Business everywhere is undergoing digital transformations driven by consumer expectations, competitive pressures, and technological advancement. According to Eric Pearson, InterContinental Hotel Group’s CIO: “It’s no longer the big beating the small, but the fast beating the slow.” For many organizations, in-house IT has become a barrier to technological advancement.
Companies can be dismayed if it takes weeks to months to find the right IT staff at a time when responsiveness is crucial. The shortage of IT talent ranks at the top of the list for 69% of US employers who struggle to find the right people. As a result of insourcing, there is a fixed cost and a risk that the talent pool remains static while the market shifts.
Businesses can outsource their digital product design and development to a flexible team of creative thinkers, designers, and developers with a variety of backgrounds who can help them come up with the best ideas. With access to a comprehensive set of IT services, businesses have been able to increase efficiency and innovation, which has led to significant growth in the outsourced IT market. By 2027, it is estimated that the market will reach USD 937.6 billion.
IT Outsourcing Services: Why Choose Them?
The primary reason for outsourcing of any kind (including digital product development) is to gain access to skill sets that are not available within the organization. Instead of tailoring a project to the skillsets an organization has on hand, outsourcing allows companies to weigh all the factors when choosing the right technology to support their project.
Outsourcing is used by 35% of organizations for innovation, with additional benefits including cost savings, reduced capacity issues, and more time for core business activities. Organizations can transform their business outcomes when they work with an outsourcing service to align their organization with a flexible talent pool of people, skills, and services.
With the advancement of technology, forward-looking companies have had a number of advantages from outsourcing services for quite some time. Small and medium-sized businesses are especially affected by this, as they lack the space or the resources to have in-house auxiliary departments like finance and payroll. – Kikis Pissarides, Manager, Business Process Solutions, Deloitte
Why should you outsource your IT services?
Outsourcing IT services has the following advantages:
- Organizations can save money by outsourcing by accessing specialized experience without having to pay a full-time employee’s fixed costs and without having to retrain current employees for new IT skills, which is time-consuming and expensive. Moreover, outsourcing eliminates the need to invest in certificates, office equipment, and other infrastructure at the same time.
- In addition to allowing for quicker time-to-market, outsourcing partners can scale as companies require.
- Having access to skills “on-demand” allows companies to assemble teams with the best expertise and access the latest technologies whenever needed.
- In today’s rapidly changing marketplace, flexibility during development is crucial for reducing risk. Depending on the business environment or the requirements, businesses can scale up or down their teams as needed (as we witnessed at COVID-19). Furthermore, outsourcing partners are accustomed to working within set budgets and are able to meet tight deadlines. Full-time, salaried employees, on the other hand, are much less flexible.
However, finding the right partner is imperative if organizations are to make the switch to outsourcing because of these benefits. Ideally, the partner will continuously upgrade their internal products so that organizations can remain competitive at lightning speed and access to the latest technologies.
IT Outsourcing Partners: What to Look for
In spite of the proliferation of design agencies and IT outsourcing firms, it is rare for them to successfully combine these into a product development mindset so that ideas can be effectively transformed into optimal results.
The key to finding a partner with a product development mindset is finding one that is detail oriented and sensitive to the unique needs of each client rather than simply focusing on completing the project and moving on. Instead of focusing on output, a product development outsourcing partner looks at outcomes. This shift in thinking focuses on developing the right product for the company’s needs.
An experienced partner will bring best processes and expertise to the table from the discovery phase to development.
It’s not always better to go with a bigger outsourcing partner. The most important factor to consider when selecting the right outsourcing partner for your business is fit. The following factors should be considered:
- Establishment of a successful track record:
- A reputable provider specialized in the area of the organization’s business is a good choice.
- Partnerships that are long-term and strategic are important
- Try out digital products
- Find out how the partner has handled similar projects in the past by speaking with references
- Technical Skills: Product development is not a one-size-fits-all process, so it is best to look for a partner with experience in more than one area of technical expertise. Platforms, mobile, web, databases, DevOps, video, machine learning, artificial intelligence, cloud, CRM, and analytics are all included.
- A partner who utilizes an agile development methodology based on Scrum should be able to incorporate feedback continuously in order to prevent costly reworks. By iterating, the results can be measured, tested, and scaled to make sure they align with the business objectives.
- We design the right product by understanding the organization’s needs and documenting the project’s scope one-on-one. As well as setting up preferred communication channels, the ideal partner will develop a roadmap of how often the company wants updates on the product.
No matter what size or scope the project is, or if the company’s needs are ever-evolving, the right outsourcing partner is dedicated to helping them succeed.
Outsourcing is a priority for COVID-19
In order to maintain business continuity, organizations have been forced to cut costs and focus on core capabilities as a result of COVID-19. Organizations have also prioritized their digital transformation as a result of COVID-19, which has impacted consumer expectations.
Support during periods of disruption and growth is the greatest benefit that an outsourcing partner can provide.
How to Select IT Vendors in 7 Steps
It takes extensive planning for enterprises to hire an IT vendor for the first time. To maximize the engagement’s profitability, an enterprise needs a set of principles and processes.
Despite well-designed websites and excellent references, not all outsourcing companies are worth investing in. One must be able to filter the best ones out.
From the many IT vendor companies available, here is a plan to help you find the best fit.
Step 1: Analysis of Business Requirements
The decision to hire an IT outsource partner must be informed since it is a big business decision. Therefore, the business should make their part of the story clear by analyzing their requirements and needs thoroughly before contacting partners and interviewing potential vendors. When selecting an IT vendor, this is one of the most important steps.
In order to make informed decisions about the IT vendor selection process, organizations should identify those who may have an opinion. Then, create a written document detailing the technical, business, and functional requirements that the company is planning to hire a vendor for. Share this document with the company’s stakeholders and decision-makers to get their feedback.
The required documents should include the following points:
- Describe the type of software the company plans to build in detail when hiring an IT vendor to build a software product designed to perform a specific task or function. Why are you hiring an IT vendor? What is the purpose of the project? Are you planning to build an app, train a team, or build an IoT platform? Consider listing its objectives and business needs in detail.
- The company’s expertise in technology stack should be noted: Enterprises involved in software projects might have a specific list of technologies they are familiar with and want to use to reach their goals. Their team or developers may be able to offer some good suggestions regarding the already integrated technology stack if they already have an in-house team working on the same software and then plan to outsource any particular panel.
- In the document, list all the solutions and let others share their opinions.
- It’s important to estimate when companies need the initial delivery because, in the software development world, time is money. IT vendors will propose their own timelines related to the delivery, but companies should estimate when they expect to receive initial deliveries.
- When considering long-term relationships and interactions after release, the company stakeholders may have additional opinions on whether they want to hire developers with particular affiliations. In addition, logistical considerations must be taken into account, such as providing technical support during business hours that complement the business’s operation hours.
- The people within an organization know it better than anyone outside. It is unreasonable to expect an outsourcing vendor to possess the same level of familiarity they do. In order for the organization to do the initial research, it is necessary to have a good understanding of the business needs. Furthermore, doing the initial research will assist the company in negotiating contract negotiations with potential outsourcing partners.
Step 2: Filter vendors based on market research
In order to find potential IT vendors, all requirements must be identified and approved by company stakeholders.
This process can be aided by the following resources:
- You can find IT outsourcing vendors with good ratings and reviews by searching B2B network sites of tech companies such as Clutch and Good.
- Research papers published by Gartner and Forrester provide a list of market leaders.
- Utilize LinkedIn to find out which IT vendors have been endorsed for services similar to your own. Alternatively, ask your friends or post a job on LinkedIn to attract IT vendors’ attention.
It is essential to select companies that provide specific services within the domain after a thorough background check, so establishing an IT vendor selection team can help narrow down the search.
Step 3: Organizations should use Agile Methodologies when developing new products or services
In order to survive in the current market, organizations must adapt to customer requirements that are constantly changing. Agile methodologies are the only way to efficiently serve constantly changing customers.
To stand out as a leader in the industry, leverage a partner who follows Agile methodologies so that you can quickly adapt to the changing needs of your clients.
Step 4: Proposals are sought (RFPs)
It is now time to test and evaluate the assumptions that have been made based on the business needs and the list of IT partners that appear to be suitable. Upon reaching this point, it is time to write a request for proposal (RFP) or request for quotation (RFQ) that will be sent to potential IT outsourcing partners.
Each vendor that is likely to respond should have a different desired service, quality, or final result, so an RFP is created. An RFQ, on the other hand, is a request for quotations for simple services in which there is no chance for service or product differentiation among the responding vendors. RFQ and RFP are created for the following reasons:
- A detailed proposal highlighting the expertise and knowledge of IT vendors is crucial.
- Finding the best vendor for the company’s needs and negotiating the best deal.
- Maintaining a healthy relationship with the outsourcing partner requires setting clear objectives, responsibilities, and constraints.
These documents should clarify the business goals of a company and provide the vendor with a clear understanding of what it needs. While each RFP and RFQ document is unique to its company type, there are a few essential sections that every document should include, including:
- Details of the submission
- Summary of business goals and overview
- Specifications in detail
- Limitations of the business
- Conditions of use
- Factors to consider
If a vendor seems suitable, send a copy of the document to them and provide their contact information so they can contact you if they have any questions.
Step 5: Evaluate and analyze responses
After reviewing the vendor responses, the next step is to select a partner who is best able to understand the business needs and possess the expertise to meet those needs. For evaluating and comparing vendors, a spreadsheet can be prepared. Provide a set of criteria for selecting the vendors and assign a color code for each criterion. The best responses are green, the bad ones are red, and the averages are orange.
By the end of the process, three to four potential outsourcing partners will have been narrowed down through visual inspection.
Step 6: Arrange interviews and demos
A potential IT outsourcing partner’s value to a company is the most important factor to consider in the selection process. Ask for a demonstration of the technology solutions they are providing. This will help companies predict their expertise and how they can integrate their proposed solutions into their tech ecosystems.
The scheduling of demos helps in testing the solutions before investing in them. As a result, companies should schedule demos before selecting and finalizing a vendor in order to determine how the vendor can meet the stakeholder’s expectations and business requirements.
When selecting an outsourcing partner, the following questions should be addressed:
- What are the needs of the organization’s users in relation to the proposed solution?
- Is the proposed technology known to the tech team?
- How risky is it to integrate the proposed technology into the business process?
- Is the proposed tech solution economically feasible for the company stakeholders?
- Could you tell me how the demo went – did the team discover any bugs or poor user experience?
Step 7: Engage in contract negotiations
In order to close the deal, it’s essential that people from the sales department and the finance department are involved. This requires good negotiation skills, so it’s advised that sales and finance are both involved.
Payment milestones should be created so that the final payment is a significant part of the overall partnership cost. The final payment should be made after the work has been fully tested and completed.
You should make sure that the legal department reviews all contract clauses before signing the deal. Even though this might take a few days, it is important to ensure everything falls into place properly. One may not have the expertise to avoid all hidden clauses in a deal as an IT leader, which could lead to problems later on.
What You Need to Know About Outsourced Projects
It is important to find a partner who isn’t just interested in building the product, but also in elevating the organization’s brand in the marketplace in the long run. Regardless, the success of an outsourced project depends on a two-way street. Here are some tips that can help it succeed:
- Clarify your goals
- Research the market and conduct feasibility studies
- Consider providers with satellite offices in a similar time zone
- Feedback and progress updates should be checked regularly
- Iterative development (Agile and DevOps) is a key component of choosing a provider.
- Make sure your providers are able to meet compliance requirements right away, giving you peace of mind that their processes have already been secured
In 2000, Revinfotech was founded to create award-winning transformative digital products & platforms for startups and enterprises around the world that combine creative design thinking and agile methodologies.
By evaluating your brand from all angles, Revinfotech charts the ideal course for revenue- and growth-driving digital products and platforms, including:
- Prototyping and UX strategy
- Validation and testing of usability
- Optimization and strategy for eCommerce
- Product development that is lean and agile
- Analyzing, visualizing, and understanding digital customer experiences
- Digital transformation and modernization of legacy IT
Frequently Asked Questions
- Choose a partner that cares about its clients.
- Never compromise on technology experience and domain expertise.
- Check out your development partners’ portfolios, customer testimonials, and references.
- Observe how they approach communication and how much they pay attention to your vision.
- Ask the right questions to help you choose easily.
- The average outsourcing charges in India are $18 – $40, which is way more affordable than in developed countries like the USA, $38 – $63.
- India has a large pool of native-English speakers who’re highly proficient in their work.
- With an Indian outsourcing partner, you can access 24×7 support and specialized IT talent.