“The important thing about outsourcing or global sourcing is that it becomes a very powerful tool to leverage talent, improve productivity and reduce work cycles.” Azim Premji
We could not have agreed to it more when we wrote our first blog- 5 Steps to Choose the Right Partner for Outsourced Product Development. Speaking from an era when outsourcing is a norm to help overcome talent shortage, long hiring cycles and high costs, it becomes even more important to take the discussion even further because of the necessity to avail outsourcing services for cutting corners.
Companies these days are battling a lack of skilled sources that could bridge the gap between company productivity and talent pool. Building the right talent pool in tandem with the company’s vision and mission has become extremely important for the future production cycles, because of the former are not sure of what the company is heading for, they will not be able to steer it toward its goals.
Most often than not, the in-house pool is insufficient to cater to the requirements of the company, requiring the intervention of the outsourcing companies. However, selecting the right ones require a lot of strategy to ensure that the company achieves its goal of steady growth.
So, here are a few basic considerations that are important before you select the best outsourcing companies:
- What are your current IT gaps and whether the outsourced product development companies will be able to fulfil the same?
- What is the scope of activity? Whether you need them for long-term or short-term activity?
- Is there any other alternative you might want to consider apart from offshoring?
- Is the strength of the Customer Software Development Company you are hiring efficient and cost-effective?
- Have they understood the intricacies of your company?
- Are the factors specific to outsourcing companies conducive for your company?Such as management and process strengths, city location, churn rate and training, learning culture, intellectual property approach and legal protection, and intangible and company culture.
Are the factors specific to outsourcing companies conducive for your company?Such as management and process strengths, city location, churn rate and training, learning culture, intellectual property approach and legal protection, and intangible and company culture.
Define the Requirement
Once you acknowledge that you have more work than the manpower available in your organization, you need to understand that you need an Outsourced Software Development Company. Discuss the requirements that you might have with your internal team and decide (after speaking to the outsourced partner) if they will be able to fulfill the requirements. Before that, you need to do a thorough analysis of the IT gaps so that you can determine the areas you need help in. This will also help you analyze the developments you have to make the coming year, along with the software fixes that you need help in.
Identify the type of Engagement: Long Term or Short Term
For many companies, it is next to impossible to continue to outsource software development. It is not a cost-effective way for long-term profits because most often than not, these companies charge more than the market rate. Add to it, the time taken to make them familiar with the company’s vision and mission. Once you have determined the IT gaps yourself, you need to realize whether the gaps need long-term retainers or whether you would be able to solve them yourselves in the coming quarters. If it is a stop-gap partnership you are looking forward to, you need not interview the outsourcing agent. If you are looking for a long-term relationship, you need to sit with the partner and make yourself clear about your plans and whether they are in line with the company’s business requirements.
Make calculative contracts
Make your contracts carefully, depending on your capital size thus deciding on the budget that you are likely to spend. So, if you are a $20 Million revenue company, spending anything close to $100,000 would have little impact on your exchequer. Having said that, if you contracted someone of that scope, it is likely that your project will not get enough attention, as against mid-sized outsourcing companies who may not have the bandwidth to fulfill your requirements but can leverage their scope to meet the same. This way, your project will be getting the desired attention with a promise to deliver on time.
Ensure that the contractor has the right understanding of the product
This is one of the most important pre-requisites when it comes to hiring the right contractors. Imagine a scenario when the outsourcing company you have contracted does not understand your requirements and delivers faulty results. It is not just time-consuming, but also puts a lot of pressure on the company’s finances. How about being very clear with the outsourced software development company about your requirements, expectations and what you have been looking for. Set up a meeting to understand if they are capable of delivering what you want.
Weigh your options: Onshore Vs Offshore
Onshore outsourcing helps you to deal with a team that does not have potential language, time or cultural differences. However, ensure that your requirements are fulfilled even if that requires offshore outsourcing. True, it would be costlier for the company, it will nevertheless be profitable at the end. Having said that, it is also true that good offshore outsourcing companies usually have a bench because of low technical talent cost. Having a bench allows them to offer both lower cost and faster availability and onboarding.