Outsourcing has become an increasingly popular trend, as more and more businesses become more cost and quality conscious especially for website and mobile app development. It is the process of transferring a company’s business to a foreign third party in place of an internal source. These third parties provide services, manufacture products, and perform duties at a lower cost and improve efficiency and productivity. Outsourcing has become a common movement for technological services that make it feasible for businesses to gain service and expertise that they would otherwise lack both financially and skill- wise.
It has transformed global business, with an estimated $100 billion spent on contracts a year. Offshoring allows companies to leverage a global knowledge base, enabling access to world- class capabilities. Companies also employ outsourcing to focus on core functions of the business while having details taken care of by outside experts.
A perfect example of this would be a business delegating application work to a third party to avoid the financial and work burden in- house, while the business focuses on marketing and advertising the new product. Sounds simple enough? Not quite. Sometimes in the desire to save money with the convincing lure of low- cost workers in places like India, China, and the Philippines, good implementation flies out the door.
One of the biggest outsourcing failures was by British Airways. After deciding to outsource their IT, the airline had six major IT failures in a 12- month period. 300,000 travelers were stranded with little- to- no information, sent home with no bags, and bused for hours to hotels to stay overnight. A couple even had to postpone their wedding, with their family/ wedding party scattered across Europe and unable to travel on their scheduled flights.
British Airways’ tech outage was due to its IT department being offshored to India as an attempt to save on labor costs.
British Airways GMB Union leader Mick Rix stated “This could have all been avoided. BA in 2016 made hundreds of dedicated and loyal IT staff redundant and outsourced the work to India. BA have made substantial profits in for a number of years, and many viewed the company’s actions of being just plain greedy.”
Like all business initiatives, outsourcing comes with risks. For example, finding a great e-commerce website designer sounds simple but not always easy. That’s why understanding what can go wrong is a great way to reduce your risk of losing time, money, and energy on a project. Companies who have experienced outsourcing nightmares have two things in common: lack of predisposition and lack of communication with the vendors.
Nightmare #1 Employees Disappearing
When someone slips up in your office, they are held accountable for their mistakes and the consequences that follow. However, because there is no way to hold overseas developers accountable, often times they disappear mid- project when things go wrong, leaving you with a big mess and no one to fix it.
When contracting outside providers to perform tasks, it is important to create an explicit contract to be signed by both sides. Drawing up a contract such as: the contractors receiving 25% of the cost upfront, another 25% upon sending substantial progress, and the remaining 50% when the project is complete and tested thoroughly is key to outsourcing.
By laying the ground rules, it creates incentives for both parties to succeed in the project, thus eliminating the possibility of a developer ditching the unfinished task and running off with your money.
Nightmare #2: Delayed Delivery with a Product far from What You Asked For
You have an app in the iOS App store doing well. You want to bring the app to Android, so you outsource the project to Android app developers outside the county. Agreeing on a week deadline, you begin to advertise your future product. The week goes by and you’ve received nothing. When you contact them, the developer claims to have been sick and will deliver the app in 10 days.
15 days later, you finally receive the completed application from the offshoring team. You test the app, only to realize that the screen, features, and fonts looked nothing like the iOS code you sent.
Now you’ve lost time, money, and your marketing opportunity.
While it can be difficult to determine which vendors will avoid situations like this, paying for only a portion of the job in advance can provide incentives for the developers to produce the product on time and accurately. By doing this, you will also prevent losing the full payment for a project if it the vendor does not deliver what you asked for.
Another way to prevent delays is to create smaller milestones and check in with the developers every few weeks/ days, depending on how long the project is.
Nightmare #3: Poor Communication
Expectations for design and tasks can be lost through poor communication, presenting you with a product or service that you did not ask for. Outsourcing can turn into a game of telephone, where each person translates the project their own way.
Jeremy Schaedler, a business owner, learned that the best way to communicate with vendors is through written instructions and diagrams. Too much information is lost through verbal communication; “Outsourcing IT overseas is a great way to get quality programming talent at a fraction of the domestic cost, but getting a quality product depends on establishing a clear method of communication.”
Another way to communicate with developers better is to continuously communicate with everyone involved, making it a team exchange rather than a single interchange. Making good communication a top priority while outsourcing can save you future headaches and complications.
Nightmare #4: Rushing in Without Proper Due Diligence
Research is key when selecting an outsourcing company. Many businesses assume that there is a “one size fits all” for outsourcing developers, creating a big problem when the developers either do not have a good reputation or they do not have the expertise to complete tasks. For example, an expert iOS app developer has different skills from an Android developer or a web development company. Be sure the service and skills that what you are looking for lines up with those of the vendor. Ask the outsourcing company to send samples and references to contact past customers, before rushing into a contract.
Nightmare #5: Setting Unrealistic Expectations
While outsourcing is a great way to save time and money, greed sometimes comes into play. Some businesses decide to outsource and forget to keep realistic expectations in check. It’s easy to get carried away when a vendor seems to be able to do it all for you. When anticipations are high, you run the risk of receiving an inferior product or service when initial perception doesn’t match the reality.
To avoid this, don’t bite off more than you can chew. Dream big but set sustainable and shorter goals. Don’t expect too much of your vendor and plan out goals and expectations. Give it time- time is key to success and you don’t want your developer to cut corners.
Here at SYNERGY, we understand the risks of outsourcing. We have a strong team that works with various companies and have created a great track record. We eliminate failures, by creating a process that includes:
- Allocating a dedicated team lead for the project
- Constant communication
- Frequent project updates
Here is the 4- step process on building a product:
- Testing & Launch
The dark side of outsourcing may scare you off, but if done correctly and carefully, it can benefit your business and help cut costs. Outsourcing failures are quite common but can be avoided, leaving your business with more time and energy to focus on core business processes.