How to Overcome the Challenges of Outsourcing

What is the biggest danger that businesses - both large and small - will need to overcome sooner rather than later in terms of technology adoption? Well, Gartner says it’s a shortage of talent; a main factor as to why outsourcing is, generally speaking, expanding.

In the past, the only reason for linking up with external providers for some projects was to save some cash, but nowadays, it’s not always that simple. While saving money is, obviously, never a bad idea in business, being able to make a connection with trustworthy technology partners is the primary influence when choosing who to outsource to. Companies need to know they’re getting the expertise they need.

If you need to know how to pick out the most influential outsource software development company, take a look at the following tips:

• Outsourcing: The reasons why
• Modeling your outsource engagement
• What not to forget during the hiring process
• Hazards to mind in software development contracts
• Your outsource team’s structure
• Managing the transfer of outsourced knowledge
• Maximizing an outsource vendor’s efficiency

Outsourcing: The reasons why

A quick and easy way to cut costs and keep to deadlines - that used to be the reputation of outsourced software development, and it’s no wonder businesses would make an association between tech outsourcing and budget, second-rate quick-fixes.

But over the last ten years, there have been major changes to the outsourcing game. One reason is that the outsource crowd has leveled up, but another is that more and more companies are finding it hard to create the resources they need within their four walls to stay afloat in the ever-changing technological landscape.

Today, companies are looking to outsource their software development for the following reasons:

• Searching for resources and ability. Sometimes particular skills are in short supply within the company or just may not be available, meaning a sensible solution is to outsource and keep projects moving forward

• Innovation. Advanced analytics, blockchain and AI are becoming more common but not every business has the knowledge of how to harness these technologies within their teams, but outsourcing brings these innovations to the fore, keeping companies ahead of the competition.

• Streamlining IT costs. By outsourcing to the likes of cloud vendors, companies are not just trimming existing costs, but changing existing processes; optimizing their IT and legacy IT systems.

Modeling your outsource engagement

The rationale is not the only thing that’s different nowadays; having a distinctive method that can discover the most valuable vendors is part of a company’s arsenal. Here are three models that cover the main outsourcing engagement approaches:

• The Out-staffing method. Out-staffing allows for an increase in staff numbers and both size and number of teams, while keeping the control and results of the teams with the management. This can be achieved by multiplying employee numbers, bringing in a new team or even a whole development center.

• Developing products. Businesses can also link up with product development services and outsource whole projects for an agreed rate, putting the vendor in charge of the process. This is used to meet a specific requirement and creates a tailor-made solution.

• Outsourcing innovation. Rather than offering specifications, companies use R&D or innovation outsourcing, hiring partners for market evaluation, producing a proof of concept and analyzing the potential for return on investment of projects in the developmental stage.

The model of choice will depend on the rationale behind IT outsourcing a software development project. The motivations behind also influence how outsourced software development teams are structured

The method that companies go for will be influenced by the reasons behind the IT outsourcing. How the team of software developers is formed will be impacted by the motivations behind the chosen model.

What not to forget during the hiring process

When outsourcing software development, you can meet any number of hazards, so it is pivotal that your new provider is in-sync with the culture and requirements of your organization. You’ll want to bear in mind the following:

• Keep culture in mind. The dos and don't of every country are different, especially in the business world. It can be beneficial to stick to countries that adhere to your values, but an awareness and experience of cultural differences is useful too. Is your provider team-orientated, or task-orientated? How are they with deadlines and change? Are their levels of communication and general attitude right for you?

• Check the time. The world may be more connected than ever before but time zones are still a thing, and your outsourced team may not be in yours. The working hours may be something to consider, but a big difference is not always a negative, depending how integrated the internal and outsourced teams are.

• Think about project management and development. Does the methodology match up with the ingrained best practices of your company? You will need a vendor that governs openly in terms of managing problems, resolving them, reporting progress and deploying the product, while key responsibilities and job roles will have to be clearly marked out, all to ensure your project stays on track.

Hazards to mind in software development contracts

To get that tick that says they’re to be trusted, the due diligence criteria will have to be met if the outsource vendors are going to go from nobody to new partner. Watch out too for particular red flags in the software development contract; if you don’t pay enough attention, you could end up with a mountain of extra fees to pay and no legal loopholes to jump through.

Governance of the project and scope of work; those are the two crucial areas that your software development contract makes completely clear before you do anything else. Before anything gets agreed, you must clarify under whose jurisdiction project management falls, and what guarantees your vendor can provide in terms of delivery.

Furthermore, ensure the contract can provide definite answers to these questions:

• Do you and your vendor know who is responsible for what?
• What expectations exist in terms of quality and acceptance?
• What are the necessary skills your team should possess?
• Has the price of the work been agreed?
• After the project is finished, how is its ownership handled?
• Who will be owning the code?

Your outsource team’s structure

Outsource software development vendors are compiled in a way that suits the needs of the internal company. General structural models are useful for when businesses just want to increase their capacity for development, but when innovation is the goal, a specialized team providing cutting-edge technology may be the ideal choice.

There are three general structures used mainly by external software development companies:

• Generalist teams where a wide range of knowledge is covered, allowing them to take a project from start to finish
• Specialist teams, these ones tend to be a bit more niche but the expertise is very high. These are best utilized when more distinct tech expertise is needed
• Hybrid teams, composed of a mixture of generalist expertise and employees with specialist competences

The most ideal team structure is one that is able to complete the most rigorous requirements of a given project. Experts from a broad spectrum of technological backgrounds can be employed.

Managing the transfer of outsourced knowledge

Knowledge, at some stage, must be passed on to the client or to other software partners that come in to pick up the mantle. Also, there are reasons for relationships with outsourced vendors even after project completion.

When knowledge is lost from a poorly-managed transfer, the success of the whole project can be severely compromised, and the complete outsourcing mission could be rendered pointless. Both explicit knowledge - files, data and records - and tacit knowledge - competence, experience and know-how - should be accounted for during transfer.

A step-by-step procedure, such as these, will often provide optimal results, as unofficial knowledge transfers are usually not comprehensive enough:

• Assess the knowledge. You need to be fully aware of what knowledge an outsourcing team possesses, as you can’t gather information you don’t know. Review all source code, documentation, workflow and processes.

• Illustrate important players. The success of the project is facilitated by key team members from both companies and these are the people who are pivotal for ideal knowledge transfer. Make sure these particular staff members meet together to share knowledge.

• Manage the data. Knowledge needs to be understood by those who haven’t been part of the project, so you must lay it out appropriately and to do this you can exploit anything from Q&A meetings and demonstrations to in-house training. Review how well the captured information matches with the original scope.

No matter how well you capture it, some knowledge will always be lost. Utilizing organized, detailed transfer procedures is the norm for companies starting on outsourcing software development, meaning the most important knowledge can be saved.

Maximizing an outsource vendor’s efficiency

First-rate management skills will be delivered by the elite software development companies, but don’t allow yourself to take the laissez-faire approach. For the best results, you should instead manage off-site or outsource teams carefully to circumvent typical issues. Here are some tips to think about to regulate efficiency:

• Distribute responsibility. Varying structures and aims will affect the amount of responsibility handed to the partner vendor, but whatever the amount, the expectations must be set. Communication must be transparent in case of misunderstandings, and using a RACI matrix may help indicate ownership boundaries.

• Targets and risks. Hazards are possible with every project whether they are dealt with internally or externally, but clear aims and objectives can reduce risk. A reliable SDLC or such risk controls can guarantee safety of information. Make sure outsourced tasks are well-padded in order to withstand any overruns or unforeseen complications.

• Deal with changing teams. Losing vital staff members can have big consequences, even on the outsourced side. Knowledge must be well spread so the loss of one particular individual won’t grind the project to a halt. Making sure staff are motivated to go the distance on a project is a great help to potential success.

• Keep everyone together. Outsource teams can feel they are distant from the organization that took them on board, meaning they can quickly lose motivation and efficiency. Make sure they feel part of the club, listen to their input and communicate regularly and precisely, as you would to the CEO.

• Be dynamic. You can never just set an external company a task and then forget they exist, you have to sync-up with them every day. Don’t presume that all your messages will be taken onboard, or even taken, so make sure everything is acknowledged and properly communicated.

External teams can, by and large, work well independently, but that should never hinder your management of them as, at the end of the day, they are attempting to make your company more successful.

Choose your new partner properly

There are two sides to every partnership and a well-structured team, proper knowledge management and the success of the software development all depend on both sides; the client company and the outsourced vendor. Get in contact with us to discover how we can give you the very best results for your software development needs.