Outsourcing is becoming more and more popular, and for a good reason. It remains a cheaper alternative to reaching a wide choice of talented workers to do your work so that you can focus on the more important factors in your business. Just to put into perspective the growing outsourcing services have experienced, Statista has estimated that in 2019 the global market size of outsourcing services is $92.5 billion. This, however impressive it might be, does not come without flaws. This is why we are going to talk about some of the largest problems you might face with outsourcing in IT.
1. The Cost
There are hidden costs that you might not have thought about when outsourcing. You will have to consider transportation fees when scheduling an appointment with your outsourced IT company. If the engineer you are trying to hire doesn’t know how to fix your issue, will you be willing to pay for his education? There are also possible upscale fees. Another factor you have to consider is setup expenses. They include redeployment costs, relocation costs, and delayed handoff. This can create an interesting situation where the company would be asking for obscene amounts of money from the get-go. While on the topic of companies, they are also prone to underestimating management costs. Being able to make accurate financial estimates is a good trait when going into a project in order to avoid issues down the road.
2. Security
When bringing in a third party into a project, there can be instances where specific information can become a liability. This is why special care always needs to be made for sensitive data such as company records, information on employees, and system structure. Remember, a third party won’t treat your sensitive information with care as your higher-ups do. Be careful not to leave any vital information out in the open for anyone to snatch.
As for safety on the web, it is advisable to run a cyber risk profile in order to determine whether you’re safe from any attacks. Extra care for security is given in EU countries, as they have established an intellectual property law that allows people to manage intangible assets effectively.
3. Familiarity With the Network
Remember that third-party personal are not your own employees, therefore they did not build your IT network. Your employees can navigate it quite easily because they built it. However, the same cannot be said about others. It doesn’t mean that your network will remain a permanent mystery. They can figure it out by themselves but you have to be aware that it takes time to do so. If you do not have adequate documentation it can slow down the learning process significantly. So try and make the learning process for them as easy as possible, as it will save you money and time in the project.
4. Developers Dropping Out Mid-project
It can be a nightmare to have a developer drop out mid-project, and it falls upon you on how to salvage the situation. It is not grim as it first seems, your project will not crumble because of a member leaving. The biggest factor you have to look out for are contracts. Always make sure that the contract includes employee replacements if a developer leaves the project unfinished. You will (most of the time) be supplied with a new developer so the crisis could be averted, just remember to leave this in the contract.
5. Timezone Differences
Being in completely different time zones can discourage any partnership. In order to properly deal with time zone differences, it is important to manage overlap and shifted time. In order to make it work, all teams need to make compromises, so try to find a golden middle ground where most of the hours overlap. This whole question is purely subjective, as it falls upon you and your employees on how much you mind the time difference in comparison to profit. Would you be willing to work normal hours but give double pay to a third party from your time zone or save a ton but work at abysmal hours.
6. Management
If you are the type that needs to be in control of anything, outsourcing is going to be a nightmare for you. You will not be able to boss around an external actor. The third-party will be an extra formula in your project structure that is out of your grasp, and you need to accept this. Depending on the necessity of the outsourced part, you might feel safer just having your team do it if it’s a crucial part of the project. Outsourcing too much can lead to a complete mess of a project as you could be in charge of a small overall portion of the staff which can cause chaos and disarray when the final product is done.
7. Outdated Qualifications
In the IT market, it is crucial to stay up-to-date with current technologies. If a company outsources a service to a third party, they will go into it with an established expectation of them being up to date on everything, which is not always the case. If reducing expenses is the objective in an outsourcing deal, the hope is that the current base expenses are reduced and that later there are further cost reductions due to technological changes. This puts pressure on the vendor to constantly improve in order to stay relevant. Outsourcing in legacy systems causes the market to stagnate as it will mean that more vendors need to be equipped to handle legacy and not contemporary technology. Sometimes companies will make annual reviews in order to make sure that their vendors are advancing in innovation and skill in order to avoid being frozen in time.
8. Lack of Experience in the Field
Everyone’s gotta start somewhere… Once you start working in outsourcing it can seem overwhelming at times. You should be ready for mistakes, bad estimates, bad practices, and communication issues to arise, but that’s all part of the business. It takes time and research to get yourself familiar with protocols and proven norms. This is why getting some managed IT service provider assistance when starting out is recommendable.
9. Avoid Loss of Innovation Capacity
You want to maintain constant innovation capacity because there will always be new ways of providing services in IT. You need to have a fluid and working organizational structure while having competent partners (which will not always be the case, as it can be outside of your hands). Not innovating while your competition is can cause a loss of revenue as it becomes a norm to expect innovations to be brought in when signing a contract.
10. Familiarity With the Legal Process
Outsourcing legal process is not as standardized as other IT-related processes. It highly depends on the country and location of the vendor. You might have to sign additional papers that you didn’t even think about, dragging the process out. Not to mention the fact that you need to be very thorough in the actual contract, as once it’s been signed any small misunderstanding could lead to the deterioration of your relationship with the vendor.