Most Common IT Outsourcing Mistakes & How to Avoid Them

Think of the situation, it’s midnight and suddenly you desire to eat a pizza, and instead of collecting the ingredients and doing all the hard work just to make a pizza, you end up getting pizza delivered by your excellent food delivery services/applications, just in a few minutes. Yeah, that’s right, that’s outsourcing. Outsourcing can be of anything, a product or service, and in this fast-moving world, we want everything to be done within specific deadlines. Be it food, our daily needs, or Software outsourcing, we are outsourcing in one or the other way, with the intention of no loss of quality. 

Coming to IT outsourcing, it’s a trend on top because hiring a whole team of in-house experts is not always the right decision just for the short term or just for a few specific IT requirements. Although, underestimating the power of a team isn’t appropriate as well. Then how do we understand whether we need an in-house experts team or we need to outsource a development team. The answer is very conventional yet very true, understand your business requirements.

But before understanding the common mistakes we make, while outsourcing, let us have a glimpse on the 3 IT outsourcing models.

IT Outsourcing primarily consists of three models:

Onshoring: Where you outsource IT services to the development team in your own country. The downside of this approach is that outsourced people in your own country are aware of the market price of the services offered. That’s the reason companies tend to hire more offshore.

Nearshoring: This approach is followed when services are outsourced to neighboring countries. Nearshoring often results well in terms of Cost Effectiveness, Quality, and the scope of the product. 

Offshoring: This is the process of outsourcing IT services overseas. This is the most Cost Oriented Approach, although you need to take into account time differences and some communication issues.

While we are outsourcing the resources or services, we give authority to the particular person or the team to do the work in their manner, and sometimes that doesn’t go the way you must have expected. And your decisions might turn out to be mistaken. 

So let’s dive in and find out the most common mistakes we make while outsourcing IT resources and how to avoid them:

Lack of Market Research

To avoid some common outsourcing mistakes, take a look at your competitors' solutions and understand your USPs and requirements thoroughly. This doesn’t mean you have to copy them, but the research gives a vision and understanding of where they are lacking and what options you have.

Another good practice for IT outsourcing research is to look out for the peculiarities of the IT industry in different countries. For example, Outsourcing to Ukraine is becoming more popular each year. According to the research, the Ukraine IT industry is growing 5 times faster than the global IT industry, hence it is predicted that the share of IT exports will increase by 8.4% by 2025. 

Unclear Requirements

One of the outsourcing tragedies can be a failure to understand the clear vision and right requirements for the software. Unless your information to the outsourced resource is not conveyed clearly, you can’t take the best out of them, even if they are the best skilled IT experts. While outsourcing the software experts, analyze your in-house team, their roles and responsibilities, and what you can expect from your outsourced team. 

Another important thing is to choose an outsourcing model that suits your organization perfectly, such as choosing between Staff Augmentation or Outsourcing Considerations.

Where Staff Augmentation means the extension of your team for a relatively shorter period but Outsourcing focuses more on larger projects and lets you focus more on the business part when the IT experts are developing your project dedicatedly.

Evaluation on the basis of Business Niche

It is always merrier that you analyze the business niche while hiring. Outsourcing the resources from the same niche is not just a smart choice but also gives you a great vision for your product. The team also comes with better knowledge and expertise in the same area. So it’s always important that you avoid evaluating the business niche, in order to choose the right remote team for your organization.

Poor Selection Process

The primary mistakes made during the selection processes include the absence of intuitive market knowledge, lack of a proper hiring plan, and a cost-oriented approach. 

A few pointers to remember while outsourcing the resources are:

1. Keep the time zones in mind, try outsourcing the team with less than 4 hours of delay in time difference, which is also known as Nearshoring outsourcing.

2. Don’t just go with the brand’s name, as you know, “Everything that glitters is not Gold”, and this applies to IT outsourcing as well, as your standards with the brands might not always match in terms of unreasonable charged prices and sudden changes in Cost plans. Moreover, the big brands might not always prioritize your projects as you expect them to do, where choosing the right outsourcing partners can make a visible difference in your success rate.

Not Signing an NDA

This might not sound like a big problem as it is. Although in the era of data, signing a Non-Disclosure Agreement not only keeps your information confidential but also helps you in the long run with the ownership of Intellectual Properties. This detail is often neglected and turns out to be a problem and a failed outsourcing experience.

The only way out is to sign a detailed and deliberated NDA to protect your data and make sure that the IP for the end product belongs to your organization only.

Assigned Project/Account Managers

While working with an IT outsourcing company, communication plays a vital role. And if you do not assure to assign a dedicated account/project manager to your remote team, you may have an unpleasant outsourcing experience in the long run. When you assign a project manager to your remote team, make sure that they are having a medium, who has the necessary skills and an amount of knowledge to guide and lead the team, whenever required. As the manager will be the first person to react to the remote teams’ queries and inquiries and keep track of the team’s progress.

Lack of Proper Cost Estimation

This is a very common mistake done by organizations while outsourcing resources due to the cost standards differences. For example, a developer might complete your project but not within the same deadline you expected, due to low-cost standards, so be assured that you and your outsourced team come to a mutual discussion in terms of cost, quality, and product standards. Which always saves your time and extra effort.

Cultural and Communication Gaps

While outsourcing the software development team, always remember that you keep the cultural and communication gaps in mind, as it might seem easier to hire someone at a lower price but it’s never a good approach for the long run. As communication is the key to every business, it is very important that you keep all the factors in your mind while outsourcing a resource, such as the outsourcing model(Onshoring, Nearshoring, and Offshoring). Also, education and experience play a big game in the process too.

End note

There are no such parameters to avoid mistakes in the Outsourcing Process, but these pointers can be beneficial in your hiring process. The outsourcing industry is getting very competitive day by day, and to avoid any unpleasant consequences, be clear with the Product/Project requirements, have a specific wireframe of Product design and cost estimation, maintain smooth communication, and agree upon a realistic and crystal clear deadline and expectations, while outsourcing the services. Be sure that you have full-fledged support available to get the best out of your remote team and you protect your IP rights.