What To Avoid In Offshore Outsourcing

What To Avoid In Offshore Outsourcing

The process of Offshore Outsourcing has been evolving to becoming a mature business practice. The ever changing and dynamic business landscape calls for reliable, skilled and talented teams and workers.

Outsourcing made it possible to have the best people on your boat. Even then, companies have been making very costly mistakes that they found hard to rectify. Ultimately, what does the mistakes lead to? Nothing but, poor use of resources, insensible wastage of time and alarming drainage of money.

A few general mistakes

Here are some mistakes that companies make while outsourcing their work:

1. Choosing the cheapest option and not going for the best value services

You might be tempted to go for the cheapest services in the market, but you may have to pay a pathetic price for it. Sometimes, at the cost of the entire project! So don’t focus on saving a few dollars, but rather, on operational efficacy, reliability and their capacity to rely on sophisticated infrastructure and tools.

2. Not following the rules of communication

Proper communication is the key to success in any relation, and when the team resides at a different location altogether, you must always have open channels of communication. Make sure both of you are on the same page, and, if one of the parties fail to understand what the other wants, then it could affect the whole project. This way, there won’t be dissatisfaction on both ends.

3. Not defining the KPIs

Every business has it’s own Key Performance Indicators or KPIs. It is using these indicators that you can monitor and control the performance of the outsourcing team. Making improper selection metrics could be damaging and you will not get the desired results. Define the KPI in tune with the tasks to be outsourced. So the metrics should be customised rather than using a set of predefined ones.

4. Having prejudice against the service providers

You may have heard horror stories from friends and colleagues, but that doesn’t mean you should have a bad story of your own. If you hire correctly, the chances of making grave mistakes are virtually non-existent. Before signing the final deal with a service provider, make sure that they understand what your requirements and that you understand what their capabilities and skills are.

You can never quickly solve any problems by being in a hurry to hire, because you could hire the wrong people. If you have a problem that needs to be addressed instantaneously, outsourcing is never a quick fix.

What to avoid

These are just a few of the common mistakes that enterprises make while hiring service providers to do outsourcing work. As explained earlier, you have to be really careful while hiring a remote team. And here are a few more things to avoid while outsourcing work:

1. Avoid: Outsourcing if in-house can handle the task

Mistake: Not knowing if outsourcing is necessary

Here’s what you do: Before going down the path of outsourcing, ask yourself – Do I really need to outsource? Just because all your competitor companies do it doesn’t mean that you should do too. Define your goals, and what you stand to gain from outsourcing your work? If outsourcing doesn’t bring value to the project, then there is no point in going forward with it.

On the other hand, if you are assigning the project to your in-house team find out whether it would push all their other projects aside? If you need a team that spends more than 50 hours a week on the project, then you can consider outsourcing.

2. Avoid: Too much expense on your project

Here’s the Mistake: Overestimation of cost savings

Here’s what you do: If you think that outsourcing your project would save time, money and resources in the long run, you are in for a rude shock. Of course, it is not that outsourcing drains your resources, but you have to be wary. If you don’t hire carefully, things could go bad, and you might have to consider hiring another team for completing the project.

To make sure the outsourcing decision was right, consider the quality of the team, the travel expenses, communication expenses and so on. It is advisable to revisit the cost structure every year because operational costs are likely to rise yearly.

3. Avoid: Hiring the first team that comes along

Here’s the Mistake: Not Choosing the right vendor

Here’s what you do: Of course, this seems the most obvious thing to do. While on a service provider hunt, make sure to follow all the rules of hiring. Shortlist at least 5 of the best ones and compare their services, benefits, skills, the perks they offer and so on. You can also study their persona, the culture and values they follow and the methods they follow to achieve the goals. Analyse them, and choose the ones that seem promising.

As the next step, you can hold meetings with the company representatives and learn more about the skills and talents in the team, the commitment to the project, their capability in solving your pain points and so on. You can even ask for the individual CV of each developer in the team to ensure you get the best people for your job.

4. Avoid: Going for the fixed price structure

Here’s the Mistake: End up paying more

Here’s what you do: Though you might be tempted to go for the fixed price models, it could affect the value and quality of the project. The vendor too will quote a higher price because he takes into consideration all the risks that come in with the project. And it would be too risky, especially if you want to make changes later on.

And then you would have to stall the project and go into lengthy discussions and later negotiations on what was included in the fixed price and what was not. This plan may not end up nicely.

A few thoughts in closing

These are some of the most common mistakes made by companies that look to outsource. You can easily avoid these errors by doing the right thing. And while making all the above moves, prepare your in-house team to work with their remote colleagues. Let them have a virtual meeting of sorts to get to know each other, and you are all set to go.

Interesting Articles:
Check Out These Top Tips to Survive Offshore Outsourcing
Tips on How to Avoid IT Outsourcing Failures

Pictures: Flickr.com/ ILO/ Karl Herler

The author: Reema Oamkumar is engaged as a thought leader at www.Software-Developer-India.com which is a part of the YUHIRO Group. YUHIRO is a German-Indian enterprise which provides programmers to IT companies, agencies and IT departments.