Saturday, November 26, 2022

Four Assumptions About Outsourcing, and the Truth

By Umme Sutarwala - July 07, 2022 4 mins read

The IT sector has long employed outsourcing. But many companies are still unclear about whether to cope with outsourcing or produce digital products internally with local experts.

After over two years of a global COVID-19 pandemic, the global IT services sector has recovered and has shown to be even more crucial to the success of corporate IT companies. Outsourcing alliances have been essential as corporate IT attempts to handle the relentless need for technology-enabled transformation in a challenging talent ecosystem.

Let’s debunk the most widespread misconceptions regarding development outsourcing.

Consolidation reigns supreme, and less is more

For a while, IT companies utilized outsourcing as a motivator to converge all IT systems, boosting productivity and lowering costs. That’s no longer always the case. Remarkably, many enterprises are approaching consolidation using a split strategy. Portfolio consolidation has always been the name of the game in the systems required to manage the business.

Offshoring and IT managed services are still heavily utilized for back-office systems in order to achieve this. However, there is more portfolio diversity, more localized services or on shoring, and more of a staff augmentation strategy when it comes to digital transformation or “changing the company” technologies.

It’s too complicated to outsource

It could appear intimidating and demanding to expand the company strategy to include an outsourced partner. It might not be as tricky as organizations believe, though.

It shouldn’t take more work or supervision to manage an outsourced team than an in-house team. The outsourced team may even facilitate long-term task reduction. Establishing an outsourcing agreement may differ from recruiting employees internally, but it isn’t always more complicated.

This is due to the fact that Business-to-Business (B2B) connections and Business-to-Consumer (B2C) ties can sometimes be quite similar. Firms that recruit outsourcers might benefit from an easy and customized onboarding process. Making an effort to choose the ideal outsourcing partner can also contribute to making sure this occurs.

Also Read: Top Four Ways Inflation Will Disrupt the IT Sector

Actually, building an internal team from the beginning can be more challenging than outsourcing. Once businesses form a partnership, the outsourcer will probably handle hiring the people needed to manage their portfolio. 

Outsourcing results in subpar work

It’s common knowledge among outsourcing firms that lower-cost development services equate to poor outcomes. But the fact is that subpar quality is frequently a result of inadequate abilities and poor communication. Whether a product is developed internally or through outsourcing, its quality shouldn’t be a bargaining chip.

In reality, the development rates in each part of the world vary and depend on various factors. Software development costs are cheaper in Asia and Eastern Europe due to living expenses rather than poor quality. In contrast, IT outsourcing enables companies to provide top-notch products on time and with lower costs. Outsourcing teams can produce even better products than local experts if they use an Agile methodology and proper planning.

Outcome-based pricing is immaculate

Even while the majority of clients would affirm that they are willing to pay for results, it is still challenging to connect outsourcing value to business outcomes beyond cost savings, particularly when an IT service provider has only partial control over the input.

Even when a sourcing partner can affect results, there may be debate over whether organizations and individuals actually contributed most to a particular business outcome. There is now a rise in traditional personnel augmentation for new projects. Every business doesn’t need to use managed services. Trying managed services early on in an outsourcing journey is actually a surefire way to end up disappointed.

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AUTHOR

Umme Sutarwala

Umme Sutarwala is a Global News Correspondent with OnDot Media. She is a media graduate with 2+ years of experience in content creation and management. Previously, she has worked with MNCs in the E-commerce and Finance domain

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