Why outsourcing work great for some and not for others?

Countless professionals and companies end up with a lot on their plate and often fall behind their deadlines due to resource shortages. A better way to solve these resource problems is to resort to a feasible solution like outsourcing. But many are reluctant to do so eventually inhibiting their own growth. You need to understand that outsourcing is also a form of delegation.  It may sound convenient but some imperative questions that arise are – How do we get started? How do we know which outsourcing partner is right for us? Will that guarantee cost-effectiveness, high-quality work, and success? 

Outsourcing can be tricky for some but with clear planning, understanding, and the right approach you can make outsourcing work for the growth of your organization. Outsourcing has led to huge successes and growth for some (basically all the well-performing and growing companies) and some bad experiences for others. Let’s dive into some of the reasons for outsourcing successes and failures.

The common outsourcing mistakes

Choosing the wrong vendor: Selecting the right outsourcing partner is the foundation of success in outsourcing. With that said, most companies who would like to outsource don’t know what to look out for in an outsourcing partner and go ahead with just the technical skills assessment. The success of outsourcing is way more than just a technical skills assessment or skillset. Without discrediting the importance of good technical skills, other factors to keep in mind are- the company’s experience in outsourcing, the management of the company, the company’s culture, and international exposure of the founder/managers, etc. It’s advisable and worth getting on video calls to assess the possibility of building a working relationship with them.

Lack of communication: Lack of professional communication is the top reason why outsourcing fails. At times during the initial discussion phase of the project/contract communication goes great until the project actually starts getting worked upon. What is important to know here is that you cannot set “good and consistent communication” on an auto-pilot mode and expect everything to go right. A lot of assumptions, and misunderstandings can take place when two companies from different backgrounds work together leading to unexpected results.

Wrong contract model: Frustrations can arise while in collaboration when you don’t have an apt contract model set in place which both the parties are comfortable with; expectations at both ends could be different. For example, the offshore partner may be expecting the invoice to be paid within a week, but your usual payment term is 4 weeks. These kinds of conflicts will affect trust levels at both ends and create frustrations. You ought to be clear with every detail including the work timings/availability, payment terms, pricing, etc.

Failing to view the relationship as a partnership: Offshore partners would like you to consider them as an extended team and not as cheap labor. You cannot continue a long-term relationship without mutual respect, commitment, and trust to make outsourcing endeavors work. Therefore, both the outsourcing company and the offshore team must consider each other as equal partners, address challenges together, motivate, encourage one another and enjoy their collaboration!

“The purpose of outsourcing is not finding cheap labour, it is the fulfillment of resource shortage.”

The in-house team not being able to manage properly: When your in-house team does not work well with the offshore team, it’s hard to make it successful cooperation. Timezone differences can also cause issues. It should be clear to the in-house team that the offshore team is not a threat to their job, but a chance to explore a new culture and to improve personally and professionally. Offshore teammates should not be waiting for replies. Assigning a bunch of well-defined tasks is a good solution.

How can you avoid IT outsourcing failures?

Selection of right partners: Request your short-listed offshore partners for client references. Talk to at least two of their long-term clients and learn what they have to say. An experienced offshore partner will have clients with whom they have worked for years. You can find reliable partners from platforms like Clutch who provide authentic reviews.

Conduct a pilot task: Conducting a pilot project is a great idea as it can help the outsourcing company evaluate the quality, knowledge, technical skills, and communications skills of the outsourcing destination company. It can be anywhere from 16-40 hours depending on the size of the project. It can also reduce unnecessary costs, wastage of resources, and risks.

Explicit communication: When you create documentation to pass on to the offshore team or when you compose an email or a reply in your project management tool – make sure that you touch upon and cover all details. Even details that you think are self-explanatory could be misunderstood leading to unfavorable results.

Deploy the right collaboration tools: Always adopt the appropriate tools to manage projects. It’s impossible to manage and coordinate everything through emails or Slack communications. It may work for a smaller project but not for bigger ones and also if you collaborate on multiple projects. If you have opted for an hourly contract, it is advisable to request the offshore team to enter their working hours in your tools so you can keep track of the time and budget of the project.

Empathy towards a different culture: Failing to understand that the offshore team is of a different culture and that differences will arise could make the collaboration unpleasant. The Asian cultures are less direct unlike for example the Dutch culture. You need to develop the patience to cope with these differences until you get used to them.  Dealing with these differences in a diplomatic but firm manner is the key to building a good working relationship. Together, aim to build long-lasting relationships and not just software!

Outsourcing can be a boon or a bane. If you’ve thoroughly done your research and homework, outsourcing becomes a worthy investment. Keep in mind to always consider your company’s needs, budget, goals, other factors, and what works best for your company in the long run.

With everything mentioned, if you are interested in outsourcing and are thinking of hiring a partner, talk to us today. We can either be your partner (here is our clutch profile ) or we can help you find a great partner who would suit your needs.