From the perspective trend in employment at the beginning of the last decade, outsourcing has already transformed into a necessity today.
From a simple and effective method of saving costs, outsourcing now is a perfect chance for business development. According to PwC research, along with hiring the best talents of any industry worldwide, companies are looking for the valuable profits of multisourcing.
Divided by the countries, industries, and companies’ strategies, outsourcing now is a complex type of business. It provides smarter suppliers, improved automation, and a long-term relationship between the company and vendors.
However, along with the various benefits of this option, it also has a lot of pitfalls businesses need to consider before starting implementing an outsourcing service.
In this article, we will cover the basic things to know and effective tips for effective outsourcing vendor management.
Things to Consider Before Partnering Up with an Outsourcing Company
It goes without saying that any business has its own goals to achieve and weak points to develop. This is why considering the outsourcing vendor becomes a real challenge for most companies nowadays.
IT outsourcing companies, for example, need to demonstrate a deep knowledge of the specific software, when a company in a certain industry requires experienced partners who are aware of the latest trends related to their field and services.
But what should you know before choosing an outsourcing partner?
Experience of the Outsourcing Vendor in Your Industry
The global market size of outsourced services has skyrocketed to $92.5 billion and is expected to reach $100 billion by 2025, according to Statista.
With such a huge potential presented by the outsourcing market, more and more companies of different sizes and various industries started providing outsourcing services to companies abroad.
In such a competitive area, the employees try to find the exact organization which possesses deep experience in the current industry.
Without it, there is a high risk of getting poor quality of services, and great losses on time and investments. As a result — you’ll need the contract with a new outsourcing vendor and start the project from scratch once again.
Checking the real experiences of the outsourcing vendor can greatly assist in hiring professional developers that are aware of the projects and trends of your industry.
Pricing Questions for the Services
It’s essential for the outsourcing vendor to provide a clear pricing list for the services provided and the general steps needed for the project to be successfully completed.
However, sometimes it happens that providers may hide some expenses for making more attractive offers. As a result, you will get a great discouragement after getting some unexpected costs that weren’t listed before, or the payments for services you didn’t use at all.
To prevent that, make sure the outsourcing provider is honest and clear with the services and pricing policy in the contract. Otherwise, the partnership will be doomed.
Communication Channels Quality
To establish the most effective workflow, the outsourcing companies should also provide you with a clear plan of your communication.
According to Clutch, communication between the company and outsourcing vendors is one of the most critical challenges for this business.
The prior outsourcing process is mostly related to technical tasks, including accounting, IT services, and digital marketing. That is why communication with the developers is a key component of fruitful cooperation.
To ensure the outsourcing partner will provide you with effective results, agree on the communication channels that will be comfortable for both parties.
Security of the Outsourcing Services
Usually, outsourcing vendors act as the employee source for various companies, which can put your company at risk of losing valuable information or other intellectual property.
To minimize these, a provider should guarantee the safety of your data and software.
Additionally, including the privacy policy to the contract, and try to cover all the possible risks with it. Make sure the outsourcing vendor takes full responsibility for the confidential data control to reduce the risks of it being shared with third parties.
Location of the Services
According to the parties’ location, there are different types of outsourcing to consider:
- Onshore outsourcing. That type refers to the vendors located in the same country as the company partner.
- Nearshore outsourcing. This type refers to the partners located in close time zones. For instance, the nearshore location for the US outsourcing vendors would be Mexico or Canada.
- Offshore outsourcing. This type implies outsourcing to far-away countries with a considerable difference in time zones. A great example of this for the US would be Central Eastern Europe (CEE) outsourcing countries.
For sure, the CEE countries have already proven their high-quality service performance with the vast number of IT outsourcing companies.
One of the leading countries that provide the high-educated and skillful talents that will help you to develop your products at the highest level.
At the end of 2021, the software engineering workforce is expected to increase to over 220,000, according to Medium.
So far Ukraine remains one of the leading IT outsourcing countries to consider because of the numerous talent pools and respective companies located in the biggest cities such as Lviv, Kharkiv, Dnipro, and Kyiv.
Tips to Build Successful Collaboration with Outsourcing Vendor
To find the best candidate from the list of numerous outsourcing companies, you should follow a well-planned strategy that covers your main goals, needs, and expectations for your future outsourcing partner.
To ensure you’ll get the most of your outsourcing process, here are some really effective tips to consider while looking for your next vendor.
#1 Find Out the Clear Scope of Work
Before starting any project, it’s essential to figure out what exactly your company needs and what you expect to get from the outsourcing team of developers.
#2 Establish the True Potential Of Your Potential Vendors
To pick up the best outsourcing company, evaluate their working performance due to the following criterion: skill sets, technical knowledge, awareness of the latest technological trends, experience in solving the challenges (in your industry and in general), etc.
This will help you to find out the real skills of each vendor and its competitiveness among the other candidates.
#3 Discover the Case Studies From the Previous Projects and Clients’ Feedback
Due to the high competitiveness in this area, no business is willing to work with a partner who has a bad reputation on the market or rigs it to get more companies on the client list.
Knowing the real situation of the outsourcing vendor can greatly reduce the risks of the missed deadlines, lost time, money, and human resources for the company.
#4 Discuss the Clear Budget
To make sure you won’t be disappointed with the price list after the project is done, ask your outsourcing company to consult you with the basic plan of the services for your project.
This way you can plan the expenses ahead, won’t spend more than discussed, and find out the exact services you will be provided during the contract period.
Conclusion
Outsourcing vendor management can be a great challenge for companies in any industry. However, knowing all the pitfalls of this process can greatly assist in choosing the right candidate for the cooperation and make the most of it.
Outsourcing a dedicated development team will help you to reduce the costs for the project’s development, hire talented workers and set up a productive workflow within your company.
Our professional team at Intellectsoft, empower various companies and their workforces from different industries with innovative solutions and approaches.
Are you looking for a team of IT talents to perform your project? Talk to our experts and discover more about its effective development and how your business can start benefiting from it right now!
