Outsourcing is today a big business as more and more companies are requiring cost-efficient, scalable solutions for their ever-growing technological needs and for closing the technology talent gaps that exists within organizations.
By choosing to contract some or all their IT to managed service providers (MSPs), both sides have experienced sustained growth based on mutual trust and transparency in everything they do. According to Statista, spending on IT services alone is expected to exceed 2.32 trillion U.S. dollars in 2022!
In 2021, small businesses are forecast to spend approximately 645 billion U.S. dollars on IT services. In contrast, medium-sized businesses are forecast to spend around 490 billion U.S. dollars on IT services that year. Medium-sized businesses are more likely to make long-term investments, whereas small businesses spend to meet short-term requirements.
Automation is the most outsourced service. According to Statista 71% of surveyed CTOs and IT, leaders expect an increase in automation services and they expect a large part of it to be outsourced. European and North American leaders expect 10% of their security managed services to be outsourced in 2022.
As the IT talent within a company is limited, what will this growing market potential mean to a business owner with a new idea for a software product, a start-up with a groundbreaking app, or even a development company wanting to scale its business? They have no choice but to outsource skilled and experienced IT talent to work on their projects. This is a make or break decision for them!
Business owners and CTOs need to realize that it will be a lot less expensive to outsource the professional IT services they’d be needing, instead of deciding to manage on their own. They must resist this temptation to attempt to bring products or services to market without expert help. This is never a good idea.
Besides, treading the path on their own will take up too much of core management’s time and energy, and before they realize it, exhaust the allocated product development budgets. This happens even before anything worthwhile is in a state of being tested, let alone ready to be launched!
Here are some of the critical steps you can take to structure a global delivery model that canleverage IT Outsourcing advantages. Understand what may be in store for business owners and CIOs, helping them make informed decisions.
The digital-age decision-makers and enterprises want to drive their businesses through dynamic markets. Deliver on an IT architecture built on and supported by a scalable platform with rapid response capability. And simultaneously, have access to tools that offer business insights and support decision-making. These are not ‘nice to have’ capabilities but essential to realising business goals.
You have no choice but to shortlist and select the right IT outsourcing partner who can make this possible. But when you do find such a partner, how does one select and onboard? Here is a proven process anyone can follow.
Begin by meticulously analysing all of the minor and major criteria, ignoring any one of them can put your outsourced project at risk. Upset the projected timelines and send budgets haywire. You also need to be wary of the over-promises that providers make.
There will be other issues that will involve under-staffing, security breaches, culture shock, mis-communications and many other factors that can make your profit margins erode. And of course, be careful of the end-product falling far short of your expectations.
Most companies decide to outsource as part of their cost-cutting drive. While this factor may have been relevant earlier, today it is no longer a valid reason for deciding to outsource. Other factors play a significant role. So think long and hard.
Consider your current and future staffing models. Explore whether a distributed and flexible strategy can help you cope with the unexpected ups- and downturns of a dynamic marketplace. It is worth pursuing such a suggestion.
Take a close look at all the inefficient processes that are slowing down the speed at which you operate your business. And more importantly, what are those non-core activities you don’t need to do yourself, and what are the financial benefits you may gain.
Deciding to outsource is an opportunity to set your ship in order, discard whatever is not working for you, conserve your resources because accessing highly skilled IT talent doesn’t come cheap. To cut waste, ad hoc hiring and begin to deploy your resources that will deliver the best ROIs.
There will always be internal resistance, whether you like it or not. Some team members will not favour IT outsourcing because their survival ‘instinct’ kicks in. While some others will cite and raise genuine issues. Everyone with a stake in decision-making needs to be heard and the issues they raise addressed.
All team leaders need to agree and speak to the teams they lead in one voice. They have to make internal presentations justifying and detailing every reason for outsourcing and the benefits that will be gained by such a decision.
The Board of Directors needs to be taken into confidence so that members clearly understand the reasons and the benefits of IT Outsourcing and are prepared to make informed decisions. Take a non-partisan approach when explaining to HR the relationship between the non-IT fields and outsourcing. Ignoring this factor will create hurdles for the chosen IT outsourcing services provider and will prevent them from working with your company seamlessly.
Before shortlisting the IT vendor, do a thorough check on what they are really like as people. You will be surprised how many tend to overlook taking such a basic due diligence step.
The first thing to do to find out if an IT services provider has partnership potential is by going out to meet and interact with them in person. Get a feel about whether they are the kind of team players you’d want to work with. Understand how they normally approach conversations about real business challenges and issues and gauge how they go about bringing value to their outsourcing relationships. Make notes and remember to discuss your assessment internally.
Do not overlook, that it is your company’s vision and values that drive your business forward. So it makes sense to measure and assess potential IT outsourcing partner’s approaches and attitudes against your company’s culture and core values. This way both sides will be on the same side and can derive the maximum value from a relationship.
When values are shared, it is much easier to implement a seamless relationship between your business and your outsourcing partner’s organization. It will make day-to-day management, communication and even conflict resolution more effective and efficient.
Mutual respect and understanding are two very basic criteria for establishing trust and building a stronger, more strategic and very successful outsourcing partnership.
Get a clean chit from customers who have used the services of the IT provider you are assessing. This will unravel insights and raise red flags, you may not have been told about or noticed before. Besides a face-to-face meeting with earlier customers will give your interactions a greater meaning and may even help establish new relationships that you can leverage and build on.
The size of the assignment or how big your company is, shouldn’t matter to the IT provider you are wanting to work with. Walk away from those who may look at you as a small, insignificant player. After all, it is better to work with those to whom handling your business will mean handling a challenging assignment and may even believe that working on your project will test the provider’s expertise, even help them to expand and grow.
In other words, the eco-system you create needs to facilitate smoother transitions, and where ‘getting IT right the first time ’ becomes a norm. Both you and your IT partner must think and feel about each other as being in a long-term strategic fit, and not looking at a short-term tactical fix.
Your levels of understanding need to run deep enough to face and overcome any cultural gaps. Enable you to bridge the shortcoming quickly, seamlessly and without rancour. After all, you are looking for an IT partner who is also as eager as you to get back to working on the project without delay.
Defining your requirements, limitations and expectations first, even before you begin your search for narrowing down your ideal IT outsourcing partner, is an obvious step. Only then you will be able to cast your net wide and find the right IT outsourcing partner you are looking for.
What you really need to be careful about is the possibility of ending up with a specialised provider who may struggle to keep a handle on your project because of their limitations. So, will partnering with a larger IT services organisation be of help? Not really. While such an organization may have the expertise, they may not bring the personal touch you’re looking for in a partner. Taking the middle path will be the best option.
Always look for a provider who also has the desire to dive deep with you to help figure out the real issues and business challenges and outline potential solutions. Remember, how well this is done reflects the maturity of an IT provider. Only after you are assured of this ability, move forward to confirm their technical capabilities.
When you are outsourcing, a provider with expertise in multiple software technologies will be of great value. Simply because, an IT Outsourcing partner with work expertise in only a few technologies will expose you to the risks of facing the “hammer and nail” problem, sooner than later. i.e., To those armed with only a hammer, every problem will look like a nail waiting to be hammered down! It stifles innovation and chokes creativity.
Also, dive deep to check where their true delivery strengths lie. You need to be very clear right at the beginning about what you expect from your partner and what they are taking responsibility for. Any other way will only lead to a dead-end in the middle of the project.
Remember, you're hiring the outsourcing vendor for IT expertise you don't have internally, so be careful not to be limited by your outsourcing partner’s own limitations. Do they have a tested and proven pool of robust, experienced, technically competent resources across Microsoft, Open Source, Java, Mobile, Machine Learning and Augmented and Virtual Reality technologies? Certifications help.
While you are examining the credentials of your possible IT Outsourcing services provider, it makes sense to confirm whether they are also certified and follow an internationally acclaimed standard to protect your data and are capable of taking care of all the necessary safety measures. Holding the ISO/IEC 27001 certification lends trust and will give you the peace of mind that your data and privacy are safe and will not be at risk.
Verify the expertise of their core team's background.It is easy for any outsourcing provider to claim they have the best people. Don’t take their word for it, probe. Ask how experienced their experts are? What projects did they work on? How are their skills kept up to date? Simple questions will open up new conversations and help you glimpse into their mindset and gain insights into how high an outsourcing provider sets his quality bar. Confirm whether their standards match yours.
Check if they can deliver top quality, without passing on the engagement overheads like some of the bigger outsourcing players do. The stronger their technical commitment to quality, the more will be your chances of success.
All communication barriers between your organization and the selected IT Outsourcing partner need to come down, as early as possible. Embrace the IT outsourcing team, initiate unhindered interactions, take the lead to play a critical part in ensuring better and more efficient project outcomes.
In any case, be sure to hold virtual and face-to-face meetings regularly. When you make time to visit the outsourcer at their offices in their country, you will be amply rewarded. The benefits of this kind of gesture may not be immediate but will be greatly appreciated.
By embracing the outsourcers as part of your team you not only get faster buy-in, loyalty, and commitment but also the sense of pride that comes with the feeling of being a part of an organization
that thrives on creating breakthroughs.
Top management may not be concerned about who is providing the IT services, as long as everything is done correctly, efficiently and stays within the set budget limitations. The responsibility is always left with the IT management team to ensure all aspects of the project move smoothly. And it is worth repeating what has been stated earlier in the blog.
Be aware of the fact that a reliable and reputed outsourcing partner will be committed to adding value at every step of your project. The partner will readily share details on their methods and the frequency at which they will capture feedback. They will also set realistic and achievable goals. And that they are always ready to discuss how they plan to manage resource allocation on projects.
For an IT outsourcing initiative to work for you, research thoroughly and find a partner that best fits both your requirements and your business. Last but not the least, once the IT outsourcing partner is selected, never be under the misconception that everything will be fine from thereon.
This is only the beginning. Everyone needs to work together to realize the true benefits of the collaboration and deem it a success only when you see sustained ROIs!