Outsourcing-the practice of taking the help of offshore companies to handle work is a familiar concept to many entrepreneurs.
The way businesses have started perceiving IT outsourcing as it has swiftly changed but there are certain issues that remain the same.
The business may have suffered development delays, improper communication, and inefficient management. This is something that an experienced offshore development company can help you cope up with.
Keeping all the aforementioned in mind, here are the solutions to the common problems every CEO or CTO should remember in order to save the IT outsourcing cost.
How Your Development Budget is Saved?
- Collaborate with best quality-price ratio company
- Clarify all the Requirements in Detail
- Choose the Right Engagement Model
- Watch For Clauses In The Contract
- Healthy Communication
- Define Clear Metrics for the Offshore Team
- Effectively Partner With Your In-House
- Not trying Multiple Offshore Development Teams
1. Collaborate with the outsourcing company with the best quality-price ratio
Cost-reduction is one of the main reasons why companies look for IT outsourcing. Especially startups and small businesses have tight-budget and can’t afford to hire experienced developers.
For this reason, they plan to take the help of an outsourcing team of developers.
You may have known that hiring developers from Asia (especially India) is quite tempting. This is because you can hire at pocket-friendly prices.
It is very important to choose a country that has high expertise and charges less for hiring developers. In India, the average salary of a developer is 7 times less than in the UK. So, you get what you pay for.
The best way of collaborating is to define your budget beforehand and then look at a partner that will fit accordingly. The affordable collaboration allows for saving the budget without undermining quality.
Less cost is because of the state economy and standard of living but that doesn’t mean it compromises quality
2. Clarify all the Requirements in Detail
Incomplete project requirements are one of the main reasons why your money is going through the roof. Whenever you choose an offshore development company and make a decision to collaborate, make sure you have a document that clearly defines the business objectives, scope, and all the requirements.
The offshore agency will do competitor analysis, R&D, user-experience and standards. The development team will ensure that the product assigned to them doesn’t lack scalability, usability, security, etc. There is no need to spend extra money to polish the product like the developers you hire will ensure it meets the industry standards.
With the help of a dedicated team of Indian developers, a number of problems can be avoided. A mature outsourcing company helps in collecting artifacts and the required information required.
The role of the developer is important throughout the software development lifecycle. They help in defining the project requirements according and also suggest as per the trending technologies. This saves a lot of time as well as money.
3. Choose the Right Engagement Model
In general, most businesses choose to outsource either to extend their already existing team while improving their development capabilities, build a software product or deliver an effective business solution. Basically, there are three types of engagement models:
- Fixed-price model
- Time & Material Model
- Dedicated development team
You as a business owner should know what suits you the best and then choose the type of model. An experienced offshore development team should suggest you the right engagement model according to your requirements and budget.
(a) Fixed Price Model
This type of model works best when it is used for the projects with the pre-defined scope of tasks, rigid requirements and predictable time frame.
There should be a detailed list of project requirements and all the developer documentation. So, this contract designs a Scope of Work and works as per the roadmap with the unchangeable deadlines. In a fixed price model there is:
All the project requirements are known beforehand and the document is prepared accordingly.
Precision: The project scope and the time frame are well-known. Because of this, the outsourcing team can easily set the deadlines and monitor the process hassle-free.
A reliable offshore team will accomplish the project on time that too within the given budget even if the team may have to work extra hours.
This model saves you from the risk associated with the project not being completed and delivered on time. It is important that both parties agree to the project scope, budget, requirements, and deadlines from the outset.
Sometimes you may have to develop a solution, have a certain budget but have the expertise to do everything internally. So you entrust the success of the project to the vendor under the fixed price model.
(b) Time & Material Engagement Model
This is a more flexible outsourcing approach. You only have to pay for development in smaller chunks for the work done side by side during the billable hours.
Well, this pay-as-you-go model helps you to pay for the work which is actually done and not for the time the team takes breaks.
This type of engagement model is more suited to long-term projects where the requirements is not known well in advance and can be changed on the go. This approach offers:
Flexibility: You can change the project scope, requirements and development team size on the go to meet the business needs.
Transparency: You have control over the project and budget and you pay only for the results delivered.
Efficiency: This is one of the best models for the Agile/Scrum delivery process where short sprints result in delivering tangible results.
In the time & material model, the experts are engaged part-time and are paid for the work done based on the hourly rate.
An effective project management team ensures that the complete project gets finished on time within budget. It is important for you to track project performance and avoid costly project delays.
(c) Dedicated Development Team IT Outsourcing Model
This model is the best engagement model as it is a combination of the aforementioned models. Used to compensate for the lack of in-house IT expertise on the mid-top long-term projects.
The outsourcing team then builds the project as per your requirement. This dedicated model is a viable solution for long-term projects with ever-changing requirements.
You get a complete development team of professionals which are entirely focusing on the project & work very closely to define the project roadmap.
Hire developers that will compensate for the lack of in-house expertise. A team is built according to the requirement and this team can directly connect with the help of a project manager.
Here is the strategy of the team:
Predictability: You are charged on a transparent basis and you always pay only for the delivered results.
Adjustability: The team size, the project size or requirements, everything, and anything can be changed or adjusted if need be.
Continuity: The offshore team works on your project for a long time so there is a complete understanding of all the project features. This helps to run the project smoothly.
Basically in this model, you get a team of developers that entirely focus on a project and work closely with your in-house team to define the project roadmap. This model is highly flexible and completely adaptable to changes.
Recommended Read: What Makes the Dedicated Team Model the Right Choice
4. Watch For Clauses In The Contract
A poorly read contract may result in an unexpected loss or penalties. It is very important to draft a contract that both parties agree on. Before signing the contract, examine it especially issues like the notice period, payment terms, confidentiality, and data security.
If you have a business that is in its growing phase, choose a remote team of developers that gives you the option of scaling and shrinking the team within the shortest possible time frame.
Read and create the contract carefully:
According to the tech stack and local tech market, the notice period may vary from 1-3 months. Make sure there is a mutual agreement on all the terms. This will help you avoid delays in the development process that will be influencing the development cost. The cost of data breaches and cyber-attacks is very dreadful. Therefore, you should make sure that the offshore firm undertakes recurrent internal audits of compliance with the security control and policies.
Also, it is significant to know that the company has established practices for data protection like de-identification, re-identification, and anonymization of data in big data sets. It is the responsibility of the offshoring company to protect data from loss, destruction, falsification and unauthorized access as per the legislative and regulatory requirements. There has to be password management, cryptographic keys management, network security, and data asset management.
5. Make Sure There is a Healthy Communication With Your Outsourcing Team
Effective communication plays a very significant role in successful outsourcing. Issues like inefficient English proficiency, cultural differences and lack of emotional intelligence should not take place.
Many offshore projects lead to failure because of ineffective communication of the objectives and overall plans and strategies.
When the dedicated developers don’t have the right knowledge and information about your business, they are unable to apply their experience. Articulating the vision of a project helps the offshore developer to contribute to formulating a winning product strategy.
Daily standups, video conferencing, retrospective meetings, planning sessions, and team-building can help establish healthy communication between both the parties.
6. Define Clear Metrics for the Offshore Team
To define clear boundaries, there has to be measurable KPIs that will help your business. When KPIs aren’t connected with the business strategy, you are wasting a lot of time and money. This is because the developers are doing something that is of no use.
Relying on the dedicated offshore developers that will contribute to defining your metrics and tracking progress helps in saving your budget.
To measure outsourced team KPI, tell the remote development company to take the help of tools, dashboards, and reports that will improve day-to-day work.
7. Find A Company That Will Partner With Your In-House Team Effectively
When you finally collaborate with the IT outsourcing company, make sure your project is in the right hands. In order to develop successful cooperation, many offshore companies have delivery managers.
These managers work closely with the client for the initial months to devise an efficient remote cooperation model and help set up the processes connected. He is also responsible for business integration, technology alignment, operation management, regular performance, and reports.
8. Don’t Go for Multiple Offshore Development Teams for Short-term
The term collaboration depends on your requirements. You must be aware that long-term IT outsourcing is beneficial for every company. The main reason is that the partner provides you with the most attractive contract. Save your IT outsourcing cost by avoiding the risk of the recurring vendor.
Also, there is a privilege of long-term strategic partner relationships as the offshore development company starts contributing to business growth.
There are innumerable companies that have already understood the importance of hiring developers and are now experiencing steady growth and prosperity.
Plan Your Offshore Development Budget
The result of outsourcing depends on your business objectives and willingness to grow. IT is very important to discuss with your in-house team what would lighten their load and improve their productivity.
Outsourcing allows businesses to connect with professionals that are in short supply. When you hire developers, you get access to a broad range of experienced developers.
By experience, it doesn’t mean you get senior developers but how well people know how to work together as a team. How they efficiently manage the process and contribute to the project’s success.
It is important that before you outsource the software development, you should define the need for which you want to build an offshore development center and then do a thorough search of the company you think to collaborate with.