Tips on How to Avoid IT Outsourcing Failures



Benjamin Fisher

Table of Content

With the globalization of the industry and the ongoing evolution of technology, many businesses are finding it more difficult to build the whole range of software solutions in-house. They are compelled to retain a competitive edge by constantly increasing operating efficiency, enhancing customer service, and introducing new goods.

According to Statista, the global market value of IT services delegated to the best IT outsourcing vendors is estimated to exceed $413.72 billion by the end of 2021. And, the IT outsourcing trend will only accelerate in the following years, with an annual rise of roughly 5 percent per year.

To be competitive in today’s business market, you must surely outsource company tasks and activities that someone else can do quicker, cheaper, or more readily than you. Unfortunately, most entrepreneurs and small company owners make many errors when they first begin outsourcing.

Today’s article will discuss potential IT outsourcing failures that may develop throughout the outsourcing process and how to prevent them.

Related reading: Outsourcing—An optimal way to fight Productivity and Performance during COVID-19

Why Outsourcing Fails?

Along with incorporating new technologies, it becomes increasingly difficult for businesses to build a broad range of creative software solutions in-house. That is why businesses use the outsourcing technique to design a successful plan for recruiting a dedicated IT outsourcing team of developers.

However, it is not as simple as it appears: according to Deloitte, “outsourcing as a concept is changing from making it run to making the change happen”.

This implies that you must not only deploy the system but also reap the advantages of its performance, as well as effectively handle any difficulties that may arise along the way. For instance, the most often encountered outsourcing issues include the following:

  • communication breakdown between the corporation and its outsourced suppliers
  • a lack of confidence in outsourcing providers
  • insufficient skills in optimizations and enhancements
  • insufficient risk assessment and a misguided development approach
  • outsourcing staff’s irresponsibility

Indeed, these are only a handful of the reasons that might contribute to an organization’s many IT outsourcing failures. However, if you continue to believe that these are trivial issues with outsourcing that have little effect on the broader situation, the following Forbes figures may alter your mind: Up to 25% of outsourcing companies fail during the first two years, and around 50% fail within the first five years of partnerships.

Now, let’s take a deeper look at the probable IT outsourcing failures that your business must avoid in order to thrive.

1. Time zone differences

When you reside in separate time zones, communication becomes a problem, since your work hours often do not match. That is why, when selecting an outsourcing partner, consider time zone variations, since you will need to communicate regularly to ensure that your expectations meet the delivery.

2. Define your outsourcing objectives and scope of work

Without a clear destination in mind, you will never arrive. After deciding to begin an outsourcing project, you’ll want to determine precisely what you want to outsource. Analyze your project to determine what tasks you can do in-house and what talents you need.

It is vital for a successful outsourcing strategy to define both long- and short-term objectives, to have a clear vision for the software development project being outsourced, and to provide written duties and expectations for your IT outsourcing team.

 Consider the future of your software product and the manner in which you anticipate your outsourcing team will manage any changes. This way, your project will stay structured and your outsourced staff will be on top of all responsibilities.

3. Make a cost estimate

The more precisely you can specify what needs to be done by breaking it down into components, the more accurately you can estimate how long it will take – and hence how much it will cost at the individual’s usual hourly rate. You don’t want to just assign work to someone and then be astonished when you get their charge or wrongly presume they spent an excessive amount of time to accomplish a job.

Without doing a thorough review of all available prices for the services, you risk paying far more than anticipated. As a result, plan ahead, inquire about any additional expenses, and check customer evaluations.

4. Emphasis on value

While outsourcing might help you save money, this should not be the primary reason you choose it. Never see outsourcing as a low-cost, simple method of offloading work. Outsourcing should optimize your company, allowing you to devote more attention to key initiatives.

Your outsourcing companies charges are often a reflection of its employees’ talents, experience, and work quality. By prioritizing value above price, you lower your chance of squandering your money and ending up with an unsatisfactory product.

Related reading: How to Hire Mobile App Developers for Your Business

5. Choose an Appropriate Vendor

Your best chance is to work with a service provider that not only knows your sector but also is completely aligned with your company’s aims and culture. Thus, taking a little more time when selecting a spouse may save you a lot of grief in the long run.

Your responsibility is to communicate the desired outcome to the software development business, to solicit and listen to their proposals, and to depend on their knowledge and ability to accomplish it.

6. Develop an Effective Communication Model

Ineffective communication has been identified as a primary cause of project failure in studies. Communication is critical, even more so when working with an offshore outsourcing workforce located in a foreign time zone. You must build an effective communication model, which begins with creating a channel of contact with the offshore staff.

You might use video conferencing and instant messaging technologies to do this. Additionally, you’ll want to arrange frequent meetings and follow-up talks to verify that all aspects are covered.

7. Prioritize relationships over software.

Quite often, it is all too simple to overlook the value of human connections in favor of project completion. However, the irony is that a strong connection will assure the success of an outsourcing deal much more than even the most meticulously designed contract.

Bear in mind that personal connections based on mutual trust and respect provide an extra incentive for your remote workforce. Therefore, invest some time and attention in building a good, engaging, and inspirational work environment to motivate your remote employees to go the extra mile. When everyone feels comfortable approaching you and expressing their problems, an open-door policy may also help minimize confrontations, misunderstandings, and distrust.

Final Thoughts On Preventing IT Outsourcing Failures

Avoiding IT outsourcing failures requires effective communication between partners and a well-defined expectation of the offshore staff. Additionally, you must draft a formal written contract, resolving any cultural or technical conflicts directly while remaining active in the project’s administration.

The most frequent source of conflict is when businesses place unreasonable expectations on the outsourcing team. Fortunately, outsourcing may be enhanced in a variety of ways. Several of these include doing sufficient research on suppliers to ensure that you choose the best match for your organization. Additionally, you must establish realistic project objectives, maintain efficient communication with your outsourcing agency, and have a well-defined scope of work.

Overall, although there will always be hurdles and roadblocks to a successful project, just as there are in any other industry, the advantages of software outsourcing much outweigh the risks for many businesses.

When you hire dedicated resources with the necessary skills according to your requirements, it ultimately helps you create your project more quickly, more affordably, and more easily. Recognizing the risks and developing a nearshore outsourcing plan lays the groundwork for your business’s success.

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