5 Nightmares to Avoid Before Outsourcing your Project

5 Nightmares to Avoid Before Outsourcing your Project

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

Picture this:

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.

Takeaway:

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:

  1. Design
  2. Prototype
  3. Develop
  4. 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. 

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5 Founders and Their Stories You May Not Know About

5 Founders and Their Stories You May Not Know About

Everyone knows the famous names behind the world’s biggest companies like Steve Jobs, Elon Musk, Travis Kalanick, and many more. Meet Jan Koum, David Karp, Chet Pipkin, Ryan Smith, and Zhou Qunfei. These are the names of the wealthiest tech founders around the world.

Jan Koum

 

(Photo by David Ramos/Getty Images)

Jan Koum is the CEO and Founder of WhatsApp. WhatsApp is a free messenger app for smartphones that was created by Koum. Now 37, Koum came from Ukraine at the tender age of 16 with his family who struggled to survive. The family lived off of food stamps in California before Facebook turned him into a billionaire. Here is a brief timeline of Jan Koum’s life. At age 16 he worked as a janitor and at age 18 is when he learned to code. He started college shortly after at 19 but quickly dropped out. At 21 he was employed by Yahoo and by age 30 he quit Yahoo. Fun Fact: Yahoo invested $250,000 into Koum’s idea of WhatsApp. At the young age of 32, he started to develop WhatsApp which he sold at age 37 to Facebook for $19 billion. That’s 1/10 of Ukraine’s GDP. In 2009 Koum bought his first iPhone when the app store was just a few months old. He saw this as an opportunity to start a new industry; he wanted to build an app. He was later introduced to a Russian developer who helped him along the way. Today, Koum has a net worth (according to Forbes) of $6.8 billion.

David Karp

Everyone has heard of the website Tumblr but do you know the man behind it? Named the Best Young Tech Entrepreneur by Businessweek, David Karp sold Tumblr to Yahoo for $1.1 billion just last year. By the 8th grade, Karp was already designing websites for money. This made him drop out of school to be homeschooled in order to save time and work on his developments. At just 14 years old, he was interning at numerous software companies and a few years later flew to Tokyo in hopes to gain more skills; and that he did. Within the next few years after his return from Tokyo, he formed an independent consulting firm called Davidville. A few years after that, he developed Tumblr. Just a couple of weeks after launching Tumblr, there were already 75,000 users registered. Davidville had then become Tumblr Inc which was later sold to Yahoo in 2013. He is a self-taught billionaire that created a larger than life company.

Chet Pipkin

Chet Pipkin is the founder and chairman at Belkin International which is a company based in Playa Vista, California. Belkin International makes computer and smartphone accessories. Belkin didn’t just pop out of the blue, he went through many other ideas and jobs before landing on his billion dollar idea. In high school, Pipkin had thoughts of starting a limo service, opening an ice cream shop, and even becoming a Santa Claus for hire. While working his minimum wage job at a wholesale manufacturer, he started dreaming about other legendary moguls who have made a substantial impact on the world. Once he started thinking the way these entrepreneurs did, it became obvious to him that PC’s were going to take off. Pipkin founded Belkin in the garage of his family home in the early 1980s. He didn’t know anything about hardware, software, or anything tech at the time but hopped right in. Statistics show that there is an 80-90% chance that if you own a laptop, it’s a Belkin product and if you own a smartphone, there is a 95% chance it is a Belkin product. Fast Company recently named Belkin one of the world’s most innovative companies in the internet of things. Today, Belkin is a leading brand in the technology sector.

Ryan Smith

Many people may not know the online survey software, Qualtrics, but you should. Ryan Smith, a co-founder and now CEO of Qualtrics, started in his mid 20s and still runs his software for businesses and academics. When he, his brother, and his father started Qualtrics, they decided they were not going to raise any funding. He never thought that an idea that started in his garage would expand to an 80,000 square foot building with 5,000 customers (some customers being 95 out of the 100 top business schools) in just eight years. They first targeted universities and their business and their business schools to use as an academic research assistant. He attended Brigham Young University in Utah and had a goal of making sophisticated research simple. Smith still has no plan to sell the company as he turned down a $500 million offer last year. Smith’s estimated net worth according to Forbes is $1 billion and growing fast.

 

Zhou Qunfei

The most intriguing of the five, in my opinion, has to be Zhou Qunfei who is the world’s richest self-made woman and the founder of Lens Technology. Lens Technology engages in research, development, manufacture, and sales of lens products. It provides and sells touch panel glass covers, touch sensor modules and touch panel covers. Her biggest customers are Apple and Samsung and created the super-slim glass screens for the iPhone. She works 18 hours a day and literally lives in her office. In her office, you will find a fridge, stove, and pot stored in the corner of the room with a small bed and rack of clothes right behind her desk. Ms. Qunfei became a billionaire just 12 days after her company went public. Here’s a little back story. She quit school at 15 and moved in with her uncle’s family after both of her parents passed away. While living with her uncle, she was a migrant worker. For a brief time, she considered a government job for stability but later discarded the idea since she was lacking a diploma. It was her cousin that encouraged her to start her own business and that’s where her idea started; in her 3 bedroom apartment. She took a hands on approach and involved herself in all aspects of the company. Over the years she started a total of 11 companies. Her estimated net worth according to Forbes is $10.8 billion.

Take Away

These founders are some of the wealthiest entrepreneurs of our lifetime. Each of them has a story to influence an army of people and hopefully will shed light on many ideas in the making. They all had the drive and determination to create something bigger than themselves and were willing to do whatever it took to get to where they are today. What do all of these founders have in common you ask? Well to start, their willingness to start from scratch is motivation in itself. Passion is important. Each of these founders started from nothing and were motivated by their passion and confidence in their product. Secondly, they’re brave. In order to be successful, you need to take risks. Without taking risks, you will forever be at a standstill. You need to be able to push and have difficult conversations in order to excel. Bravery will take you a long way. Third, they’re enthusiastic for criticism both good and bad. Constructive criticism and just flat out criticism should not be the “end-all, be-all” of your company. Use the feedback to alter what you are doing to make your company more desirable to customers. Lastly, they know how to prioritize. In the beginning, it’s easier to test your idea first and then think about how you can change or build your business differently. Up until your company goes public, it’s important to prioritize and delegate so that you will be able to divide and conquer. With the right mindset, knowledge, and resources, you can achieve anything. Take a page from their book and be inspired by their stories in order to strive for greatness.

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