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IT outsourcing is an innate part of IT. Decades ago, ever since projects started to grow in complexity, scope and price, some sort of external redistribution was necessary, either onshore or offshore. Despite that, it is still a topic surrounded by confusion. In this post, we debunk the most memorable IT outsourcing myths.
Too Long; Didn’t Read
IT Outsourcing happens when a company delegates part or all of its IT efforts to a partner company, onshore or offshore. Usually, the motivation is lowering costs and increasing efficiency to focus on core projects. Even though it is an established practice, many misconceptions surround it.
What is IT Outsourcing (And Why Business Do It)?
IT Outsourcing (also known as IO) means assigning external service providers to take over internal IT tasks. The customary comparison form outsourcing is manufacturing – for instance, a fashion brand that ideates products and outsources the manufacturing steps to another location.
Thanks to the overall technological progress in the last decades, there are no limits to what an outsourced IT services provider can offer.
Small sample of outsourced duties:
- Consulting – Ranging from early startup mentorship to project and stack advice and even CTO as a service.
- Development – Coding from scratch, refactoring, migration, QA, and packaged services.
- Infrastructure – Specify hardware requirements and handle on-site installation, provide and maintain the equipment, manage cloud infrastructure and third-party providers.
Of course, it is also possible to combine different services.
As you can see, the responsibilities (and skills involved) are diverse. IO can provide full-stack programming, DevOps, business intelligence, security analysis, and much more. The actual ceiling is the need of the customer.
And why not do it in-house? The reason can vary, but IO can enable companies to lower costs, speed up deployment, and gain access to specialists and intellectual property, among other benefits.
Right, now that the concept is clear, let’s scrutinize some IT Outsourcing myths.
6 IT Outsourcing Myths Debunked
1. Lower Cost is The Only Benefit
It is still a common misconception, particularly with those inexperienced with outsourcing in general.
Lowering cost is, undoubtedly, the number 1 motivator behind outsourcing. Around 70% of the companies interviewed in a Deloitte report mentioned reduction as an objective when considering branching out their IT needs.
However, it’s far from being the only expected benefit, as the study shows.
The companies also expect improvement in flexibility (40%), speed to market (20%), access to tools and processes (15%), and agility (15%). These benefits are integral to the outsourcing package.
2. Different Regional Regulations Make IT Outsourcing Impractical
Let’s be realistic: Compliance does get more complex with outsourcing, especially when the provider is offshore. Different regulations might apply in different jurisdictions. For example, GDPR rules specific to Europe or specific rules surrounding data storage and liability in the US.
However, whether you are working with an internal or external team, the underlying practices are not different: rules and responsibilities have to be made clear and agreed upon by all parties. A transparent start is a good start!
More importantly, experienced IT services providers are used to this. They have experience on how to handle complex cases and take the opportunity to be proactive. They share their insight and offer different methods to assess risks and enforce compliance periodically.
3. IT Outsourcing is Not Secure
Similar to the point above, seasoned providers have security protocols cemented into their practices. More than that, having been exposed to different markets and industries, smart providers can offer a unique perspective.
With this expertise, basic safety protocols such as security testing, use of private networks, and preference for industry-recognized tools, are a given.
Always remember to follow good practices: sign an NDA and agree on each party’s responsibilities.
Starting right will ensure a more stable partnership without bad surprises on the way.
4. Managing an Outsourced Team is Harder
This is a valid concern. Isn’t it too complex to manage a remote team, especially when the professionals are not my employees?
The answer is: not necessarily. IT services providers offer different models of working with their teams. Notably, they might take care of all the red tape regarding workers, which helps companies focus on the project rather than being burdened by minute details.
As a result, the working model can be much more flexible. The project owner might work closely with a project manager from the outsourced team. Or your company might choose to worry only about the delivery and let the service provider handle all aspects.
It’s not an automatic plus, though. Without strict guidelines and clear expectations, both parties might get lost.
Remote Work
The remote aspect of the collaboration, however, is less and less relevant. Another lesson many companies learned with the pandemic is that physical space is not always a necessity. The IT industry has leverage, having moved away from the office much sooner.
The bottom line is: management demands an attentive, if not always hands-on, approach. Anyway, the best service providers easily spot the bottlenecks and work proactively to address them.
5. Too Many Communication Barriers
Let’s start with a pragmatic take on communication. Geographical distance likely means time zone differences and communicating with non-native English speakers. How much of a problem is that?
It depends on how flexible your company is and where the outsourced partner is, but it doesn’t have to be a problem at all. Let’s focus on the United States as an example.
Time Zone
The time zone difference has a larger effect on partnerships between the US (especially on the West Coast) and providers in Asian countries. Usually, even in these cases, the providers are ready to follow somewhat the Pacific Time Zone (PT), but it’s not smooth. Working hours are too distant.
European providers benefit considerably from a more “central location”, considering the topic. They are not too distant from the United States and have negligible to minimal time gaps between countries in the same region.
English Proficiency
Now, language. English is the de facto international language for business exchange.
The Swedish-based Education First education company lists 100 countries in order of English proficiency. It’s a very interesting read, as it groups countries in tiers ranging from Very High to Very Low proficiency.
Our highlight: the top three are, in order, Netherlands, Denmark, and Finland. The bottom three: Oman, Iraq, and Tajikistan.
Kambu seeks to ensure smooth communication between the software development team and the client. As such, all members require to have above-average command of English, even those who don’t deal with customers directly.
The team is located in Poland, which the ranking lists in 16th place, with High Proficiency in English.
In most cases, the client dictates the time of meetings. Our developers and designers have flexible work hours, so they can organize their time and be ready for every milestone.
6. Too Many Cultural Barriers
First, a pragmatic element: holidays calendar. This is important but often overlooked.
When the partnership involves multiple regions and religions, it’s important to align holidays, as they will not match.
There’s no secret, however. It’s just about addressing the calendars before the project starts.
Now, a much broader aspect: how to navigate different cultures to align expectations? This is a fascinating topic that has been studied extensively.
Measuring Cultural Barriers
A known framework is Geert Hofstede’s Cultural Dimensions Theory. In simple terms, it grades each country in aspects such as individualism vs. collectivism, strength of social hierarchy, and other spectrums.
The resulting analysis attempts to show what each culture values – and, consequently, how to interact more effectively.
One example: Costa Rica is highly collectivist, while the United States privileges the opposite: individualism. Data such as this is combined to conclude that United States companies value a more immediate growth of the business over the profit in ten years from now. With this in mind, it should be easier to approach and react to companies from the US.
Like any model, it will always be insufficient. Experienced service provider managers know better than to take charts at face value.
Going back to the myth: yes, different cultures can provide barriers, which must be navigated smartly.
However, cultural differences are hardly a deal-breaker, if at all. You can mitigate them by choosing to work with cultures that are similar to yours and by investing in continuous partnership.
More: they can help you understand and network with different markets, which is increasingly valuable.
Myths Surrounding IO: Summary
Companies big and small have at least considered delegating part of their IT efforts to an external partner. IT Outsourcing is a reality.
It is a promising but sensitive decision that should not be taken lightly. We hope this article provides a succinct and transparent take on IT Outsourcing myths to make you feel more prepared.
The first step toward a successful partnership is choosing the right partner. We at Kambu would love to talk about it! Contact us so we can estimate your IT project and figure out how we can work together.
