IT Outsourcing: Benefits, Risks and Best Practices

July 5, 2016
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With CRM, BI, storage, document management and other systems moving rapidly to the cloud, companies that are slow to make the shift to the latest cloud-based platforms will be left behind. These cloud-based systems are essential for the modern firm that wants to be agile, leverage information for growth and deliver the best possible customer experience. There’s also the pressing need for mobile-focused platforms, and interconnectedness between multiple internal and customer-facing channels. All of these demands require IT.

With CRM, BI, storage, document management and other systems moving rapidly to the cloud, companies that are slow to make the shift to the latest cloud-based platforms will be left behind. These cloud-based systems are essential for the modern firm that wants to be agile, leverage information for growth and deliver the best possible customer experience. There’s also the pressing need for mobile-focused platforms, and interconnectedness between multiple internal and customer-facing channels. All of these demands require IT.

Given the amount of work required and the need to complete projects quickly, many companies look to IT outsourcing not only to save time but also for the significant cost savings. Here are some of the benefits to this approach, along with some potential downsides that should be considered and managed before moving your development team offshore.

Benefits

Faster Go-to-Market

The mobile-centric and omnichannel environments require companies to adjust tactics quickly to meet consumer demands. Moving fast can require changes or additions to current tech platforms – at a speed that often cannot be met by internal teams alone. IT outsourcing significantly reduces the time for recruiting new IT resources, allowing companies to bring projects to market faster and meet the increasing demands for agility in today’s market.  

Reduced Costs

A considerable benefit of offshore development is the potential for cost savings. Wages outside of Canada for IT expertise are often quite low, so companies can bring on a larger number of skilled workers to handle complex tasks quickly – another factor in speeding up go-to-market.

Human resources doesn’t need to focus on hiring developers with niche skill sets who may or may not have the right talents necessary for the projects at hand. They can instead leave the task up to an experienced company with access to a large pool or resources so they can spend more time on hiring support staff or improving company culture.

More Time for Other Work

By moving labor-intensive work to offshore teams, IT can better assist sales and marketing with strategy and projects that directly impact revenue. Managing a full in-house development team is stressful and requires a considerable amount of time. Instead companies can leverage trusted offshore managers to handle the day-to-day requirements, and focus energies on other projects and areas of the business that require the knowledge of internal staff.

Understanding the Challenges

Offshore IT outsourcing doesn’t come without some possible downsides. Drawbacks (and possible remedies) include:

  • Language barriers that can introduce errors and delays. To avoid these you must come up with a clear and consistent communication strategy that utilizes a multitude of channels and resources.
  • Intellectual property concerns. Be careful sharing proprietary access or customer data with offshore developers. Set rules and procedures for limiting and granting access.
  • Lack of control. Management needs to place trust in the offshore developer to hire reputable staff members and to properly handle the project. Only work with established firms with quality reputations. You don’t want to be in the fourth month of a six-month project and find out the outsourcer is bankrupt.

Best Practices for a Smooth Experience

Diving into an offshore development project can be nerve wracking. Following some best practices will make the experience as painless and productive as possible:

  • Start out small. Pick a manageable project with clear deadlines and deliverables.
  • Establish a communication and update schedule. This is especially important when dealing with 12-hour time zone differences.
  • Provide context. Bigger projects that will transform your business require extra training and guidance. Ensure the developer management have context about your company’s brand mission and the needs/desires of your customer base. This is vital for developing systems that match your unique business.
  • Don’t assume. With language and culture barriers, your project direction needs to be crystal clear. Use imagery and direct language, remembering that the outsourcer is being paid to follow directions, not add their own thoughts or changes.