The market is competitive so companies are focusing on optimizing the business by cutting costs! Sounds a little crazy and self-contradicting, no? When you consider that companies spend a great deal of their budget on optimizing technology and software (expensive!) to remain competitive (necessary!), cutting costs and skilled manpower would be the last thing on a company’s mind in order to move the business forward! (Insane?) And yet, this is what many companies are doing these days! Welcome to the wonderful world of outsourcing where everything can be virtual from your assistant to your development team, and the term in-house development is a dirty word!
Previously outsourcing used to be the playground of very large companies who would decide on a whim to outsource their entire tech support to India and then would regret the move, and outsource everything to China. This seemingly random sort of behavior of behalf of large corporations made the idea of outsourcing confusing at best, and irritating/costly at worst for the poor souls in the organization who had to clean up after an unsuccessful maneuver. Nowadays this is no longer the case. Companies, large and small, and especially tech start-ups are getting into outsourcing but from a different perspective. Now they are treating outsourcing staff as an extension of their own in-house staff. This drives it from a different angle in which companies stop treating outsourcing as cheap labor and treat them as part of the TEAM. See, with cheap, replaceable labor you are not concerned about your partnership as long as they save you money. With team you analyze carefully their job criteria, the benefit of them in your organization and where do they fit in, and interviewing multiple persons for the right fit.
This is why outsourcing has failed previously when companies only think in the short-term goals of saving money and hiring cheap.
Poorly thought out goals + saving cash at all costs = Big fail for company! However:
Well planned goals and vision + careful choice of outsourcing partner + defined structure = Can result in long-lasting benefits for the company!
The reason that outsourcing is so attractive for companies is not because of the costs. Actually it’s not that cheap – it is CHEAPER but not work-for-rice cheap. And companies know somewhere deep down inside that highly skilled labor costs money. Brilliant developers are in high demand all over the world and they know that they are probably not the only person bidding on his resources. There is an entire black market devoted to poaching highly skilled developers, actually. So it is highly unlikely that you will find IT talent who will work for peanuts …….. and if they do, as the saying goes: “If it is too good to be true, it probably is!”
No, the real attraction in outsourcing comes from gaining team and resources that you could not find or hire locally. Our entire world is virtual these days and with it, comes the craving for instant gratification – people want things done TODAY, Now! However there is a fine line between what people want and what is physically possible. Manpower is precious resource and if a company is perhaps working under an umbrella of on-going projects simultaneously, it would spread their resources too thin if they had their existing team working on each project. Plus this would slow down the whole process and time is money! But if you outsource, you are effectively hiring a team of people who work as your own under your direction and perhaps in project work where you lack the necessary skills and talent, and that can bring long-term benefits!
However the question always boils down to: What outsourcing partner to choose?
Essentially the concept of outsourcing should be treated much like marriage – you are looking for someone to complete you with knowledge, talent and resources that you do not personally possess, yet shares enough of your values, goals and vision in order to make a partnership successful. There has to be trust, yet as in every partnership there has to be results to make it worth your while. For companies who are flirting with the idea of outsourcing part or all of their business processes or tech development, first you must know yourself. If you do not, you cannot expect this to turn successful. Have a very clear idea of your objectives and goals with the outsourcing partnership and review this on an ongoing basis. What you want is a partner who can align their goals, resources and style of working to yours. Someone who can work as an invisible extension of your team and be a good fit.
In the outsourcing world, big is not necessarily better ….. It is just bigger! You need GREAT!
Read our white-paper “6 Essential Factors to Maximize the Value of Outsourcing” to understand best practices and strategies necessary for effective outsourcing of software, hardware and product development.