Outsourcing ⯀  

Providing adequate customer service is important to continue growing your company in today’s business climate. The Internet has created an environment where bad news travels fast. One seemingly small negative experience for one customer or prospect has the potential to travel far and wide while your good name is dragged through the mud. 

IT  

The share of software development outsourcing is ever increasing and expected to make up more than 12% this year. Companies are expanding their IT departments and reducing product delivery time and cost. How to follow their way efficiently?

IT providers are now deeply concerned about increasing the value of efficient IT outsourcing. While making offshore resource augmentation, the CIOs aspire to involve a manageable number of outsourced staff and define what works out better in financial terms. However, the key considerations for choosing the outsourcing vendor are not limited by the cost reduction. The companies make a point of technical sense, innovation, experience and staffing opportunities, and even cultural affinity.

Here are 3 brief facts on IT outsourcing trends and stats in 2017:

• Cost reduction remains the most considerable factor to strengthen the team with offshore developers, followed by the conformity with the business objectives and access to resources.
• 65% IT vendors are planning to increase the amount of outsourced work
• 20% of companies are reported to improve project’s efficiency

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Before rushing into filling in the staffing blanks by means of external resources, a business needs to fully understand rates across different global regions, and set their financial goals. At the same time, it’s worth questioning: does ends justify the means? The priorities across the IT outsourcing have shifted to skills- and technology- based, besides, the product end value shouldn’t be underestimated. Instead, the choice of potential vendor requires comprehensive investigation of the core factors:

• Vendor environment – real estate prices, taxes, GDP.
• Effective management – a high-level project management and a team lead who will help to manage the team and tackle all technical issues.
• Cultural match – language conformity, working approach. 

The closer look on random top outsourcing vendors at clutch.co showed how drastically can the prices vary across the regions.

USA: Tivix, San Francisco, California, $ 100-149

1. English language 
2. Law regulations conformity
3. Advanced IT culture & background

Although hiring developers from the US and Western Europe ensures the high legal and technical standards, the prices may seem inaffordable for limited budget.

Asia: MindInventory, <$ 25

1. Considerable/diverse talent pool
2. Low-cost projects
3. High employee loyalty 

The opportunity to delegate tasks to Asian teams and save up to 80% of the costs has made them the most demanded region to outsource. It takes years of market investigation and to find out whether it suits the company, and what kind of outsourcing model will suit you best.

The top players on the market are India and China, followed by lower-cost Malaysia and Philippines.

Eastern Europe: Elinext, $ 25-49

1. Understanding of foreign markets, customer service, and other cultures
2. Profound technical skills
3. Reasonable price

Eastern Europe cannot boast the prices as low as they are in India or China (cost savings up to 50 percent in comparison with average 75 percent in India), but it has proven to provide better development processes, quality assurance, and proximity to Western Europe.

The sector can be divided into two regions: Ukraine, Belarus, and Russia (lower costs) and Poland, Hungary, Bulgaria, Romania and the Balkan countries (higher costs).


It becomes clear that if a company turns to external outsourcing, they will considerably reduce expenses and at the same time get exceptional-quality software packages on time.

By  33rd Square	Embed

Business  

Over the years, outsourcing certain tasks has saved a lot of great businesses from failure, and provided visionary entrepreneurs with their livelihood. However, it’s also proven to be a total disaster for some firms, and caused countless financial and organisational crises. Like anything in business, good outsourcing requires a careful approach backed up by detailed knowledge. Here are a few key factors that need to be considered when you’re outsourcing anything…

Strategy Alignment and Deal

You and your higher-ups need to understand how the outsourcing deal fits in with the overarching business strategy. Go through your correspondence with each of the companies you’ve been reaching out to, and think about the available deals in terms of purpose, scale, context and limitations. By understanding how the deal fits in with your vision for the business’s future, you’ll be able to mitigate the worst of the emotional impact that can come with some outsourcing deals. In many cases, your staff are naturally going to worry about the future of their jobs, and how the deal will affect the people they care about in the business.

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Are you Going to be Able to Reap the Benefits?

Shifting any given task to another company, whether in the form of IT outsourcing, marketing or anything else, will always lay the immediate cost, effectiveness and efficiency synergies out to be collected. I’d say under half of the deals actually allow the business in question to collect these, mainly due to a lack of preparation. The most important things to consider here are the clearly stated responsibilities of the suppliers and the client, clarity on conditions and timing for synergies to be collected, and the service beyond key performance indicators. It’s also very important to have a plan in place for escalation if and when the results are coming in slow or aren’t coming at all. When you’re constantly getting bombarded with marketing materials for B2B services, it can be easy to get taken in by it all, smile, nod, and put your money down. However, if you fail to consider how easy it will be to reap the benefits, you’ll just be setting yourself up to fail.

The Risks and How you can Mitigate Them

It’s 2017 now, and that means that the risk in an outsourcing deal isn’t isolated to one little area of the company. Now, risk in any business deal will reach all your stakeholders, including financiers, staff, clients and regulators. Whether good or bad, you’re going to exit from the contract eventually, and it’s important to know how you’ll handle it, whatever the details. Staff knowledge transfer or retention is always a big factor to consider. Onshore and offshore risks, along with the financial stability of suppliers and rights to intellectual property all need to be considered as well. Exit clauses for a change of ownership, too, are essential to consider. You need to take the time to consider all of these risks, and what you’ll do to mitigate them in the future.

By  33rd Square

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