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Are you tired of juggling the demands of different IT projects and constantly trying to do more with less? You are not the only one. A Clutch study found that over 37% of small businesses currently outsource at least one business process, with IT services making the top of the list. This number grows even larger when we look at enterprises, about 90% of Fortune 500 companies outsourcing at least some portion of their IT needs. All this for good reason.
IT project outsourcing levels the playing field, allowing you to build software or support IT-reliant business processes without a huge investment or putting additional strain on your in-house team. Regardless of your company’s size or the complexity of your project, you can get immediate access to the most skilled IT talent on the market.
However, even knowing these benefits, delegating a whole IT project to another team can be a tough call. One of the most stressful factors for decision-makers today is unpredictability, both within their organization and outside. And outsourcing does come with its fair share of unpredictability. To help you navigate the ins and outs and create a fail-safe outsourcing strategy, we’ve put together some of the best tips to decide whether it’s time to outsource and secure your IT project from day one.
What Are the Signs It’s Time to Outsource IT Projects?
We all know in business timing is everything. So it’s natural to have a lot of questions about when to outsource your IT project. If any of these situations sound familiar, this might be a tell-tale sign that you should consider external collaboration.
Keeping up with daily operations overshadows everything else: When your in-house team is constantly putting out fires and can't get out of the break-fix cycle, this leaves little room for embracing new ideas or new technologies. Outsourcing IT projects allows you to tap into unexplored potential, freeing up your team so they can focus on less urgent but more strategically valuable tasks.
The cost of in-house IT talent is too high: For some projects, keeping an in-house team is simply too expensive. For instance, if you handle IT support in-house, you will need to consider additional pay for those who are on call, plus vacation days and benefits. By outsourcing, you can pay employees for core competencies, while also having access to the same level of technical expertise but with less overhead.
Project milestones are consistently missed: Regularly making the deadline for your project with a limited in-house team can feel daunting. Despite your best attempts, internal IT efforts result in delayed product launches or a slow response to market changes. In this case, delegating a part of the project to a dedicated team might be the solution you are looking for.
The complexity continues to pile up: Changing regulations, increasingly sophisticated cyberattacks, and elaborate IT infrastructures are just a few of the things that make managing complexity harder and harder. Working with an experienced outsourcing partner can help you take back control of all these moving parts.
A lack of specialized skills leads to missed opportunities: Your team might be faced with a specialized project like integrating AI or blockchain. While these are not skills your IT department requires in their day-to-day work, they can be a significant growth opportunity for your business that you would otherwise miss.
Assessing the Benefits and Risks of IT Project Outsourcing
If you’ve done some research online, chances are you’ve come across all kinds of experiences with outsourced IT projects. We’re sure you heard horror stories about projects that delivered unusable apps, as well as inspiring stories about companies that saved a ton of money in development and still got results beyond expectations. Benefits and risks are two sides of the same coin you should be aware of when defining your project outsourcing strategy.
There are several key benefits of IT project outsourcing, such as:
- On-demand access to talent: When you outsource a project, you have the flexibility not only to source IT talent from anywhere in the world but also to scale your team up or down. You can access talent when, how, and for as long as you need it to meet your goals.
- Round-the-clock productivity: During peak periods, outsourcing IT projects can provide a much-needed support system. Especially when enlisting offshore collaborators, they can cover time zones during which your team is usually unavailable.
- Internal cost savings: Software projects come with a lot of overhead besides headhunting and hiring developers, such as energy consumption costs or expensive hardware. With outsourcing, you can cut down on all these additional internal expenses.
- Streamlined project management: The best outsourcing companies have experience in managing a wide range of IT projects. They can provide the right combination of people, skills, Agile best practices, and tools to keep projects on track.
However, there are potential IT project outsourcing risks too, like:
- Hidden costs: Watch out for any additional charges that were not previously communicated. While even in detailed estimations, there is always a percentage of “unknown”, any extra costs should always be discussed and negotiated as soon as this concern appears.
- Lack of expertise: The provider might have a poor understanding of your industry or developers might lack proficiency in the required tech stack. Either way, always check if the outsourcing company worked on projects similar to yours in the past.
- Communication breakdown: When you bring different company cultures and time zones into the mix, communication issues can turn into a total misalignment on even the most basic tasks. Get clear on communication channels and protocols to prevent team disengagement.
- Security and privacy concerns: Outsourcing inevitably involves sharing sensitive data about your business and customers. The provider should have in place risk management policies that protect intellectual property and confidential information.
7 Steps to Create a Fail-Safe IT Project Outsourcing Strategy
To maximize the benefits and mitigate the risks, it’s important to follow these steps and build a reliable strategy for successful IT project outsourcing.
1. Understand what IT activities you need to outsource
IT project outsourcing is much like a Swiss Army knife. You can delegate literally any part of your IT activities, from web development and hardware maintenance to cybersecurity and support to another team. Some companies outsource the work of a single developer who can integrate a chatbot on their website in a couple of days, others hire a team of DevOps engineers to completely revamp their entire infrastructure.
It’s up to you to decide what areas of your business would benefit most from switching to an outsourced team. Here’s what you can do:
a.) Use SWOT analysis to identify your strengths and any areas where you need additional support.
b.) Out of those areas consider which are safe to delegate, meaning they don’t overlap with your core business competencies (those are best kept in-house).
c.) Break the project down into smaller parts you can delegate right away. If you are just starting out, this is a great way to test the outsourcing process and the potential collaborators without overcommitting.
2. Set measurable goals for your IT project
While it’s true that your outsourcing partner will help you build a detailed roadmap for your project, you’ll be the one to share the vision for where the roadmap leads. As such, you first need to have a clear picture of what you are trying to achieve before you can relay it further to the development team.
Don’t think just in terms of timelines and deliverables, but try to imagine what kind of outcome you expect and translate it into “North Star” metrics. Let’s say you are planning to outsource IT support. Then your end goal might be to see a 30% drop in the time it takes to respond to tickets and incidents. The priorities you set early on will become the criteria for evaluating and choosing the right provider and outsourcing model.
3. Decide on the right collaboration model
You can think of the collaboration model as your blueprint for IT project outsourcing. It dictates who is responsible for what and it guides how you will interact with the outsourcing partner throughout the project. For instance, will your or the outsourcing company assign a project manager? Who will answer the teams’ questions during development? Who will be the product owner?
As you answer these questions, you might lean in favor of one model or another, depending on the resources you’re able to dedicate to the project. The two most widely used outsourcing models are:
Managed team model — in this model, the outsourcing company is responsible for managing the development team and deliverables on your behalf. It’s a good model to use when:
- You have limited time or resources to manage the project yourself.
- IT is not your main area of expertise but it’s critical for your operations.
- You prefer to outsource the entire project end-to-end, including project management, QA, maintenance, and support.
Staff augmentation model — here outsourced developers become members of your team. It’s a more hands-on model you might choose if:
- You already have an in-house IT team but need some extra help.
- You have experience managing technical teams.
- You want to continue working with your established frameworks and team structure.
4. Put in place fail-safe mechanisms
No outsourced project is completely free of risk. This is not so much a flaw of outsourcing as a general principle, but rather a lack of proper fail-safe mechanisms. Service Level Agreements (SLAs) are a great way to define the standard of quality you expect from a provider and to encourage mutual accountability. Make sure the outsourcing contract includes ways to settle disputes and specific actions you can take if things don’t go as planned.
There’s also a less talked about aspect we wanted to mention here. Companies often make the mistake of not preparing their in-house staff to work with an external team. Your employees might feel like they are being replaced, causing unrest and potentially affecting cooperation. If you choose to outsource, always reassure employees and explain workflow changes to ease the transition for everyone involved.
5. Agree on task and communication management
Understanding how tasks and communication will flow between you and the development team is critical. The majority of companies that provide IT project outsourcing services follow Agile project management methodologies that help streamline how time and tasks are managed within the team. Sharing a common Agile mindset lays the foundation for collaborating with developers and for effective communication.
Speaking of communication, it’s important to agree on a schedule and communication channels early on. Will you keep in touch via email or would you prefer to be added to the company’s Slack? How often do you expect to meet and who will be in charge of organizing those meetings? Have a clear communication plan in mind and agree on what project management tools you will use to access tasks, reports, or other documents at any given time.
6. Align on how to handle project changes
Many outsourcing partnerships fail over time because they don’t account for change and obstacles. These are inevitable in any IT project and change management is vital if you want to avoid scope creep and disruptions to your workflow. Agree on the steps you need to follow to request and approve new features or changes to the existing team structure. Once again it’s important to have a well-defined communication plan to ensure all stakeholders are informed about any changes made during the project.
7. Build feedback loops and track progress
When you outsource IT projects, providing the software agency feedback on their work is the best way to align on what’s done and what still needs to be done. Most outsourcing companies hold demo meetings where developers showcase the progress they’ve made throughout different stages of the project. Demo meetings can significantly shorten the feedback loop, especially if you organize them after every sprint. You can provide feedback early and often, and the development team can respond asap when changes are needed and implement fixes.
Finding the Right Team for Your Outsourced IT Project: Dos and Don’ts
Even with a well-thought-out strategy, you’ll need an experienced outsourced team to deliver on it. Take a look at these essential dos and don’ts to secure the right software development team for your next project.
Do research the outsourcing company thoroughly
Use multiple sources of information when researching a potential software outsourcing partner. Their website and portfolio are a great place to start, but if you want to have a better view of their online presence also check ratings platforms or even expert content they put out.
Don’t settle on the first or cheapest option
Choosing your provider too quickly or basing your choice solely on the price can actually lead to more expenses down the road. Development costs that are way below the industry average usually indicate low quality or hidden fees later in the project.
Do look for project-specific expertise
How experienced is the outsourcing company in working on projects similar to yours? Most directories like Clutch feature curated lists of software development companies based on criteria like industry, technologies, or services, which you can further narrow down according to project size.
Don’t focus only on technical know-how
You’ll want your outsourcing partner to have the perfect blend of insight into your industry, software development knowledge, project management ability, and communication skills. Assess vendors from a holistic perspective, rather than just based on programming languages or tech stack.
Put Your IT Project Outsourcing Strategy in Motion with Helpware
Not every business has the resources for an in-house IT team. Even those that do, might still find that their teams are stretching their limits to meet high-stakes deadlines and keep up with everything that is required of them. If you are grappling with the demands of a new app development project or an ongoing IT initiative, putting in place the right strategies can maximize the advantages of IT project outsourcing while minimizing setbacks.
At Helpware, our goal is to help you manage your company’s IT needs through smart planning, solid engineering, and a team of experts you can quickly onboard to meet changing workloads or new business opportunities. Are you ready to put your IT project outsourcing strategy into action?
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