92% of respondents to the popular Harvard Business Review report believe that today’s digital transformation is more important than ever before.
Therefore, it’s no surprise that IT outsourcing companies have a vital role in supporting business digital innovation and transformation.
Outsourcing is loved by many businesses, but it also has its skeptics or naysayers who prefer IT in-house. For everyone else, outsourcing lies somewhere in the middle – suitable for some activities but not all.
Read on to learn where IT outsourcing of software development has many upsides but also some challenges for businesses, including the most vital, i.e., collaborating with an external provider offshore or nearshore.
Company Culture and Digital Transformation
Since 2020, organizations have been quick with the update of emerging technologies, including
- The Cloud and Cloud services
- Robotics Process Automation
- Self-Service Business Intelligence tools
- Virtual assistants and more
However, digital transformation has a much broader role, and for the change to happen ubiquitously, the organizational culture must also change.
A more agile company
Using agile project management methodology helps businesses with the challenge of creating digital innovation while struggling to recruit in-house IT professionals. Changing the company culture, so it is based on flexibility with cross-functional teams in a hybrid model manages the staffing challenge as it is fully inclusive of third-party providers like IT Outsourcing solutions.
The alternative is companies are needing show they care more by providing more benefits focused on employee well-being to hiring in-house. Also, businesses must adapt to a flexible work model (e.g., shortened workweek). However, even with what some owners say are drastic measures, these moves are not always enough. The hybrid model and use of agile project management methodology support a lack of in-house tech experts, including external “reinforcements,” aka freelancers or third-party businesses.
The major trends in outsourcing
According to the Deloitte study “Global Shared Services and Outsourcing Survey Report 2021”, companies are most likely to opt for outsourcing in the areas of Finance, Human Resources, and Information Technology. Since 2019, there has been a 58% increase in outsourcing services. Digitization is not the only factor driving this process.
As many as 88% of companies indicated that they were looking for a way to reduce costs but also needed greater efficiency of processes (78%) and business value (63%).
IT Outsourcing: Expectations Versus Risks
The Good
Flexibility
Companies that provide IT outsourcing pool their IT skills; therefore, they must be adaptable to draw in and retain the top professionals in the industry. They are also adaptable when it comes to forms of collaboration; you can employ a single expert, a group of them, or the complete team, or you may commission an audit.
Organizational growth
The company may concentrate on its main business by outsourcing technology-related responsibilities. It expands at the same time because digital innovation is handled.
Fresh information and tools
Testing libraries, programming tools, and other resources are often unavailable or difficult to get from external vendors.
Savings
Savings are a crucial component in the context of rising prices. Businesses that choose the outsourcing model may avoid paying for permanent hiring, setting up a workspace, training employees, etc.
Diversity of locations
Location diversification is a crucial trend that the pandemic scenario has brought to light. You increase implementation assurance and reduce failure risk with the aid of an outside provider—or numerous external providers.
Technology innovation
The purpose and driving factor behind digital transformation is digital innovation. Thanks to IT outsourcing, businesses may accomplish their objectives with the aid of skilled programmers, testers, business analysts, and Business Intelligence experts. Companies that wish to stay competitive are aware that digital innovation is quickly emerging as the new norm.
The Poor
Before choosing this method of implementing IT projects, it is important to know the hazards of outsourcing.
Inadequate experience
The number of software outsourcing businesses grows along with the demand for IT outsourcing services. Many novice businesses in a certain location may provide their services for a fair price. Cooperation should be based on in-depth investigation, conversation, and portfolio analysis of such a firm.
ineffective forms of collaboration
Outsourcing is successful when an outside organization customizes the solution to your demands rather than the other way around. A comprehensive supplier should analyze the requirements and provide the best possible partnership model, not just the one that allows them to complete the job quickly and easily.
Inadequate transparency
One of the pillars of both establishing organizational culture and the agile deployment of IT projects is transparency. The website for the external firm should outline the breadth of its services, completed projects, client endorsements, expertise, and technical foundation. Although this is significant, individuals ultimately matter the most. Is the “about us” section blank? The business did not care to include contact information or introduce its staff. Here, the alert bulb needs to turn on.
Improper fit for the team
Even if the external supplier may possess the required skills and procedures, for some reason, the collaboration with the specified experts may not go smoothly. Internal hiring also carries the risk mentioned above. Let’s say you participate in the applicant verification procedure or allow the team to provide feedback on your selection. By doing so, you may reduce the possibility of adding someone who has unfavorable traits.
Last Words
Change and the digital transition are unavoidable. Additionally, it’s not simply evolving technology; rather, its mere presence obliges companies to adopt more flexible work schedules and remote working practices. Businesses that struggle to hire IT, specialists, on staff don’t need to sacrifice their ambitions for digital innovation; instead, they may work with IT outsourcing partners to support them along the way.
