Software outsourcing has long been an effective way to do business, especially if it’s the tech industry. According to a survey conducted by Deloitte, companies hope that their outsourcing partner will solve several business issues including cost-cutting (59%), technology capacity (47%), service quality (31%), etc. not to mention that they can concentrate on developing their core profession (57%) rather than spend too much time on building a website or app.
Everything, however, has 2 faces like a coin: opportunity and risk. In 2007, a survey from Price Waterhouse Cooper revealed that “69% of outsourcing deals fail, in whole or part”. If you need some examples then here they are: IBM-Queensland deal was one of the biggest outsourcing failures, this resulted in a $1.2 billion loss and a legal battle; in 2012, Royal Bank of Scotland once scared the crap out of their customers when keeping them withdrawing money and checking their account “thanks” to a failed software update.
What happened with IBM – Queensland deal? Image: David Klein’s corner.
To help you make it in the few 31% of those successful cases, here are some pieces of advice that Designveloper thinks you may need to take action.
1. Good strategy comes good results
One can never take part in any activity whether it is small or big without a good plan/strategy. In a study written by Cody Miller (Portland State University), the top three challenges in outsourcing a product are changing management in an organization; poor project management on the software development outsourcing partner side and poor quality of delivered software product. To avoid those three and many other risks, there are various types of strategies that are suggested to apply in software outsourcing business and your decision may depend on your company’s core goal, for example, money-driven, product-first, user-first, etc. However, thanks to its adaptability, the outsourcing-life-cycle process model developed by Sara Cullen here will help you a lot in planning detailed steps, foresee risks and opportunities during the procedure.
After analyzing the outsourcing procedure of more than 100 companies and enterprise, The Cullen Group has conducted these 9 concise building block in an outsourcing-life-cycle process model:
The nine building-blocks in an outsourcing-life-cycle process model by Sara Cullen. Image: Slide Serve.
- Building block 1: investigate
- Building block 2: target
- Building block 3: strategies
- Building block 4: design
- Building block 5: selection
- Building block 6: negotiation
- Building block 7: transition
- Building block 8: manage
- Building block 9: next generation
The model has been learned and followed because it is helpful for discovering and gathering information necessary to develop an effective strategy that is visible to both parties so that the two organizations can achieve their own goals.
2. Choose the contender that is most suitable
There are two main ways to find yourself an outsourcing partner:
- Ask for recommendations from your friends, colleagues, other partners, etc. It is a faster approach to find verified and trusted ones. However, your consideration may be affected by bias in favor of the suggester.
- Look for the company on Google and scan their portfolio. You may have to spend more time to find a perfect one but there are more choices to look at.
One way or another, you will eventually find a partner. What you should pay attention here is that an outsourcing provider may work on many projects but it does not mean that they surely have enough knowledge and ability to help you with the product. As you already know, an mHealth app and an e-commerce app is not an apples-to-apples comparison. If you don’t wanna take the risk, make sure you try an experienced one.
If you are looking for a multi-industry experienced outsourcing partner then we at Designveloper have developed several projects which are such categories as healthcare, education, finance, marketing, etc. You may have a closer look here.
3. Have your own tech experts
If you’re already a software development company (SDC) then obviously, it is easy to talk about business and tech with your future partner and have the best deal with them. However, provided that your business is not a tech-based enterprise, you’d better recruit a team or at least one person owning comprehensive technical knowledge.
The reason behind this is sometimes Google cannot explain how things work and you are not able to handle it yourself too. And lack of technology insight may lead to 2 big issues: 1, you may be cheated by your own outsourcing company due to the knowledge gap; 2, miscommunication could happen during the process.
Don’t make an outsourcing deal without a technical expert. Image: FI Tech Guy Link.
Even a giant technology company like IBM has ended in such a big legal scandal so please be really careful. Once an issue happens, chances are that you may lose a big bag of dollars like Queensland or your customers will not be impressed with the service and leave your business. Both consequences equally damage your company in terms of finance and reputation.
Having a business/technical expert in your team is a good move to build a strong and practical plan for the outsourcing deal. On the other hand, you as a manager/CEO will have more time to focus on your main task. This expert is going to take on the responsibility of an IT manager, a CTO, a project manager or a product owner: becoming a bridge between the two parties, helping them to communicate effectively, solving technical problems, etc.
4. Always ask for details
During the proposal step, it’s crucial to question your contenders, it’s free, so take the chance to get to know how they do business as much as possible.
On one hand, a well-prepared company will get ready for everything to gain trust and prove that they are into details and have enough technical or business knowledge to be a quality partner. There is no better way to define a perfect contender than a detailed questionnaire. On the other hand, the questions you provide will help them connect the dots and may have a better insight into the project.
The questions may be about the partner itself, their working procedure, business knowledge and if possible, their technical abilities.
5. Frequently check your product
Once you and your software outsourcing provider reach the deal, it’s time to put all the blueprints to real business. One big note you have to give scrupulous attention is testing and checking your product frequently. Your technical guy will play a crucial role in this step. They need to cooperate and point out what is not fit or missing from the plan.
When you engage in this activity closely, you give your plan a chance to be in the right direction, your product, whether it is an app or software, definitely will be launch in time (maybe late a bit but it wouldn’t be another disaster like the IBM-Queensland deal).
Above are five tips Designveloper recommend to you if you are looking for a perfect outsourcing partner for your future project. But hey, before you leave, let’s take a look at our portfolio to see if we are the most suitable one for you. Our work stretches from mobile application building to website development, across industry like fin-tech, health care, education, etc.
Author: Huyen Pham.
Cover image: TestingXpert.