Information technology (IT) outsourcing has been gaining popularity in recent years among companies in various fields of activity. Outsourcing IT processes or software development to third-party specialized companies allows you to cut costs, focus on your core business, and gain access to advanced technologies.
However, a recent Forbes article noted that IT outsourcing is often associated with certain complexities and risks. Typical pitfalls include poor service provider selection, insufficient project planning, vague requirements, ineffective communication between parties, and inadequate execution controls. These problems can lead to missed deadlines, budget overruns, and unsatisfactory quality results.
This article will share practical experience in optimizing IT outsourcing. We will consider typical problems and possible solutions, and give valuable recommendations on contractor selection, planning, and communication management. It will allow you to learn from other people’s mistakes and minimize risks when implementing your IT outsourcing projects.
Improper Vendor Selection
One of the most common IT outsourcing mistakes is choosing the wrong company. The entire project’s success depends on how reliable and professional the partner is.
So, pay attention to the following aspects:
- Experience in the required subject area. Check the presence of successfully implemented similar projects.
- Portfolio and customer reviews. Make sure the company has proven itself on the positive side.
- Cost of services. Compare the proposed prices with market prices and assess the proposal’s value.
- Qualification of specialists. Check the competencies of managers and developers.
- Technology stack. Verify that the technologies used are optimal for the task.
- Geographical location. Take into account the difference in time zones.
- Incorrect assessment of these and other factors can lead to dire consequences.
If you select an inexperienced or incompetent contractor, there is a high risk of getting a poor-quality result, violating deadlines, and exceeding the budget. Terminating the contract in the middle of the project can result in even more significant losses.
The wrong choice of an executing company is one of the most common mistakes in IT outsourcing. That’s why it’s critical to be thorough when evaluating potential service providers. Careful vendor selection is the key to successful IT outsourcing.
Insufficient Project Planning
Another common area for improvement in IT outsourcing is the need for a clear project plan with a breakdown of tasks and timelines.
When applying for IT outsourcing services, it is essential to define goals, objectives, timelines, and resources clearly:
- Setting project goals and objectives.
- Breakdown into phases with intermediate deliverables.
- Allocation of functionality into sprints.
- A clear timeline with deadlines for each phase.
- Identification of responsibilities and resources.
- Criteria for evaluating deliverables.
When creating the plan, it is crucial to be as realistic as possible about the timeline, considering possible delays. Allow time for contingencies.
Lack of a detailed plan leads to chaotic work, missing intermediate milestones, and disrupting final deadlines. Often, in the end, the functionality needs to be fully realized, and the customer’s dissatisfaction grows.
Therefore, making a realistic plan and monitoring its implementation is extremely important before starting an IT outsourcing project. It will allow you to achieve your goals within your budget and timeframe.
Vague Requirements and Expectations
Another common problem is vague, ambiguous requirements from the customer.
To avoid ambiguities, be as straightforward as possible:
- Functional requirements for the product.
- Non-functional requirements (performance, reliability, usability, etc.).
- Standards to be met by the solution.
- Limitations and assumptions.
- Product readiness and acceptance criteria.
Writing a detailed specification as a statement of work is recommended to eliminate ambiguity.
With vague requirements, there is a high risk of getting a result that does not meet expectations. It leads to rework, redesigns, and budget overruns.
Therefore, developing a shared understanding of the goals, objectives, and expected results is essential before starting the project. It will avoid many problems at the implementation stage.
With poor communication, problems often arise:
- Delay in providing needed information or resources.
- Ambiguous understanding of requirements and tasks.
- Failure to meet agreed-upon actions and deadlines.
- Duplication of effort or gaps in work.
- The result is reduced performance and missed deadlines.
Effective communication between the client and contractor teams is essential to the success of an IT outsourcing project.
To establish communication, follow these tips:
- Identify communication channels (email, chats, video conferences).
- Allocate responsible representatives from each party.
- Hold regular synchronization meetings.
- Use convenient tools for tracking tasks, errors, and wishes.
- Inform people about problems promptly.
- Document agreements and solutions.
Thus, it is essential to establish a transparent and regular exchange of information between teams. It will help avoid many problems and misunderstandings in the IT outsourcing process.
Inadequate Control and Management
Lack of proper control leads to the following problems:
- A decrease in the quality of work due to negligence or incompetence of the performer.
- Delayed deadlines, leading to project failure.
- Execution of unnecessary work and unjustified increase in the budget.
An important factor in optimizing IT outsourcing is organizing proper control and management on the part of the customer.
It is recommended to:
- Approve the stages of work and criteria for evaluating the results.
- Receive regular reports on the project’s status.
- Avoid significant deviation from the approved plan.
- Make adjustments promptly, if necessary.
Hence, it is crucial for the customer to closely monitor the outsourcing project to correct deviations and prevent problems on time. It will maximize the return on the invested funds and efforts.
IT outsourcing allows companies to increase efficiency and focus on critical business tasks if properly organized. However, specific difficulties and pitfalls inevitably arise.
As we have found out, typical problems in IT outsourcing are the wrong choice of contractor, poor planning, vague requirements, ineffective communication, and insufficient control.
To minimize risks, carefully select a reliable partner, create a realistic plan, clearly define requirements, establish close team collaboration, and ensure regular progress monitoring.
By following these recommendations and learning from others’ mistakes, you can significantly increase your chances of success when implementing IT outsourcing projects. The main thing is to choose a reliable partner and establish productive cooperation!