IT Outsourcing Best Practices to Follow in 2022

IT outsourcing provides enterprises with several benefits, including cost savings, access to expertise and talent that may not be available internally. However, you need to engage in outsourcing best practices to make the most of it. Otherwise, it turns into an expensive mistake.

A significant chunk of all outsourced projects fails because they do not meet business expectations or goals. The outsourcing relationship is of mutualism where both parties benefit from it.

An organization must follow certain best practices to ensure a mutually beneficial relationship with its outsourcing service provider.

Here are Five Outsourcing Best Practices You Can Leverage in 2022:

1. Investigate the critical requirements of the project to set clear goals

The best way to approach an outsourcing engagement is by determining whether it is a good fit based on your business needs. You must have clear insights on:

• What you are trying to achieve
• Results you expect
• The kind of budget you are working with

It will help determine if a particular project would be better off handled internally or outsourced externally. It will also enable you to set realistic expectations with your service provider so that both parties know each other’s goals from day one.

Ultimately you should create a list of:

• Key features
• Additional features
• Performance parameters based on speed, functions, and accessibility
• Deadlines

2. Analyze whether the project is fit for outsourcing

If your project has low complexity, high predictability, or a small number of tasks involved, there is a higher chance that outsourcing would benefit your business. However, if your project requires a lot of resources and time commitment from you or your team, it might not be worth outsourcing.

It also largely depends upon the budget. Outsourcing extensive projects are beneficial only when you have a large amount of capital to spend on outsourcing. When outsourcing a large project, stick to IT outsourcing companies in developing nations as they are cheaper and can offer better quality services than those in other countries.

Remember, if your project requires a small number of tasks, then it would be best to outsource them rather than hiring full-time employees for that specific task. Hiring full-time employees are more expensive and require more time commitment from you and your team members than outsourced workers.

3. Building a collaborative relationship

If you don’t trust your outsourcing service provider, it will be challenging to find success. Establish a trusting relationship right off the bat, and both sides will have a better chance of achieving success.

Try to engage and form a collaborative partnership with your outsourcer rather than viewing them as a vendor. After all, if you can’t work together effectively, then it doesn’t matter how much money is saved by outsourcing; nothing will get done.

You need to ensure that your outsourcer can deliver what they promise. Furthermore, you need to be confident that they will not abuse your data or use it for purposes other than you intended, which brings us to our next point.

4. Choosing the ideal outsourcing service company

When evaluating service providers, it’s essential to consider and compare various factors. The most important considerations are usually price, quality of work, and responsiveness. Depending on your project requirements and priorities, these may be weighted differently by you.

However, it is always critical to investigate the basic parameters while selecting an IT consulting services provider. Check for the following to ensure the match is right:

• Whether they have three to five years of experience in software development services.
• A proven track record of delivering quality software solutions to their clients.
• High ratings on independent platforms like Clutch, GoodFirms, etc.
• Do they have a transparent pricing model with no hidden costs or surprises?
• They offer 24/7 support through live chat, phone calls, email, and tickets to ensure your issues are resolved quickly?
• Whether they offer a 100% project warranty?
• Price Matching is another excellent way to ensure you get the best service.

Also, verify whether they offer an NDA (Non-Disclosure Agreement). It is a legal document that ensures the confidentiality of your sensitive information during collaboration with a service provider.

5. Choose a compatible engagement model

Source: Medium

When choosing an outsourcing model, it’s crucial to find a middle ground between on-demand, project-based, and managed services. A clear understanding of your organization’s needs is essential to selecting an appropriate outsourcing engagement model to analyze which outsourcing model is suitable for your needs.

Worldwide following are the renowned outsourcing models:

• Fixed Price Model: Under this model, you will be charged a fixed price for providing an outsourced service. It is one of the most popular models because it offers both parties a clear understanding of what they are paying and receiving while also giving you complete control over how your money is spent.

This model suits projects with fixed requirements and a clearly defined scope. If you want to outsource your project to a company that will work on it as per your requirements, then the Fixed Price Model is best suited for you.

• Dedicated Team Model: This model involves hiring a dedicated team of people who will work on your project. It offers you an opportunity to have a more personalized relationship with your outsourcing company and greater control over how your money is spent.

However, it can be pretty expensive since you will be paying for a full-time employee’s salary and benefits even when they are not working on your project. This model is suitable if you want to outsource an entire project to one outsourcing company and have complete control over it.

• Time & Material Model: This model is also known as the Pay-Per-Use model. Under it, you will be charged based on how much time and money your outsourced team spends on your project. This model is suitable if you want to outsource a small part of your project to an outsourcing company but have complete control over it and don’t want to spend too much money on hiring full-time employees.

It also works well for projects with varying requirements since you can adjust your spending based on your project’s needs. However, it can be risky if you don’t know how much time and money your project will require.

You can choose either of these models based on your requirements while engaging with an IT consulting company.

6. Giving extra attention to NDA, price matching, & project warranty

Source: Statista - Data Breach Worldwide

Outsourcing best practices are incomplete without discussing data security and project warranty. A good service provider should have the following things clearly explained & executed in their contract:

• NDA refers to a Non-Disclosure Agreement, a mutual legal contract between an outsourcer and service provider. It assures you of complete data security and zero theft of your business information.

• Price matching refers to negotiating with third-party vendors on the cost and maintenance of services like billing, implementation, and evaluation. It ensures that your charge is reduced to a great extent as compared to other vendors.

• Project warranty includes a period that provides compensation or reimbursement if any failure occurs at the client’s site during the implementation of the project. Project warranty ensures that if any loss occurs at the client’s site during the execution of the project, the service provider will take care of it free of cost.

****Over to You

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When choosing a good outsourcing company, always look for one with an excellent reputation. It’s easy to find out if they have an excellent reputation by looking at their reviews online. Also, look at the latest IT outsourcing trends.

The best companies will be able to show you samples of previous works and experience with your industry.

All the best for your project.