Outsourcing has been used by businesses of all sizes to access specialized skills, reduce operational costs, or increase team efficiency. In fact, a recent study by Deloitte found that 76% of executives outsource their IT functions.
Manufacturing, HR, IT—today, companies can outsource literally everything.
But how exactly does outsourcing work, why can it benefit companies, and how can you find a trusted outsourcing company for your current or next project? Let’s take a look.
What Is Outsourcing?
Outsourcing refers to delegating specific tasks to a vendor (an external company or service provider) instead of performing them in-house. Usually, such tasks include software development, QA, IT support, engineering, accounting, manufacturing, and others.
Outsourcing companies can range from large international corporations to small domestic firms and provide services either on a project-based agreement or ongoing, depending on the client’s business needs.
Why Should You Outsource?
Choosing to outsource instead of use in-house services can bring a number of benefits to businesses of all sizes.
1. Reduce costs
Instead of spending time and resources to find the right candidates and give them access to office supplies, outsourcing allows businesses to access specialized skills and expertise without the expense of hiring full-time employees. What’s more, with different outsourcing models like time and material or fixed price, companies may adjust their expenses depending on the requirements and needs.
Outsourcing development teams can be particularly beneficial for startups and small businesses that may not have the resources to hire a full-time development team.
2. Increase work efficiency
Outsourcing non-core tasks allows businesses to focus on their core competencies and improve overall efficiency. In addition, partnering with a vendor typically reduces the time spent finding the right specialists for the project, speeding up the time-to-market or other important tasks.
3. Scale up or down as needed
Outsourcing allows businesses to scale up or down quickly in response to changing market conditions or demand. Whether you need to find extra specialists or reduce the number when your project is done, this business model can adjust according to your business without any extra risks.
4. Access specialized skills
Outsourcing companies often have access to a pool of specialized talent that would be difficult or expensive to find in-house. Most companies have 100+ specialists on their team in different industries and specialties spread all over the world, ready to jump on your project as fast as a couple of weeks.
How to Choose an Outsourcing Company
Choosing the right outsourcing company is critical for your business project to succeed. With so many outsourcing companies on the market and new ones arising daily, it can be difficult to know where to start. Here are the key steps to follow when choosing an outsourcing company:
1. Identify your business needs
Before you choose to outsource the development team, make sure to identify your needs. Writing a technical document would be perfect; however, you can start by answering these questions:
- What tasks or services do you want to outsource?
- What are your expectations for the outsourcing project?
Make sure you communicate clear requirements; don’t be vague. Only fully defining your needs will help you narrow down the list of potential outsourcing companies and ensure you find one that meets your specific requirements.
2. Evaluate vendor’s expertise
When choosing an outsourcing company, it is important to evaluate their experience and expertise. Make sure all of these are covered:
- Technical skills
- Experience in your industry
- Access to the latest technology and know-how
- Years in business
- The number of projects completed
- Experience in solving complex challenges
As a rule of thumb, your outsourcing vendor should be experienced in a number of technologies to ensure they have all the necessary skills to allocate their services and help you. In addition, look for a company with a successful track record in your industry and a background working on projects similar to yours. Check their portfolio and client testimonials on Clutch or GoodFirms to get a sense of the quality of their work and their ability to deliver on their promises.
3. Check their communication style
Effective communication and collaboration are critical to the success of an outsourcing project. Look for a company with open communication and cooperation in their corporate culture; you can find it in the reviews with their clients. Consider language skills, time zone differences, and communication channels to ensure you can work effectively with the outsourcing team.
4. Assess vendor’s quality control
Strong quality control and risk management processes are a must to ensure a project is delivered on time and adhered to a high standard. Ensure the company you choose clearly defines the quality control process and can provide regular updates on the project status. Ask about their risk management processes and how they handle potential issues or challenges that may arise during the project.
5. Check their data protection policy
Outsourcing usually involves sharing sensitive data with third-party companies. Hence, choosing a company that takes security and data protection seriously is essential. Search for a vendor with strong security protocols to protect your data and who can provide evidence of their compliance with relevant regulations and standards. In addition, make sure to ask for NDAs in case you want to further protect your information.
6. Clearly communicate budget
Before contacting an outsourcing partner, make sure to establish a clear budget for your project. After that, you can discuss it with the selected outsourcing partner and choose the most suitable model for your business.
7. Choose a flexible vendor
Choose to hire a vendor who utilizes Agile methodologies so that the company can easily adapt to changing requirements of the market and your customers. In addition, the partner you choose should be able to react urgently to any problems or requests. This is why a vendor that works in the same time zone as your in-house team is especially critical.
Outsourcing is one of the most beneficial business models that can help startups, mid-sized businesses, or enterprises delegate tasks and improve efficiency. With access to specialized talent, an outsourcing vendor like pwrteams can become a trusted partner for a number of tasks.
However, before you decide which company to work with, do your proper research and ensure the company fully aligns with your business goals, vision, and needs.