Busted: 17 Myths and Misconceptions in IT Outsourcing
Over the last decade, IT outsourcing has evolved from a niche service only feasible for multinational companies to common business practice. Today, the majority of global tech businesses entrust some part of their processes to third-party IT companies.
However, there is still a whole bunch of inaccurate, outdated, or blatantly wrong ideas surrounding IT outsourcing. In this article, we will address some of the most widespread false outsourcing stereotypes.
Myth 1. Software development outsourcing means a decrease in productivity
Many business owners believe that employees tend to slack and cut corners when they aren’t part of the company team. Meanwhile, a Deloitte survey proves the opposite. 57% of the respondents reported that outsourcing allows them to increase the company productivity and efficiency.
By delegating laborious and mundane tasks to a third-party vendor, business leaders allow in-house staff to focus on projects that better fit their skills and competence. This better distribution of resources improves overall business processes in turn.
Myth 2. Remote developers are harder to keep in touch with
Keeping a project on track can be tricky when you and your team are in different countries or even continents. In this case, it is essential to define overlaps in working hours and look for opportunities to create more collaboration time.
Chat platforms such as Slack and Yammer are vital tools for communicating with a distributed team and managing remote workers.
Myth 3. Outsourcing will compromise your company’s privacy and security
Some business leaders worry that engaging with third-party developers will endanger sensitive information or the intellectual property of the company.
In fact, outsourcing vendors operate to forge trust and a good reputation among clients. The reason behind it is obvious: word of mouth goes a long way and a tarnished reputation would cause great financial loss for an outsourcing company.
The outsourcing sector builds trust. Over 44% of tech entrepreneurs say that they are more inclined to hiring outsourced contractors than they were five years ago. A trustworthy outsourcer will formalize each end every process with thorough documentation, mitigating legal and security concerns.
Proactive security management would not hurt, either. Consider these practices to reduce security threats when working with an offshore vendor:
- ensure that all contractors adhere to proper security policies and procedures.
- conduct audits and security evaluations regularly.
- require all outsourced team members to sign an NDA.
Myth 4. Communication suffers
Infrequent communication can cause issues that may negate the financial benefits of outsourcing. Luckily, in the digital age, efficient communication is no longer about physical presence. From Skype and Slack to Asana, there are numerous tools aimed at facilitating collaboration with a remote team. Companies such as Trello, Piktochart, and Unity add time zone management and scheduling apps to their toolbox for remote communication, too.
According to the research, 52% of remote workers get in touch with their manager at least twice a day. 34% more employees contact their managers on a weekly basis.
Myth 5. Meetings are ineffective
When planned and conducted properly, online meetings can be as productive and efficient as face-to-face communication. Moreover, managers can make online meetings more effective by using Skype, Zoom, or similar web conferencing tools to form an agenda, share documents, keep track record, or hold particularly large meetings that involve distributed team members.
Myth 6. Remote programmers are lonely
One of the downsides of outsourcing is that remote workers are left out of corporate activities and lack connections with your on-site team members.
However, remote IT workers don’t seem to be that upset about a lack of informal interaction with office-based colleagues. 19% of remote tech employees put their work before relationships with co-workers, according to a survey that questioned over a thousand full-time employees across the US. A number of office workers aren’t fond of the water-cooler chat either – 23% of employees working from offices admit to actively avoiding talking to their colleagues.
Myth 7. IT outsourcing increases costs
Another common misconception is that moving an IT project offshore entails additional costs for implementing and managing outsourced processes.
Admittedly, there are some added expenses related to travel, changing business processes, communication, and coordination, but overall operational costs actually decrease for the following reasons:
- access to a qualified workforce with lower salary rates.
- less spending on staff training.
- less spending on rent, furniture, and other office amenities.
Myth 8. Company culture suffers
Many executives misjudge remote developers, thinking of them as outsiders who couldn’t care less about corporate values. However, off-site developers invest as much skill and effort into the project as their office-based peers and a good manager understands the importance of making their remote team feel included and appreciated.
While it’s hard to maintain corporate spirit when part of the team works off-site, here are some tips for creating a welcoming environment for remote workers:
- encourage communication between remote developers and the rest of the team.
- consider creating a culture deck to showcase your corporate values in an inspiring way.
- measure your off-site workforce engagement to track sentiment amongst the employees and address possible issues.
Myth 9. Remote workers work 24/7
Just because your employee works remotely and at times outside of your 9-to-5 workday doesn’t mean that they will be in touch 24/7. Remote developers have the same work-life balance needs as their office-based colleagues. Therefore, they deserve to be treated the same in order to maintain a healthy working environment within the company.
Myth 10. Offshoring and nearshoring is a career-killer
A software developer has to have the appropriate skills and qualifications to perform specific tasks regardless of whether the tasks are outsourced. There are no grounds for thinking that outsourced development is in any way easier or inferior to in-house development skills-wise.
Myth 11. You can make distributed outsourcing software development work from any low-cost geography
Many executives underestimate the importance of choosing the right location for their remote team. A few significant factors are:
- the number of overlap hours when project teams can get in touch and discuss the project agenda.
- possible cultural differences between the teams.
- the tech talent landscapes, including median qualification level, opportunities for self-development for local IT specialists, etc.
- mentality and the approach to conducting business in particular.
Myth 12. Cost is the only reason for offshore development
Cost is definitely a major factor, but it is not the only benefit of software development outsourcing. In addition to saving up to 30% on operational costs, outsourcing can bring a number of advantages on both strategic and tactical levels of project development:
- outsourcing allows businesses to focus on their core tasks while delegating complementary activities to the external vendor.
- the company gains access to skillsets and technical expertise on an international scale.
- with outsourcing, risks are divided between a network of companies.
Myth 13. Only large firms can hire outsourcing services
This is simply untrue – 37% of small companies outsource some of their processes according to research by Clutch. Moreover, 52% of small businesses are planning to take some tasks offshore this year.
Among the main reasons behind hiring off-house developers, small firm leaders report a significant boost in efficiency, gaining access to certain expertise or technical skills, and freeing-up in-house employers for critical business tasks.
Myth 14. Outsourcing takes away control of your business
There is a fear of losing control over business processes when the company increasingly relies on a particular outsourcing vendor. While this threat is real, this concern usually boils down to the question of whether management has a good grasp of the project in the first place. One way to mitigate the dependency risk is to outsource non-value-added activities while delegating critical tasks to in-house developers.
Myth 15. Outsourcing is unethical
The concern behind this idea is that offshore employers contribute to national unemployment rates, weaken economies, and exploit cost of labor advantages in the destination country.
First, by hiring a remote developer, you create a job that otherwise wouldn’t exist at all. Outsourcing also helps businesses grow, which creates more jobs. Besides, the unemployment rate in the US has dropped this year.
As for the welfare of the outsourced workers, they are usually get paid fairly well, considering the average salary rates and the cost of living in their countries. In Ukraine, for instance, the average salary for a software developer is about $2,500 per month. That’s three times less than the US salary for this position, which is about $8,000 per month.
Myth 16. Outsourcing is not a long-term solution
Some executives see IT outsourcing as a temporary solution for when the inner team is unavailable to perform the work.
The fact is that cooperation with tech outsourcing companies has many more benefits in the long run. From the client’s side, you gain a contractor who has learned all the ins and outs of your business processes. Thus, a long-lasting offshore partner can deliver solutions that are more in line with your company goals, needs, and strategies.
Outsourcing companies, in turn, are interested in acquiring long-term clients to secure a steady source of revenue.
Accordingly, long-term cooperation with an outsourcing vendor can create a win-win situation where both parties gain more value from their partnership as time goes by.
Myth 17. There’s enough technical talent in the United States to satisfy demand
There is cut-throat competition for high-skilled software engineers in the US already. By 2025, there will be two million tech job openings in the US, according to estimations by Gartner. Tech talent demand is expected to be so high that US high schools will not be able to satisfy even 30%. The simple fact is that numerous industries struggle to hire qualified tech specialists already, and this trend will continue.
Are you considering outsourcing your project or looking for specialists with a certain set of skills? Our experts will gladly share their professional advice.