More than 50% information technology firms across the world outsource their projects, either fully or partially. According to a 2016-17 IT Outsourcing Statistics report, around 40% of application development firms increased the degree of outsourcing last year (as opposed to a measly 9% firms actually reducing their outsourcing activities). In particular, both the level and the frequency of outsourcing is higher in larger-sized IT companies than in startups and mid-sized agencies. Over here, we will highlight some key reasons behind the popularity of outsourcing IT projects:
Doing away with distractions
Every IT firm or app development company has a core business, which has to be accorded first priority. What’s more, companies – even the largest ones – have limited manpower and technical resources. Outsourcing allows them to avoid keeping these resources engaged on different projects at any time. As a result, they can keep their focus on their main business activity, while the third-party developers they hire can complete projects. It’s all about freeing up resources, prioritizing things, and doing business optimally.
Availability of skilled professionals
One thing needs to be understood at the very outset – in IT, ‘experience’ is NOT equivalent to ‘skill’. Different projects require varying types of skillsets – and it would be a waste of time, money and learning resources to train your employees every time. The smarter alternative is, of course, looking for a company which already has the necessary skilled personnel to handle the project under question. Through outsourcing, projects can be handled by qualified professionals – without your having to organize in-house training sessions every time.
Moving beyond resource constraints
If every IT or mobile app agency were to accept only those projects which can be handled with their resources – they would have ended up working on very few projects each year. The reason for this is simple: in such a ‘closed’ environment, the existing resources of a company would simply not allow it to accept projects of various types. Outsourcing is the best way to do away with this constraint, get access to advanced technology (as and when required), and make the best use of them. An ‘open’ company has the capability to take on more, and diverse, IT projects.
As a company grows and its scale of business expands, operational inefficiencies tend to creep in. Certain areas remain unattended to, teams might start to lose productivity due to poor monitoring and management, and project budgets might slowly spiral out of control. To keep such risks at bay, organizations often hire IT project management personnel. In exchange of a pre-specified fee, these managers can make sure that day-to-day operations in an office are running optimally, and each project is progressing in the best possible manner.
If you are an employee of an IT company and are involved in an application development project, it is only natural that you will have a certain bias towards it. During the software testing phase, everything might seem perfect to you – since you are the one who had created it in the first place. The reality, however, can be quite different – and your software and mobile app might be complicated for the general users. This is precisely why objectivity and a clear perspective is required during testing, and a third-party tester/testing team brings that to the table. If you outsource software testing to a reliable external firm, you can rest assured that your app/software will be checked thoroughly and without any pre-conceived notions. The lack of familiarity will actually help in better project evaluation.
Bringing down labor costs and operational expenses
When you hire a third-party app developer, you will (of course!) have to pay his/her fees. However, these ‘outsourcing charges’ are, in most cases, significantly lower than the overall labor fees and other related expenses that a firm has to incur – if it opts to do all projects on its own (needless to say, the time-crunch will also complicate matters further). By delegating projects to third-party companies, these additional expenses are avoided, and there is no uncertainty over overhead expenses either.
Better quality standards
As already mentioned above, outsourcing helps IT companies to get hold of superior technology as well as the ‘right person for the right job’. As a result, chances of innovation and discovery becomes higher, and new elements can be implemented in projects to make the latter technically superior. Given the sheer volume of third-party companies at present, it is only natural that each of them focuses on high quality standards to give itself an edge. When you choose the right outsourcing partner, you effectively ensure that your projects will turn out to be better.
Note: On average, 2 out of every 3 tech firms do not find the time to train their employees on a regular basis. With outsourcing, the need for such training is minimized – since projects are actually worked upon by professionals from another company.
New ideas and solutions
It’s an absolute myth that IT professionals do not need to be creative. While brainstorming for a new app idea, or trying to resolve a nagging tech glitch – it is often important to be able to think out-of-the-box. Outsourcing projects opens up that opportunity. The team to which a project is delegated to can bring new ideas and thought processes to the forefront – something that in-house employees, already busy with their everyday tasks, might not be able to do. A fresh idea or a new way to work around a problem can help the entire project development greatly.
Advantages without commitments
One of the biggest advantages of working with an outsourcing partner is that, you get all the resource and expertise benefits, without any additional baggage. As an when projects arrive, you get in touch with a third-party company, get into an agreement, get the work done, make the payments, and be done with it. The next time you need to contact that company is when you have to hire its services again. There are no long-standing commitments to worry about. It’s just like paying an expert from outside your company to help you out – only when you need the help.
Great for startups
A new IT company, understandably, cannot even come close to match up with the setup and resources of an established organization. However, with the help of outsourcing, they can certainly take up projects of the same scale that the big players do. In essence, outsourcing allows the startup companies to ‘think big’, and ‘go big’ with their projects – even when their internal setup is small. Traditionally, new companies have always been at a disadvantage from their larger rivals – and outsourcing removes this by evening out the playing field.
The continuity factor
The turnover rate in the IT industry is on the higher side (and has an upward trend as well). The BenchmarkPro survey pegged the 2015 turnover rate in this sector at 16.4% – nearly one per cent higher than what the figure was in 2014. While working on a project in-house, if a team-member leaves – that can lead to considerable delays, as a replacement is recruited, trained, and given time to settle in. To avoid such messy scenarios, outsourcing is a good option. The specialist app development company you hire will make sure that projects do not suffer from continuity issues. More often than not, they have trained personnel as backup – just in case some team-members decide to leave prior to project-completion.
Note: With use of advanced technology, availability of more qualified workforce, and minimal continuity problems, outsourcing often helps in speeding up the overall project development cycle.
12. Risk reduction
The risks associated with a new IT project come in many forms. On the one hand, there are technology-related issues and the rapidly evolving market trends, while on the other – there are things like legal regulations, government directives, competitor analysis, and security considerations. It is one of the main jobs of third-party outsourcing partners to keep track of all the latest developments regarding these. In addition, they are also well acquainted with the tools and resources that are best-suited for a particular project (and one size definitely does not fit all!). Project risks – particularly those cropping up from improper/incorrect/outdated information and sub-optimal utilization of resources – get minimized as a result.
While outsourcing IT projects has many benefits, it should be done with a certain degree of caution. For starters, a company should look for probable outsourcing partners, make a shortlist of suitable agencies, get in touch with them, and then make a choice. Before a project is delegated, all the paperwork has to be completed and things agreed upon – so that conflicts do not crop up in future (mobile app companies generally sign non-disclosure agreements (NDA)).
Outsourcing, when done in a smart, informed manner, offers companies a way to handle projects better – while avoiding increased operations, training and IT costs. Seamless knowledge sharing (between third-party experts and in-house employees) is yet another advantage of outsourcing. In Business 2.0, outsourcing plays an extremely critical role – and its growing popularity is far from being a surprise.
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