IT outsourcing best practices in 2021

Let’s start with the fact that the outsourcing market has been growing rapidly since the early 1990s. The analysis from Technavio’s research shows that the IT outsourcing market’s volume will grow by $98 billion during 2020–2024.

Jeremy Coward (National Outsourcing Association’s Community Marketing Executive) also has written in his report that more than 70% of companies are planning to increase the usage of IT outsourcing. The same report from the National Outsourcing Association also reveals that the main reasons why companies choose IT outsourcing are:

• 35% of cost savings;
• 23% of user experience improvement;
• reduced use of outdated solutions by 17%.

Meanwhile, Dun & Bradstreet in their “Barometer of Global Outsourcing” in 2000 has reported that 20–25% of all outsourcing relationships fail within two years. Not much has changed since then.

Let’s talk about how an outsource team can avoid the common pitfalls and ensure customer satisfaction.

Technical expertise in the selected tech stack and industry

During the sales process, some companies can be found guilty of showing their best developers in order to convince the client to work with them, but then the client has to work with Junior developers, who don’t even speak the language of the client. This point should always be clarified during negotiations.

Here at Afterlogic, we start with presenting the project manager, who is also the technical lead (not just a postman between the client and the dev team). Then, once we introduce developers assigned for the project to the client, they will be the actual ones working on that project.

Honest project estimates including taking all risks into account

In order to attract the attention of a client, companies often give unrealistic estimates. Goes without saying that later these companies find themselves in difficult situations. On the contrary, time spent working on the estimate and clarifying the nuances with the client will pay off in the long run. Reducing the client’s expectations in terms of estimated budget and time, however, will not, and will most likely end up in losing the client.

If you are not sure about the time and/or budget estimates but you still want your proposal to be competitive, you can do a couple of things. First, you can include several evaluation options from minimal to complete with all the risks involved. You might also include segmented estimations for different scopes of work — the clients themselves often don’t realize how much some little thing can cost them, and that they might not really need it. And if you also manage to be proactive while discussing the project and present a few of your own ideas that will save time or make the solution safer, the client might just fall in love with you.

Communication

Communication is the key to success. It should be obvious, but, as real-world experience shows, only few people really question whether the communication process in the client’s company actually fits outsource practices or if it needs to be adjusted (especially if the client’s company hasn’t used outsourced services before). Properly structured dialogue and project management methodology in the initial stages help build a more complete picture of the final result and its implementation timeline.

While the importance of good English is already understood by many, understanding the mentality is still somewhere near the end of the priorities list. Most of our clients are from the USA, Australia, UK, and EU. Each country has its own differences in mentality, which we not only put into documents for our managers but also teach by example. Your assessment on a professional scale is subjective. Are you keen enough to keep up a light conversation or make a joke? Got a point. Have a good understanding of technology as a project manager? Got another one. Only a combination of them all makes the person eligible for PM work.

This is why our specialists are not only good with their English but also have the right attitude and great technical background.

Project cost

Nobody wants their business to go bankrupt because they decided to outsource development. Disappointments involving costs usually occur when the project cost begins to exceed the estimates made during the sales phase. This is fundamentally wrong since the company providing the assessment is obligated to describe the risks and discuss them with the client. With the right approach, the client doesn’t have to worry about going over the budget, since all the details are agreed upon during the assessment stage.

Conclusion

IT outsourcing is beneficial for many companies, provided it’s approached consciously with the main goal being the balance between communication, quality, and economy. Choosing a company with relevant cases and references, as well as convenient methods of communications and workflow, will save both time and cost without taking away from the quality of work.

In the end, the best quality indicator is the number of clients, who stay with the company for many years and return with new ideas and projects. Just like here at Afterlogic :)