17 Busted Management Myths in IT Outsourcing
Over the last decade, IT outsourcing has turned from niche service feasible for multinational companies only to common business practice. Today, 65% of global tech businesses entrust some part of their processes to third-party IT companies.
And yet, there is a whole bunch of inaccurate, outdated, or blatantly wrong ideas surrounding IT outsourcing. In this article, we will address some of the most widespread outsourcing stereotypes that are completely untrue.
Myth 1. Software development outsourcing means productivity decreases
Many business owners believe that the employees tend to slack and cut corners when they aren`t part of a company team. Meanwhile, a Deloitte survey proves the opposite. 57% of the respondents report that outsourcing allows them to increase the productivity and efficiency of the company.
By delegating laborious and mundane tasks to the third-party vendor, business leaders allow the in-house staff to focus on projects that better fit their skills and competence. Better distribution of the resources, in turn, improves the overall business processes.
Myth 2. Remote developers are out of contact
Keeping a project on track can get tricky when you and your team work in different countries or even continents. In this case, it is essential to define overlap hours and look for opportunities to create more collaboration time.
Chat platforms such as Slack or Yammer will serve you well in communicating with a distributed team and managing remote workers as well.
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 intellectual property of the company.
In fact, outsourcing vendors operate to forge trust and reputation among their clients. The reason behind it is obvious. Word of mouth goes a long way, and tarnished reputation would cause great financial loss for an outsourcing company.
Outsourcing sector gains more trust. Over 44% of tech entrepreneurs say that they are more inclined to hiring outsourcing contractors than they were five years ago. A trustworthy outsourcer will formalize each end every process with thorough documentation to mitigate legal and security concerns.
Proactive security management will not hurt, too. Consider these practices to reduce security threats when working with an offshore vendor:
- ensure that the contractor adheres to proper security policies and procedures;
- conduct audits and security evaluations regularly;
- require all outsourcing team members to sign an NDA.
Myth 4. Communication suffers
Infrequent communication can cause issues that may negate the financial benefits of outsourced development. Luckily, in the digital age, efficient communication is not about physical presence anymore. From Skype and Slack to Asana, there are numerous ways and tools aimed to facilitate collaboration with a remote team. Such companies 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 with their managers on a weekly basis.
Myth 5. Meetings are ineffective
When planed and conducted properly, online meetings can be as productive and efficient as face-to-face communication. Moreover, a manager can make online meetings most effective by utilizing Skype, Zoom, or similar web conferencing tools to form the agenda, share the 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 the corporate activities and lack connections with your on-shore team members.
Although, 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, says the survey that queried over a thousand full-time employees across the US. A number of office workers aren’t fond of water-cooler chat as well – 23% of employees working from the office admit actively avoiding talking to their colleagues.
Myth 7. IT Outsourcing increases costs
Another common misconception is that moving an IT project offshore would entail additional costs for implementing and managing outsourced processes.
Admittedly, there are some added expenses related to travels, changing business processes, communication, and coordination, etc. But the overall operational costs actually decrease for the following reasons:
- access to a qualified workforce with lower salary rates;
- less spendings on training staff;
- less spendings on rent, furniture, office amenities, etc.
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 the remote team feel included and appreciated.
While it’s hard to maintain corporate spirit when a 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 culture deck to showcase your corporate values in an inspiring way;
- measure your off-site workforce engagement to track the sentiment amongst the employees and address possible issues.
Myth 9. Remote workers are working 24/7
Just because your employee works remotely and off your local 9-to-5 workday doesn’t mean that he or she is 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 nearshore is a career-killer
A software developer has to have the appropriate skills and qualifications to perform a specific task regardless of whether the task is outsourced. There are no grounds in considering that outsourced development is in any way easier or inferior to the in-house development skill-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:
- a 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 landscape, including median qualification level, the 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, but not the only benefit of software development outsourcing. Besides 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;
- a company gets access to skillsets and technical expertise on the international scale;
- with outsourcing, the 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 the Clutch research. Moreover, 52% of small businesses are planning to take some types of tasks offshore in 2019.
Among the main reasons behind hiring off-house developers, small firms’ leaders report achieving a significant boost in efficiency, getting access to certain expertise or technical skills, and freeing-up the in-house employers for business-critical tasks.
Myth 14. Outsourcing makes you lose 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 the threat is real, this concern usually boils down to the question of whether the management had 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 the in-house developers.
Myth 15. Outsourcing is unethical
The concern behind this idea is that offshore employers contribute to the national unemployment rate, weaken the economy, and exploit the cost of labor advantages of the destination country.
Firstly, by hiring a remote developer, you create a job that otherwise likely wouldn’t exist at all. Outsourcing also helps businesses grow, which creates more jobs. Besides, the unemployment rate in the US has dropped from 4,4% in 2017 to 3,7% in 2019.
As for the welfare of the outsourced workers, they are usually get paid fairly high, considering the average salary rates and the cost of living in their country. In Ukraine, for instance, the salary rate of Software Developer is about $2000 per month. That’s three times less compared to the US salary for this position, which is about $6700 per month. At the same time, Ukraine’s national average salary is about $440 per month, which makes IT outsourcing one of the highest-paying industries.
Myth 16. Outsourcing is not a long-term solution
Some executives perceive IT outsourcing as a temporary solution for when the inner team is unavailable to perform the work.
The fact is, cooperation with tech outsourcing company brings way more benefits in the long run. From the client’s side, you gain a contractor who’ve 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 their 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 a throat cut competition for getting high-skilled software engineers onboard already in the US. By 2020, there will be 1,4 million tech job openings in the US, according to estimations by Gartner. A tech talent demand is expected to be so high that the US high schools will not be able to satisfy by even 30%. The simple fact is, 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.