Although IT outsourcing has long been recognized worldwide as a particularly useful and in many respects profitable service, some executives are still afraid of outsourcing non-core tasks. This happens because of certain fears, most of which in fact turn out to be absolutely far-fetched with outsourcing software development.
Outsourcing is often used as an effective element of business strategy to cut costs. It gains access to the best software. It drives innovation. However, there are risks that can confuse your project. What are the most common outsourcing pitfalls? How can you get around them? How can you ensure that your project thrives amid the potential pitfalls of third-party development? Take a look at the top 5 biggest outsourcing risks. Ans let’s figure out how to deal with them.
So, what are the dangers that await those who decide to switch to IT outsourcing?
Transfer of profile functions
Selecting tasks that are more convenient to outsource to a specialized external company requires a complete understanding of all the sources. It’s related to all the organization’s competitive advantage. To achieve the greatest efficiency, the enterprise often uses difficult to repeat or substitute, complex and expensive features and resources. Enterprises based on them, as a rule, are not transferred to an outsourcing firm. So as not to lose competitive advantages in the market and not turn into a company similar to many others.
Choosing the wrong service provider
The success of their implementation depends on whether the company can initially choose the right provider of outsourcing services. When selecting an outsourcer, it is customary to adhere to the so-called. hard and soft requirements. The first criteria are quite real. They can be checked. Since they reflect the ability of the outsourcing organization to provide the customer with progressive technical solutions at an acceptable cost. Also important criteria for choosing a service provider is the availability of the necessary experience. And here is the financial stability.
Soft criteria are quite subjective. They cannot be verified. Moreover, they can change depending on the situation. One of them is the presence of the so-called. the cultural closeness of the outsourcer to his client, his desire to constantly improve his work. Here is flexibility. And here is a high degree of readiness for long-term business relationships.
Errors when drawing up a contract
It can be stated that since the 80s the idea of partnership with a service provider has become the most common model in business. It has replaced tough competition in the form of establishing trusting contacts with several companies. They are chosen by one or another enterprise.
Lack of attention to the personnel issue
In IT outsourcing, such as with https://fireart.studio/offshore-software-development-company-fireart-studio/, the effectiveness of personnel management is of particular importance. Since in some cases, staff members assess it as a lack of confidence in their own level of qualifications. Sometimes this leads to the departure of valuable workers. It is not profitable for the enterprise. Therefore, already at the stage of studying the possibility of transferring some functions to an outsourcer, the management of the client organization should also take into account the likelihood of certain personnel problems.
Personnel management should be carried out in such a way that all key specialists remain in their places. So you need to find effective ways to motivate them. It is also necessary to gain the loyalty of those employees. They come under the control of an external organization.
Lack of attention to the possibility of hidden costs
Typically, customers are confident that they can correctly assess whether the transition to outsourcing will help them save money. At the same time, they sometimes forget about costs. This can be detrimental to outsourcing efforts. Savings on transaction-related costs hide two key types of hidden costs:
a) The costs of finding a worthy service provider. The conclusion of a contract – the cost of accumulating data to identify and evaluate suitable outsourcers. Plus here is the costs of negotiations and development and agreement of the contract;
b) The costs of managing interaction with an outsourcing company. It includes monitoring the concluded agreements in order to ensure that the contractor complies with his obligations. Here are sanctions in case of their violation and approval of amendments to the contract in the event of unforeseen circumstances.
Lack of a termination strategy
Sometimes business leaders forget that it is necessary to foresee in advance a strategy. It’ used for withdrawing from the contract in the event of a change in service provider or functions transferred to an outsourcer. Of course, renewing the contract with the outsourcing provider of your choice offers many benefits. It includes even discounts on service. And there is a partner change or a set of outsourced tasks. It can lead to serious difficulties. Therefore, from the very beginning, it is necessary to choose the right outsourcer. So that cooperation with him is profitable and convenient for many years.
To sum up
Of course, you need the end result of the level of international quality standards. But still, sometimes you will get a seemingly working product. There are critical errors will surface at the very first testing. At the same time, the developer is no longer responsible for the project. Or maybe his trace is gone. And there is no way to get through. To avoid this situation, make sure the third-party developer adheres to the latest quality standards.
Choosing a certified and reliable developer is a critical factor in preventing information security threats. Especially if your project contains valuable data.
Take a look at the case studies of the third-party team and find out if they had to work with confidential information before. Check out their security measures. And learn how they have addressed data protection issues in the past.
Of course, outsourcing carries enough risks. Since you cannot fully track the process of work on a project. To effectively manage a third-party developer, you need to be confident in the service provider. You should be ready for force majeure and be able to account for hidden costs.
And don’t forget, the outside team must speak your language in every sense. Don’t waste your precious time and money overcoming the language barrier and finding out tedious details!