Myth #1: The main reason why companies decide to outsource is cost-reduction
Fact: The main reason behind outsourcing is the company’s growth, in terms of capability and geographic reach, as well as value provided to customers – these are the bigger benefits to catch.
For a long time, reducing costs had been the only reason why companies looked into outsourcing. Many times, however, this turned out to be just a mirage, with a strong clash between expectations and reality. Now that the process is much better understood, the requirements are clearer and the services of a higher quality, the reasons behind outsourcing have also evolved.
Instead of chasing shadows, think of tech-outsourcing as a way to become more efficient in your day-to-day operations and to increase the quality of the services you provide, to become more competitive in your industry.
Myth #2: Cultural differences are easy to circumvent and don’t have a big impact on my project
Fact: Cultural differences are one of the main reasons – if not The main reason – why outsourcing fails
Just as your organizational culture is important, the cultural compatibility between you and your outsourcing partner is of the upmost importance as well. Always do your best to understand the people you are trying to work with – it will save you time and money. It’s, again, a matter of expectations vs reality – it doesn’t matter what working climate you’re accustomed to; what’s important is that you speak the same language as your outsourcing partner (both literally and figuratively).
Make sure you meet your partner face-to-face before making your major decisions. One simple indicator of understanding each other’s cultures is being able to hit a joke or two during the meeting, and have everyone laugh together.
Myth #3: The customer wastes too much time training the outsourcing partner’s employees
Fact: Trainings are necessary if it’s more than just a simple capacity project, but it should never be perceived as wasted time
Just like when settling into a job with a new company, a period of adjustment and knowledge-transfer is needed with outsourcing as well. 10 clients from the same industry, wanting the same thing, will request it in 10 different ways. It’s the outsourcing partner’s job to understand the client’s real needs, and the client’s job to define them as clearly as possible.
There is no universal formula, but with the right project management, trainings and procedures in place, the knowledge transfer phase should be smooth and efficient – and will certainly prove well worth its time in the long-run.
Myth #4: You need a bulletproof contract to ensure a good partnership
Fact: Most of the time, writing lengthy contracts that try to encompass all possible situations is just a waste of time.
Sometimes, customers approach outsourcing companies with doubts, and with the fear that they might be wrong to consider outsourcing in the first place. In other cases, the client brings bad experiences form previous collaborations into the relationship. As a result, they try to fix all of that with an ironclad contract they think should solve everything. This is an impossible task, a quest for the unattainable – and it only wastes a lot of time on both sides. That’s because an efficient outsourcing collaboration is flexible, constantly evolving, changing according to the client’s needs, so trying to predict all the possible scenarios is a pipe dream. All that a solid contract needs is the best possible understanding of roles and responsibilities, and efficient procedures for change management.
You simply can’t encompass all possible scenarios, and once you give up on that idea altogether, you can create a legal framework that allows your project room to breathe.
Myth #5: Outsourcing is the Jack-of-all-trades
Fact: As with everything, you need to define what your priorities are, or it will become the master of none
Fast. Cheap. Good. Pick two! Sounds familiar? The project management triangle is a great example when it comes to expectations from outsourcing. Clients are looking at cost reduction, flexibility of staffing and improvement of their services. Unfortunately, this is just another mirage and, what’s worse, some vendors are promising this, while knowing it doesn’t exist. You must have a broad vision, and define your objectives as clearly as possible before engaging an outsourcing project. I cannot stress the importance of this enough: it’s incredible how much trouble, time and money it can save you.
You cannot go for the cheapest price and expect a full-time resource, while at the same time receiving top quality. Prioritize according to what’s important for your company, and choose to partner-up with an honest provider, who will not hesitate to be open about what he considers unrealistic.
Myth #6: Clients have no control over the outsourcer and are kept ‘in the dark’ about the development process
Fact: You actually can have almost as much control over your nearshore team as you do over your in-house people
This is really not as difficult to manage as most tempt to imagine. With the right working methodologies and check-points in place, plus the help of the outsourcer, who can offer different collaboration models and best practices, you will have more than enough control over the team and its work.
Agile methodologies can help, since they require frequent information-exchange between the client and vendor’s team by default, thus greatly improving communication and the understanding of each other’s tasks.
Myth #7: Outsourcing works only for large enterprises
Fact: If you want a definitive statement, it’s rather the other way around
Start-ups can derive huge benefits from outsourcing – they are fast to adapt and flexible enough to integrate working with a nearshore partner in their culture, while the outsourcer would not only take care of software development (which is maybe not even the start-up’s core-business), but would also add value, experience and know-how. In the meantime, the start-up can focus on its core functions.
Of course, large enterprises also make use of outsourcing successfully, but on a different scale – and the decision to outsource is supported by different reasons than is the case for start-ups.
Some outsourcers specialize in working with one or the other side of the spectrum, and this is definitely worth looking into when selecting a vendor. If your company is either very small or very big, it’s worth looking into a partner that specializes in dealing with your size-specific challenges.
Now it’s your turn! Share your questions, experienced and myths with me, and let’s help disseminate accurate information in our field.
The author: Silviu Panait, Business Development Manager at InCrys. Behind the job title, my core principles stay the same regardless of who I’m working with: Be curious – Understand your objectives – Give your best – Love what you do – Accomplish – Be curious again. If you’d like to know more about me or get in touch, visit me on LinkedIn.
InCrys is one of the international service providers that comes with experiences from more than 500 projects in 10 industries and a mature business model to the German market. InCrys is Knowledge Partner of Deutscher Outsourcing Verband e.V. (German Outsourcing Association) and a contributor to our shared knowledge initiatives.