How to Discover the Best IT Outsourcing Strategy for Your Business
In today’s market, businesses are quickly expanding beyond their original scopes, and IT outsourcing is the ideal solution for achieving this goal. IT outsourcing is a business strategy for utilizing external service providers that provide enterprises access to IT expertise, resources, and flexibility not available in-house. Outsourcing also helps businesses eliminate internal management layers, overcome budget line-item restrictions, and improve the delivery of IT-enabled business processes and application services. Those looking to succeed must know how to plan the perfect IT outsourcing strategy for their business.
The First Step to IT Outsourcing to Digitally Better Your Business
Businesses need to utilize the digital realm to improve customer service and reach their furthest scope and the broadest range of target audiences. Startups are always finding ways to command their digital space early as possible, causing disruption for established businesses. Market-leading enterprise organizations have gladly welcomed IT outsourcing services to keep up with the growing competition in the market. Yet some startups and SME business owners have yet to decide upon the best outsourcing strategy to help them further their goals.
Your IT outsourcing strategy is the plan you’ve created to achieve the desired software development outcomes by choosing and engaging with the best outsourcing partner for your needs, finding a suitable engagement model, and executing the engagement. A business requires vital care and attention through its growth stages, making it ever more important to remember that outsourcing can be a long-term strategy that helps your business achieve a competitive advantage and its strategic goals.
The Power of IT Outsourcing: Market Statistics
Businesses have invested a great deal in technology in recent decades. These changes have led organizations to invest heavily in outsourcing IT services. Outsourcing allows companies to free up internal management and staff, execute strategic plans, and improve the allocation of internal workforce resources. This is achieved by having the outsourcing partner look after the quality, rate of development, delivery, and testing of digital projects.
Let us look at the remarkable market statistics depicting how crucial it is for you to focus on defining your IT Outsourcing Strategy.
- In 2022, overall spending of $4,454,354 billion in IT services outsourcing resulted in 5.1% growth compared to 2021. And it is expected that in 2023, spending of $4,679,119 billion will result in 5% growth from the current level.
- As per GrandViewResearch, the IT Service sector is expected to be worth around $1,070.28 billion by 2025, and the IT Outsourcing sector around $806.63 billion.
- Over the past 5 years, IT outsourcing reflects 10% growth owing to the spending and outcomes in the following domains: IT services, enterprise software, applications, data center systems, devices, and communication services.
- According to a report, 37% of small businesses outsource a part of their business processes. Out of which, 59% of companies outsource to save their budgets.
- Businesses that have outsourced in the past are even more willing to outsource further.
Choosing the Best IT Outsourcing Strategy: What You Need to Know
A business’s IT requirements must be analyzed before making a deliberate outsourcing strategy. Emphasis should be made on creating such a strategy via a step-by-step procedure to guarantee a smooth flow of information.
Find Out the Appropriate Time to Outsource
There will come a time when you notice the administrative tasks are getting out of hand, client requirements increase, or strategic projects remain undone due to bandwidth issues resulting in overall work compromise. This challenge should be your first sign of looking for the most viable and compatible candidates to manage the time crunch and not jeopardize the work quality.
Choosing What to Outsource
Many of your business’s IT projects can be outsourced to optimize work efficiency and time management. These projects can involve almost anything, including new development, system upgrades and enhancements, testing, or strategic consulting. However, there will always be instances when you have to analyze requirements specific to your needs and decide to outsource accordingly.
Setting Definitive Objectives
Understanding and establishing clear goals for your projects and company is essential to finding and choosing the correct match of an IT outsourcing partner. If you fail to do so, it may result in inaccurate proposals, task confusion, wasted time, compromised work quality, communication challenges, and team friction.
The next step would be to plan a suitable and fully funded budget for outsourcing. This will help you narrow down your best candidates and prepare for unplanned costs regarding logistics, new requirements, and much more. The best outcome is when there is excellent work on a well-defined project with an agreed-upon budget.
Choose the Engagement Model
The next step is to consider all the above-listed points and choose an effective engagement model suitable to your requirements. Thoroughly reviewing multiple engagement models and locations is important to make the best choice.
Creating Contracts and Tracking Progress
In a way, outsourcing is like a partnership for a specific project. Binding this in a legal contract is essential to protect both parties’ interests and responsibilities. Moreover, it is also vital to keep track of the progress of the outsourced project for maximum output. Being actively engaged in regular project meetings will help make you feel like part of the team and hold accountability in place.
Maintaining Proper Documentation
Here, we are not only discussing the legal contracts but also the work documentation. It is essential to ensure properly recorded documentation is developed for use in the future. While documentation is an inherent expense, it is vital for future reference and when making upgrades, fixing bugs, and completing other tasks.
The Top Three Types of IT Outsourcing Engagement Models
The next question would be what types of IT outsourcing engagement models are available and which would help you with your requirements. Your software development project requirements will be well-met under one of the following types of IT outsourcing service engagement models:
Project-Based Outsourcing – Dedicated Development Team
Project-Based outsourcing using a dedicated development team is the most common outsourcing service in the IT industry. This engagement model can be done either onshore or nearshore. The outsourcing provider is hired to extend development capacity at a high-value, scalable, sustainable basis for a specific project. A Dedicated Software Development Team model becomes an attractive option when a development project’s scope, specification, and implementation plans are reasonably well-defined at the outset. Under this model, a project team, including a delivery manager, equipment, and infrastructure necessary, are assigned to the project so it is delivered on time. The outsourcing provider provides an assembled team and takes care of its integration, motivation, and management while you retain ownership over the whole project and monitor the overall project progress.
IT Staffing – Independent Performers
The individual performer IT staffing engagement model enables companies with local development and product support teams to quickly access and apply expert technical IT staff on a project basis. Through this engagement model, clients can integrate talented global technical staff into discrete projects that are “time-boxed” and require specific market or technology expertise. IT staffing services comprise recruiting, retention, and managing IT talent for clients, including large organizations with multiple locations and high-volume IT requirements and companies that need flexible staff augmentation. Whether you opt for an in-house placement or a remote team member, you will manage them directly, and they will be fully dedicated to your project for a chosen period.
Research & Development Centers as a Service
Research and Development outsourcing acts as incubators for new product ideas and a learning center for stakeholders. The ideas and innovations developed provide a significant head-start to clients’ technology initiatives and projects. Putting R&D ideas and innovations into action in real projects furthers their refinement and helps move them from concept to proven component, tool, or framework. The research knowledge and application enable opportunities to create new businesses from technological advances, offer new ways to bring solutions to market and provide substantial savings in cost and time.
How Will You Know When to use IT Outsourcing to Drive Your Business Strategy?
You may need clarification as to which of your strategic IT projects are suitable for outsourcing. You can outsource many types of projects, but the trick is to determine what’s safe to outsource and what functions should be embraced in-house.
These are some of the IT services that are commonly and successfully outsourced:
- Mobile app development
- Custom software development
- UI/UX design
- Software testing & QA
- Maintenance & Support
- MVP development
- Cloud projects
When should you Outsource? These are some probable circumstances that prompt the outsource of your IT development needs:
- When you are short of time
- When you have security issues
- When there is a lack of skilled resources
- When you are having line-item budget issues
The Six Main Advantages of IT Outsourcing
By employing a well-defined IT Outsourcing strategy, you can enjoy the many advantages of outsourcing your company’s IT services. Have a look at the major benefits:
- Service-Based Pricing – It helps you only pay for the service hours you use through the service provider, thus managing your budget better.
- Less Labor Cost – It allows you to avoid the time-consuming and complex processes of hiring, training, and verification for full-time staff so that you can focus your resources and time where they might be more useful.
- Expert Assurance – Outsourcing providers manage the entire hiring process, so they assure you of trained, qualified, and experienced developers.
- Increased Productivity – Putting the best people on each task delivers increased productivity. Improvements in expert talent acquisition lead to less time spent per task and reduced liabilities. Delegation of tasks also enables internal team members to put greater focus on high-value projects and tasks.
- Technological Advantage – Special technology or technical skills may be needed for a task in some situations. Outsourcing is the ideal way to save time on finding a new specialist and hiring for such a need.
- Stay on Top of Competitors – Outsourcing has become increasingly popular with businesses globally. It is viewed as a preferred option for all sizes of companies. Looking toward outsourcing services to help you stay ahead of the competition and maximize output.
How Your Business can Power through it’s IT Outsourcing Challenges?
The IT outsourcing strategy you define for your business depends on your chosen outsourcing vendor. Software development that consistently delivers quality results on time and within budget requires a proven recipe. Each software project is unique regarding business objectives, environment, and constraints, yet each must be delivered equally. Selecting an outsourcing provider that uses an Agile Scrum methodology with online tools for development teams and customers to track, manage and monitor project progress is vital. This methodology not only defines the rules of engagement but has identifiable steps for each week of the development cycle. Since the entire team follows the same roadmap, everyone is communicating effectively in terms of where they stand each day about the target date.
Get started by discussing your needs with an established IT outsourcing provider that is not merely a quality-assured outsourcing company but the best fit for your challenges. Learn more by reviewing QAT Global’s case studies and testimonials and starting a conversation today.
What is the preeminent problem with IT outsourcing?
While some business owners are nervous about outsourcing their business requirements, they fear losing control over their development projects. Partnering with trustworthy software development outsourcing companies will allow management and communication responsibilities to ensure that they are yours.
What are the benefits of having a preset IT outsourcing strategy?
By partnering with a trusted IT outsourcing provider, you will reduce costs, lower expenses on resources & management, and enhance the quality of IT software development.
Which factors should you remember when defining an IT Outsourcing strategy?
Considered some of the more vital points as you choose where to invest in outsourcing:
- Be sure to decide what to outsource & the reason for outsourcing
- Define your expectations
- Proper documentation
- Choose the right outsourcing partner
- Select the ideal engagement model
- Keep track of the process.