While the data shows that working with nearshore and offshore partners is widely accepted and fruitful, there are pros and cons to consider.
This post is designed to help companies avoid potential negative effects of outsourcing. To accomplish this, we’re going to take three common issues outsourcers have with their partners and give you actionable advice to avoid falling into the same trap.
If you want to learn more about the state of outsourced software development, how leading companies choose their partners, and how to avoid some common IT outsourcing pitfalls, download our white paper, “The 9 IT Outsourcing Stats Every Business Needs to Know”.
According to Deloitte, 46% of companies that outsource application development say a major challenge with the arrangement is that their providers are reactive rather than proactive. In other words, they’re merely taking orders, not driving the app dev process. This puts significant pressure on the in-house team doing the outsourcing – further strapping resources that were probably quite strapped in the first place!
Think about it: If a team is too short on bandwidth or specialized experience to complete a project, it’s unfair for their nearshore partner to not bring a layer of proactivity and suggestions to the table.
But this negative effect of outsourcing is avoidable. It comes down to the makeup of the outsourced partner’s team. Strong account management structures and on-staff business analysts add strategic insights that will improve both the end product and the relationship. A great software development partner should be able to take an idea and a framework and actively add value at every stage.
The same Deloitte study showed that 33% of outsourcers feel their partners aren’t innovative enough. The issue here is just a like a lack of proactivity: If your in-house team needs to focus on other core initiatives or simply lacks a key ingredient of the project, why should it be expected to think about new and creative ways to take a product to the next level?
Stability is almost as big a problem as a lack of innovation for firms that outsource software work. Twenty-nine percent of respondents told Deloitte that their partners’ staff attrition rates are too high.
This presents a number of problems. Institutional knowledge is lost, relationships are constantly shifting, and work quality varies with time. High turnover at your nearshore development firm, in other words, is the absolute last thing you want.
How can you avoid this trap? Again, perform your due diligence. Ask about your potential partner’s average staff tenure, compensation (it should ideally be above-average for their geographic location) and culture. Don’t simply take their word for it, though. Check out their local and global social media accounts to see for yourself. Western-style offices and staff events are great indicators of an engaged, loyal, and hard-working team.
There are pros and cons to IT outsourcing. To experience the former, it’s necessary to avoid the latter. A few well-placed questions during the vetting process and a little bit of online legwork can help you find the right software development team for you.
When you’re seeking a nearshore or offshore development partner, don’t forget to ask:
Is IT outsourcing right for your business?
Read our white paper to find out now:
The 9 IT Outsourcing Stats Every Business Needs to Know