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Why Outsourcing?

Outsourcing is a large part of successful tech companies’ strategies, to be efficient both in regards to costs and finding expertise fast. One way of starting an outsourcing project can be to start with isolated parts of the teams to see how it goes. One part that is great to start outsourcing is for example QA, as there are many advantages having other teams do your IT testing. Let us go through step by step when you should consider outsourcing, and how succeed with the project.

Reduced Labor Costs

Outsourcing often allows you to access skilled tech professionals in regions with lower labor costs. You can typically hire talented engineers, developers, and IT specialists at a fraction of the cost compared to hiring locally. This can result in significant savings on salaries, benefits, and overhead. If you are outsourcing to Eastern Europe or Asia the prices reduce drastically if you are in Western Europe or the US.

Scalability and Flexibility

Outsourcing gives you the flexibility to scale your tech team up or down as needed. You can easily add or reduce resources based on project demands or business growth, eliminating the need to maintain a constant in-house workforce. This scalability helps you avoid overstaffing during slower periods and reduces labor-related expenses.

Cost Predictability

Many outsourcing agreements offer fixed pricing or transparent cost structures. This predictability allows you to budget more effectively and avoid unexpected expenses. You can allocate resources to other areas of your business with confidence, knowing that your tech team costs are well-defined.

Less Recruitment Costs

Outsourcing companies often specialize in particular technologies, industries, or skill sets. By partnering with these experts, you gain access to specialized knowledge and experience that would be expensive and time-consuming to develop in-house. This expertise can lead to faster project delivery and reduced development costs.

Reduction in Infrastructure, Office and Overhead Costs

When you outsource, you typically don’t need to invest in additional office space, equipment, or infrastructure for your tech team. This reduction in overhead costs can be substantial, especially if you’re expanding your tech operations. You can redirect these savings to core business activities or technology investments.

Start Outsourcing Step by Step

Start Small and Scale

You certainly don’t have to start by outsourcing your entire technical team. It may be a good idea to start small, such as outsourcing an isolated part such as QA. Consider starting with a smaller project or pilot phase to test the waters and build trust with your outsourcing partner. Once you’re satisfied with the results, gradually scale up the outsourcing activities according to your needs and objectives.

Define Your Objectives and Needs

Begin by clearly defining your objectives for outsourcing. Identify the specific functions or tasks you want to outsource and the reasons behind this decision. Whether it’s cost reduction, access to specialized expertise, scalability, or focusing on core competencies, having well-defined objectives will guide your outsourcing strategy.

Assess Your Current Operations

Conduct a comprehensive assessment of your existing operations in the areas you plan to outsource. This involves evaluating your internal capabilities, resources, processes, and costs. Understanding your current state will help you identify what can be effectively outsourced.

Set a Budget

Determine a budget for outsourcing activities. Consider the costs associated with hiring and managing an outsourcing partner, as well as the costs of transitioning tasks or projects to an external team. Your budget should be realistic and aligned with your outsourcing objectives.

Identify Suitable Outsourcing Partners

Research and identify potential outsourcing partners. You can find outsourcing providers through referrals, online directories, industry associations, and by attending outsourcing conferences. Look for partners that have a strong track record, relevant expertise, and a cultural fit with your organization. WeTal.com is a great partner when outsourcing, and has IT partners in 12 countries. We have quality assured our supplier and recommend what suits your company’s needs.

Request for Proposals (RFPs) or Quotes

Send out RFPs or request quotes from the selected outsourcing providers. Include detailed information about your project or requirements, budget constraints, timelines, and evaluation criteria. This step helps you gather proposals and evaluate potential partners based on their responses.

Evaluate Proposals and Conduct Due Diligence

Carefully review the received proposals and assess them based on various criteria, such as cost, expertise, experience, and cultural alignment. Conduct due diligence by checking references, visiting the outsourcing provider’s facilities if possible, and ensuring they meet security and compliance requirements.

Negotiate Contracts

Once you’ve identified a suitable outsourcing partner, negotiate the terms of the contract. Discuss pricing, service levels, performance metrics, intellectual property rights, data security, and termination clauses. Ensure that the contract aligns with your outsourcing objectives and protects your interests.

Create a Transition Plan

Develop a detailed transition plan for moving tasks or projects from your in-house team to the outsourcing partner. This plan should outline the timeline, responsibilities, communication protocols, and key milestones. Effective transition planning is crucial to a smooth outsourcing process.

Establish Communication and Governance

Implement clear communication channels and governance structures to manage the outsourcing relationship. Appoint a dedicated team or manager responsible for overseeing the partnership and ensuring that the outsourced activities align with your company’s goals.

Monitor and Evaluate

Continuously monitor the performance of the outsourcing partner against agreed-upon KPIs and SLAs. Regularly review the outsourcing relationship to ensure it remains aligned with your company’s objectives and that you’re achieving the desired outcomes.

Remember that successful outsourcing is an ongoing process that requires collaboration, communication, and adaptability. It’s essential to build a strong partnership with your outsourcing provider and actively manage the relationship to achieve your goals effectively.

When facing a wide range of technical issues within a development project, the internal team usually recognizes the need for expertise beyond our capabilities. To expedite time to market and meet industry standards, many decide to leverage outsourcing services.

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