to achieve gives you an idea of how much you need to invest in hiring the right outsourcing partner. Not defining your expectations could have you spending more than you need to. And in a time like now, the last thing business owners would prefer to do is waste money.
Understanding whether you need a ready-to-use or custom solution is also an important consideration for business owners.
Set the right expectations and be clear about the project
Once you’re clear regarding the motives and the approach, define your expectations and specifications. You’re likely to have an insight into how long your project might take to complete. For eg: if you’re looking at outsourcing managed services, it could most likely be a long-term contract. But if you’re looking for a web design project, it is a one-time affair.
Set a deadline for the projects so that projects don’t drag for a long time. Sometimes, it is hard to set a deadline, but in those instances, set some expectations like milestones or micro-milestones that you’d like delivered on time.
Find flexible and expert tech talent
Whether you’re looking for a team to support a short web development project, a long managed services project or you have a custom requirement, find a team that works seamlessly with you.
Find a dedicated development team that works in multiple models and can be flexible to support your project’s needs. Nuvento’s dedicated development teams work in three unique models. Our dedicated teams support clients’ projects onsite in the client’s office, offsite in our office in the client’s location and offshore from our delivery centers in India. These models deliver flexibility and coverage to meet the project’s specifications. You can scale up and scale down services as required without breaking a sweat.
It’s also best to partner with a technology company with deep industry expertise, whose know-how knowledge can add value to the project.
Decide project and team management details
Once you’ve found a dedicated team to work on your project, decide on how the project and team members would be managed. You can choose to manage them from your end, or also have a project manager from the outsourced team to manage your project.
Discuss tools you’ll use for project management and share how you’d like to approach the engagement. Whether you’d want to work in sprints or have weekly/monthly deliveries. Have a tracking system to know how your project is progressing. You can use tools like Microsoft Teams, Slack, Zoom or choose from other available tools for communications. And for project management, you can leverage JIRA, Basecamp, Asana, or choose from multiple options.
What are some common outsourcing mistakes you can avoid?
1. Thinking you’ll not need a manager for the project once you’ve outsourced it
Always have a manager for your outsourced team. Hiring an outsourced team can add value only if you have a manager ensuring they are meeting project timelines and service delivery expectations. You can manage the team from your end internally or choose to hire a manager from the outsourcing agency.
2. Outsourcing because you don’t understand the job
Your outsourced team will work on your projects and will be diligent at it if you’re giving them the feedback after fully understanding what they’re working on. Business owners must understand every aspect of the business to be successful in getting tasks accomplished as per expectations with an outsourced team.
3. Assuming your outsourced team’s personal development is not your concern
Never hire people purely based on what they can do. Employees when unmotivated are rarely cost-effective and a positive influence on the company. Treat your outsourced team like your own time and keep them aligned to your motives and cause.
Now that you’ve decided to outsource, ensure you share your work with a team that aligns with yours. To hire Nuvento’s dedicated development teams, reach out to us today