This year’s KPMG report on the state of outsourcing offers some interesting insights into this sector.
KPMG’s research indicates that when selecting a service provider, enterprise leaders deem the following 3 criteria most important: ability to deliver timely ROI, ability to support business outcome initiatives and ability to transform existing processes. The report also shows that IT continues to be the biggest industry in outsourcing and that its outsourcing is still expected to increase, with bigger companies from the technology-centric sectors most likely to use offshore service providers.
So with IT outsourcing blooming, it is worth coming back to the Outsourcing 101 and look at what steps can be taken to avoid issues when using outside companies. No company wants to suffer an outsourcing mishap, after all.
Here 10 tips for IT outsourcing and our advice on how to establish and maintain successful IT outsourcing partnerships.
1. Focus on relationship management through clear communication
From the beginning of the relationship, establish rules and procedures for communication and appoint a designated person to ensure project information flows smoothly between you and the software outsourcing organisation. Define how often you want to meet in person and how often you want video call updates to occur.
2. Request testimonials
Testimonials or feedback from other clients of the outsourcing company is a great way to gain insight into the genuineness and professionalism of the company. If the other clients refuse to offer comment or give negative feedback, you may need to look elsewhere for an outsourcing provider.
3. Choose the outsourcing country wisely
Although many outsourcing providers are available in far-off locations, there are various risks that come with outsourcing from a distant country. On the other hand, nearshore outsourcing, also known as nearshoring, can bring numerous business benefits, including similar work cultures, time zones and holidays. It is worth checking outsourcing rankings for locations worth considering. If your business is based in Europe, it is sensible to choose a European outsourcing company as they have similar working hours and bank holidays.
4. Don’t underestimate the complexity of the project
The day-to-day working of a company is often complex, and most business leaders don’t fully understand how difficult and time-consuming some tasks can be. Clearly communicating what you require from an outsourcing provider is therefore paramount for a successful relationship, since it helps both business leaders and the outsourcing company to recognise complex workflows. When processes are completed successfully, a company can adapt its procedures and streamline systems.
5. Develop a thorough Request For Information (RFI)
A good Request for Information (RFI) forms the basis for selecting the right outsourcing partner. A well written and thorough RFI clearly explains what your company requires, what information it requires back from the potential partner and offers them guidance as to what format their response to your RFI should take. An ideal RFI should offer as much information as possible across a range of categories. If done well, the company will provide you with all the information you need to make the right choice.
6. Confirm contracts early on
By finalising contracts early on, you can determine deliverables and KPIs from the outset, so there are no misunderstandings or questionable actions along the way. Setting clear dates to reflect and discuss your project is desirable, to determine the success of the project and any changes that need to be made. Don’t forget about covering such things as intellectual property rights, contract length and agreements of return of services.
7. Look for industry accreditation
An outsourcing company that is ISO-certified or has won industry awards is much more likely to be a trustworthy partner. For example, choosing a company that has ISO/IEC 27001:2013 certification ensures that the company has an information security standard in place and is actively working to improving its offerings.
8. Establish longstanding partnerships
Choosing an outsourcing company that has established longstanding partnerships both with clients and with key industry players (such as Microsoft), will suggest that the company is a trusted partner and can continue a lengthy relationship.
9. Look for more than just ‘body leasing’
An outsourcing partner should offer more than just leasing employees. Companies that offer other services and solutions (own products) in addition to pure headcount are much more likely to be people who know what they’re doing. Their wider offering means you can be safe in the knowledge that the company is a well-established organisation.
10. Trust them to do a good job
If the outsourcing company passes the above criteria, then they should be left to do a good job. A great outsourcing partner will complete the job to a high standard and will continue to develop the relationship by suggesting improvements. The more trust the outsourcing partner gets from you, the more confident they will be to propose improvements which can be beneficial for the software you are developing. Developers who have the guts to challenge you, as opposed to just agreeing to what you’ve requested no questions asked, are ones which are true partners – a bit like true friends, and not just an outsourcing company.
There are many things that should be considered when looking for an IT supplier, but the most important aspect that should be taken into account is that you are choosing a partner, not just a provider. You and your outsourcing partner should be trusting, collaborative and communicative, since a breakdown in communication is the last thing you want.