January 29th, 2020
6 questions to consider before starting your outsourcing journey
An introduction to Software Outsourcing
In the era of specialization, you cannot afford to be a jack of all trades. With the global outsourcing market amounting to $92.5 billion in 2019, outsourcing allows you to reap the benefits of scalability without disrupting your present workflow. It involves giving ownership & control to a third-party expert who will share the risk management and responsibility with you. With expert hands on board, you are better able to increase control and attention towards other projects at hand – even strengthen your internal team perhaps – as the third-party is now responsible for the project’s execution from start to finish.
Here is why you should outsource:
Outsourcing offers you multiple benefits. It’s a great way to focus on your internal team strengths and play on them while leaving vital project deliverables to a team of experts. Moreover, with outsourcing you can minimize risks, save on large expenditures and also rid yourself of the hassle of training new resources and further ensuring that they adhere to company policies – all the while expanding your talent pool as per your project requirements. Outsourcing also helps free up capital for growth that you can utilize elsewhere in the business. Similarly, outsourcing allows you to scale your business in a very timely manner as you can simply outsource projects whenever it comes along and still be able to meet tight deadlines while executing your other tasks. Just think about not having to worry about losing any business ever again even if your core strength is not it!
But in order to leverage the full benefits of outsourcing and mitigating the associated risks, you must develop an outsourcing strategy with the help of the following 6 key questions.
1. What’s the reason / particular need for outsourcing?
The first question that should come to mind is why it is that you are outsourcing in the first place i.e. what is the particular need that you are trying to address via outsourcing. Is it a novel idea? Is it part of your overall business plans? Outsourcing should be in sync with your businesses’ strategic vision, should complement your business activities & targets and at the end of the day, should be of value to your end users – ultimately serving as a competitive advantage for your company.
2. Is it the right time to outsource?
Both in terms of cost and time, ask yourself is it the right time to outsource? This means that you have to do an internal review whether outsourcing will complement your existing team strengths or will it weigh down the business altogether incase of an inaccurate assessment of your core capabilities. Before you outsource therefore, consider that you have the right management strategies, people and processes and that you have identified the right areas to be outsourced. Typically when you feel you have exhausted your internal capabilities, it may be beneficial to opt for outsourcing at that time.
3. Is it for a business idea that is yet to be validated?
Before you outsource, it is critical to assess the viability of your project or business idea if you haven’t already. This involves a full-scale discovery workshop of your business goals, technological capabilities, competitor analysis and product design in order to see if it adds value for your end users. Therefore, you must ask yourself whether the idea is viable enough to be outsourced and then test that product to see the results before actually proceeding with outsourcing.
4. Is your outsourcing strategy in sync with the industry’s best practices?
Before outsourcing, save yourself time and precious resources by identifying the outsourcing process most companies follow and try implementing that as per your requirements. This will fast-track the process altogether because such companies already know how to strategize, identify gaps and opportunities and also know how to have an effective collaborative relationship with the external party. It will further help you in comparing your outsourcing strategy after project completion.
5. Is it a one-time thing or an ongoing development requirement?
When it comes to establishing just how many external experts to involve, you must be crystal clear on the duration of your project. This will help you ascertain just how many extra resources you need to scale up your business and how to distribute its expenditure accordingly within your overall budget. Moreover, the time duration would also help you determine whether you need a particular skill set or a large team – in the former case, it would be better to opt for experts in a specific niche.
6. How much project control are you willing to surrender?
Perhaps one of the most important questions to consider is how much of the development ownership and control are you willing to give away. Companies usually find it hard to cede control of important products and business ideas to a third-party development team. This is especially nerve-racking if your company does not fully trust or feel confident about the out-sourced party and so are concerned with all the financial, legal and workflow implications of it. Therefore, it is always good to outsource to verified sources which your industry research can help you with as mentioned above.
To sum up, companies have to think of outsourcing as part of their strategic plans. They must be aware of the outsourcing life-cycle, what questions to consider and how to go about it before embarking on their outsourcing journey. Therefore, you must not only be crystal clear on its purpose, the associated cost-benefit analysis and time duration but also undertake an internal and market research to better understand the best way to pursue it.