Outsourcing costs – it’s not all about the money!
For years now companies have been rushing to find cheap labour offshore, expecting quick gains and decreased spending.
While searching for business opportunities, many of them have ended up involved in a lot of bad outsourcing deals based purely on price, resulting in poor quality products, not saving a penny after all.
However, you have surely come across outsourcing success stories with companies achieving great results and impressive cost savings. So, where does the truth really lie? How to combine cost-effectiveness with quality IT outsourcing? Is it even possible?
Of course it is, but you have to remember one thing – do not choose your IT outsourcing partner based solely on price.
A balance of value and quality
Although it is tempting and often promises significant cost savings, choosing IT outsourcer based on price is just an anxiety generator. In order to maintain sound balance between value and quality, take a wide variety of factors into consideration. Cost-orientated choice can result in entering into a relationship with a partner lacking sufficient scale, skills, infrastructure or even worse – lacking motivation. This will only make your IT project suffer.
Look at testing for example. This is the area that most frequently gets cut when customers put downward pressure on prices. Yet it is one of the most important elements of best practice in software development. Avoiding testing may cause bug-ridden code and greater problems when the software is to be upgraded or developed further. What is even worse, it may result in the product being not used or not suited to a user’s actual needs.
Additionally, a lack of testing can end up costing more, as it takes much longer to fix poor code in the future than to release it correctly initially. Cutting testing time directly results in poor quality software, which in turn generally makes for unhappy customers who view the project as a failure.
Don’t simply body shop
Here is another example of what can happen if you look too hard for cost savings: some companies decide to outsource just to build up teams at a lower cost. In terms of best practice, it is certainly not the way to go. Most outsourcers have developers with fantastic skills. If customers are just body shopping they are not taking advantage of them or of the general knowledge and experience of the supplier.
In other words, while the customers think this is a cheap option, they are not really getting their value for money.
Again, body shopping usually gives the developers themselves no control over their work and can become boring and demotivating. This does not result in the best code being produced. And, as you already know, fixing poor code costs much more than doing it properly in the first place.
What is the solution then?
Aim at building a strong partnership.
This is the lynchpin of any outsourced project, be it software development or something else. If you have a relationship based on openness, the outsourcing company is more likely to warn you as soon as a problem occurs, rather than hiding it. It has the single biggest influence on the success or failure of the project, one that really can save you money in the long term.
Investment is also very important. Not only in terms of money, but rather time, effort and perspective. Relationships rarely work well from the get-go, particularly when slight cultural differences are involved.
Look for a highly scalable, competent team of experienced engineers that are not purely salary-driven, but rather looking for a challenging project. The consequence is a better end product, which will in turn result in the partnership continuing. And this is where the real savings come in on both sides – no time and money wasted trying to find a new software development supplier or customer, much less time required to brief the team, no steep learning curve, an understanding of how to work together from the outset and a willingness on both sides to produce a good end product. This really lowers outsourcing costs!
Successful companies outsource IT projects to achieve business agility and understand this process is a long-term investment with a long-term payback. This definitely outweighs the deceiving quick cost savings which choosing someone based purely on price may promise.
Would you like to find out more about outsourcing? Check out our 2020 Software Development Outsourcing Guide.