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- Case Studies
7 Myths about IT Outsourcing Debunked
- 7140 views
- 8 min
- Jun 04, 2019
Outsourcing has long been a part of the IT industry. But a lot of businesses are still unsure whether to deal with outsourcing or create digital products in-house with local specialists. In this article, we dispel the most common myths about outsourcing development once and for all. We hope this blog post will clear up what outsourcing really is. Enjoy!
Myth #1: Outsourcing is limited to big businesses
Most outsourcing companies don’t limit their services to businesses of a certain size. Although outsourcing companies may often work with bigger clients, they don’t close the doors to small and medium-sized businesses or startups. Moreover, small and medium-sized companies are the top customers of Business Process Outsourcing (BPO) providers today. That’s because these companies have the potential to grow and may need long-term services.
From the statistics below, you can see that the percentage of budgets spent on IT outsourcing is increasing across businesses of all sizes. This suggests that outsourcing is becoming more attractive for all organizations that want to build outstanding products.
If you’re a small business owner or a startupper and are still unsure if outsourcing is beneficial for you, consider the advantages you can get from it.
- Quick project start. One of the top reasons small companies benefit from outsourcing is that the work gets done much faster than with an in-house team. There’s no need to waste time on hiring the right local team and training them. Instead, you can get a team of professionals with deep expertise in the field and reduce the time to market for your project.
- Cut costs. In addition to lower costs for specialists, small businesses can save on development itself when outsourcing. The average rate for software development in Asia is lower than in Europe, while development companies in Europe charge less than those in the US. In addition, small companies can avoid large expenditures at early business stages by outsourcing.
- Increased efficiency. Small companies provide a wide range of services from research and marketing to software development. By giving tasks to outsourcing companies, small organizations can work on tasks with higher priority.
Myth #2: Outsourcing makes you lose control of your business
Some companies worry that they’ll lose control of their project and operations if they outsource development services. But in fact, most outsourcing companies are good at managing tasks that require lots of time and resources, fully involving the client in the process. At RubyGarage, we stick to an Agile software development methodology. This allows us to stay on the same page as project stakeholders. We involve our clients in every step we take.
Myth #3: Outsourcing means poor quality
Outsourcing companies often hear that cheaper development services equal lower quality. But the truth is that poor quality is usually a result of poor communication and insufficient skills. The quality of a product shouldn’t be negotiable, whether it’s built using outsourcing or in-house development.
In reality, each region of the world has its own rates for development, which are based on many different factors. The prices of software development in Asia and Eastern Europe are lower not because of poor quality but because of the cost of living. Conversely, IT outsourcing allows businesses to create high-quality products on time with fewer investments. With proper planning and an Agile methodology, outsourcing teams can create even better products than local specialists.
Outsourcing IT providers value their reputations most of all, which is why service quality is a priority for established companies in this sphere. If you still have doubts about the quality outsourcing companies provide, you can always learn about a company before contracting with them. We advise you to check out a company’s portfolio, learn about their expertise in your sphere, read testimonials from other clients, and review ratings on credible platforms like Clutch and GoodFirms.
Myth #4: Language and cultural barriers make collaboration difficult
It’s true that language and cultural difficulties present one of the biggest concerns in IT outsourcing. However, cultural barriers appear only when clients and outsourcing teams don’t follow a simple set of rules that should be established at the very beginning of cooperation. A good outsourcing service provider will know English reasonably well and have extensive experience working with foreign clients. Experienced outsourcing companies have already worked with other business cultures and understand cultural differences.
When contracting with an outsourcing company, you should also take into consideration the culture. For example, high context cultures – Asian, Indian, Middle Eastern – value politeness and honor during business communication. In these cultures, people try to avoid surprises and reduce confrontation, as they value their reputations a lot. The priority of such cultures is to establish close long-term business relationships. Low context cultures, such as American and European, focus more on achieving a particular goal and tend to build short-term but productive relationships. Knowing cultural peculiarities can help you overcome barriers that appear when doing business with an outsourcing team.
Let’s consider tips for managing cultural gaps when outsourcing IT services:
- Create a set of rules your foreign IT providers must follow during the project.
- Visit your outsourcing team and stay with them for some time to improve your cultural awareness and learn about the local mentality.
- Educate your outsourcing provider about your corporate culture, your values, and your style of communication.
- Ask for interviews with each team member who will be involved in the project to check whether they’re compatible with your employees and customers.
Myth #5: The time difference is a problem since the team works when you sleep
There are 24 standard time zones globally, each separated from its neighbors by one hour. So the difference between you and your IT outsourcing provider can be up to 24 hours, which is quite high. The first and most essential thing for businesses that want to outsource services is to establish overlap hours: the time during working hours when both parties are available.
Let’s consider an example. Say you work from an office in New York and your remote team is in Ukraine, so you’re 7 hours behind. Considering the traditional American 9-to-5 schedule and the 9-to-6 business hours in Ukraine, you get two hours of overlap. The most efficient way to use these hours is to conduct daily meetings to discuss progress or issues with the project, get feedback, and clarify any concerns and bottlenecks. Or take a European country – Germany, for example. The time difference between Germany and Ukraine is just one hour. That means that a client from Germany and a Ukrainian team have seven hours of overlap, so there’s almost no difference.
Once you’ve established comfortable overlapping hours for both parties, it’s necessary to decide on the set of tools for management and communication. There are plenty of options available (even for free) to help remote teams communicate seamlessly and conveniently.
As you can see, outsourcing has no borders. If businesses and their technology partners set up the project workflow wisely, time zones won’t become obstacles.
Myth #6: Outsourcing will compromise your company’s privacy and security
In any business relationship, trust is the key to long-term and successful cooperation. Privacy and data breaches are another important concern that turns businesses away from outsourcing. In reality, outsourcing companies work hard to earn the trust of their clients and establish credibility. If a company mismanages a client’s data and a breach occurs, the company will lose its reputation. That’s why security is a must for outsourcing.
When outsourcing IT services, businesses can follow these guidelines to secure sensitive information:
- Ensure that the outsourcing team follows proper security procedures to detect potential security threats.
- Align in-house security standards and policies with those of your outsourcing technology partner.
- Require all members of the outsourcing team to sign an NDA.
Myth #7: Outsourcing means offshoring
Outsourcing and offshoring are often confused. Business offshoring simply refers to getting work done outside of your country, but with offshoring, the team is still part of your company. When you outsource, on the other hand, you make an agreement with a third-party IT company to get some services. If you’re still unsure about the difference between these terms, answer the following questions in the image below:
Outsourcing service providers have played a key role in the development of many companies. But still, there are some misconceptions that confuse businesses and make business owners fearful. Outsourcing has its strong and weak points. But by following some simple guidelines, you can use outsourcing to your advantage.