Did you know that the IT outsourcing market is worth roughly $526.6 billion?
The benefits of IT outsourcing are undeniable, hence the market’s high value. But not all businesses that outsource their IT functions get their money’s worth.
Many business owners rush into hiring outsourcing partners only to make costly mistakes. It’s no wonder that some of them advocate against outsourcing. However, the problem doesn’t lie in outsourcing but in how you handle the entire process.
How can you avoid making the same mistakes they do? Read on as we delve into some common IT outsourcing mistakes and how to avoid them.
-
Doing Insufficient Market Research
It’s easy to get caught up in the excitement of outsourcing and hire the first company you come across. Doing so will only land you in trouble as they may not have the capabilities required for your needs.
Instead of rushing, take the time to understand what IT outsourcing companies offer. What benefits are your competitors reaping? How did they choose their specific IT partners?
This doesn’t mean that you should copy what your competitors are doing. Analyzing their options for IT services is only meant to give you a general idea of some of your choices.
While at it, also analyze recent offshoring trends. Which countries are popular IT outsourcing options and why? Understanding this will help you make an informed decision on offshoring.
-
Choosing Shiny Brands
It’s tempting to choose outsourcing partners that work with large companies. After all, who wouldn’t like to work with Microsoft’s outsourcing partners? While most businesses think this gives them an edge, it doesn’t.
They often have to deal with being low priorities for these companies. And they also incur exorbitant costs since these large outsourcing firms aren’t cheap.
Instead of choosing shiny brands, look for “companies that manage IT services near me.” That’ll give you better-suited options for your needs and IT outsourcing budget.
Don’t underestimate the benefits of working with a middle-sized or small outsourcing firm. They’ll give your project attention as they don’t have as many large clients as big firms. Also, they’ll do that at a more budget-friendly cost.
-
Hiring Companies That Aren’t Conversant With Your Industry
Many business owners don’t realize the effort it takes to get an outsourcing partner on the same page. It takes even more effort when chosen companies aren’t conversant with their fields.
They have to explain common IT issues in their industry to these companies. And that’s on top of explaining their individual business goals and vision. This can get frustrating fast.
So, hire outsourcing companies with experience in your industry. This is especially crucial if you’re in a sensitive field like finance and medicine.
Doing so will save you time and money since you can forego the onboarding process. It also allows you to use industry-specific language when discussing goals.
-
Outsourcing Core Competencies
The benefits of outsourcing are too many to pass up. But some businesses go overboard and outsource their essential IT services.
Don’t outsource app development if you’re a mobile app development company. You can outsource other functions like tech support, but never your core offering.
Over time, outsourcing core functions causes strategy-related issues that may affect your offering. You also risk your reputation as your outsourcing partner may offer low-quality solutions.
Always identify your core product and service offerings before outsourcing. Maintain these offerings in-house to maintain complete control of quality.
-
Poor Strategic Planning
Did you know that US companies outsource roughly 300,000 jobs every year? And that most of these jobs are IT-related?
Companies are quick to fire their in-house teams after realizing the benefits of outsourcing. Odds are, you, too, can’t wait to fire your team once you get the right outsourcing partner.
While this results in employee-related cost savings, it can affect your bottom line. IT outsourcing firms aren’t as quick to adapt to businesses as we’d like to think. Disruptions can quickly occur during the first few weeks.
So, let your in-house team work with your outsourcing partner for a few weeks. They’ll show them the ropes and discuss common IT issues so your partner can adapt faster. You can maintain one IT employee to guide your new team if you’re concerned about costs.
-
Going for the Cheapest Available Option
It’s tempting to want to hire the cheapest IT firm you can find. After all, the main goal of outsourcing is cutting expenses.
However, cheap options will only give you cheap results. Most overly cheap IT outsourcing partners will cut corners to meet your needs. So, you’ll ultimately end up with low-quality services and have to look for other options.
Why risk this when you can hire the right company from the beginning? Create a reasonable IT outsourcing budget and look for companies willing to work with it.
Sometimes, all you need to do is negotiate. You’d be surprised by the number of companies willing to reduce their charges. Don’t compromise your work quality to save a few bucks.
-
Ignoring Offshoring Barriers
Offshoring is a top option for many companies because it’s pretty cheap. Countries like India are attractive IT outsourcing options because of their cost-efficiency.
Business owners rush into offshoring without considering the implications. You’ll face language and time barriers when you outsource outside your country. These barriers may affect your services, so you need to weigh your options.
If you’re offshoring customer support, pick a company with fluent English speakers. Also, choose a company willing to provide support during your time zone’s office hours.
Remember, most of your customers will communicate in English. And they’ll most likely call during your office hours. Don’t hire a company that can’t meet these needs.
-
Poor Goal Setting
Vague goal setting is a common problem when working with IT service providers. Most business owners assume that these providers know what to do and when to do it.
Though they’re professionals, they may not know your business’s unique needs. Not communicating with them can lead to poor quality work and time wastage.
So, always ensure you’re on the same page with your outsourcing partner. Discuss your goals and what they can do to help you meet them. That’ll prevent most avoidable disruptions once you start working together.
-
Poor Governance Structuring
Things can go wrong even when working with the most reputable service providers. Disagreements on each party’s rights and responsibilities can sour your relationship fast.
This makes Service Level Agreements (SLAs) crucial when outsourcing. An SLA, or IT outsourcing contract, is often the go-to in case of outsourcing disagreements.
So, ensure you draft a solid IT outsourcing contract. Engage your outsourcing partner and ensure you agree on every detail before signing.
Also, amend the contract as your business relationship progresses. Doing so will ensure no party feels taken advantage of as you work.
-
Failing to Track Performance
Business owners assume IT service providers are experts who always know what to do. They rarely assess them, only to identify mistakes later on in their relationship.
Sure, IT service providers are experts. But they’re also like other businesses, meaning that they sometimes run into issues. These issues could affect your services and, over time, your relationship with customers.
A reasonable degree of oversight is needed to prevent this. Schedule meetings with the team assigned to your company to track their progress. That’ll keep them on their toes, constantly working to deliver high-quality services.
-
Not Being Transparent
Most businesses operate on a need-to-know basis, often keeping information from their partners. While this is crucial to keeping company secrets in-house, it can affect work quality. Failing to give your partners information can cause a goal mismatch.
So, your outsourcing partner must have full access to your company. You can protect yourself by drafting a Non-Disclosure Agreement (NDA).
For this, you’ll need the assistance of an experienced legal team. An effective NDA restricts your outsourcing partner from revealing any sensitive company data.
-
Having Unclear Exit Strategies
Like all things, working relationships end. However, most businesses don’t look that far into the future, so they rarely have exit plans. This causes bitterness between parties and can get expensive if either party sues.
It’d help if you drafted an exit strategy for your IT outsourcing contract. Lay clear guidelines on the course of action if a party withdraws before the contract term. Both parties should agree on the stated guidelines before signing the contract.
-
Switching Service Providers Too Often
There are several justifiable reasons to switch service providers. Maybe your partner isn’t communicating or delivering services as they should.
But, switching providers shouldn’t be the go-to move in all cases. It could affect your reputation among service providers.
Instead of switching, find the root cause of the problems with your current provider. Sometimes, the problem could be you and not the service provider. Only find a new option if you have irreconcilable differences.
Save Money by Avoiding Common IT Outsourcing Mistakes
These are some of the most common IT outsourcing mistakes. Some business owners don’t even realize when making them until it’s too late.
Some mistakes like doing insufficient market research are pretty simple. Others, like having a poor governance structure, are serious and can prove costly for you. Luckily, you can avoid them all and ensure your outsourcing strategy’s success.
Have you enjoyed this article? If so, feel free to browse through our other business, finance, and sports content today!
