Outsourcing Strategies: How to Create Them for Your Business

Know Why Building a Smart Outsourcing Strategy is Important for Any Business

Outsourcing is termed to be an important strategy to perform different business operations effectively. It comes handy in those situations where companies face lack of resources or work power to handle certain jobs. It provides them an additional impetus to complete different tasks that are not subjected to their expertise. The outsourcing strategies are therefore termed important for every business, as they allow companies to allocate different tasks without disrupting their own internal operations.

Today, many companies have specialized in offering software outsourcing services to different clients in the market. They assist different businesses to connect with each other and find valuable resources to manage their various tasks. That is how outsourcing between different companies work, allowing them to perform different functions with the help of mutual resource sharing.

For a software development company, outsourcing sometimes becomes very important. It provides them a helping hand to manage different development functions that are out of their domain. From database security to QA testing, there are a lot of jobs that are often outsourced by the software companies to third party resources. This sometimes becomes costly for them, but also ensures to provide perfection in the work.

In this article, we will discuss more about outsourcing strategies that comes handy for different businesses. We will also define how you can create a smart outsourcing strategy yourself to manage all the business processes effectively. Let’s first start from the basics understanding the importance of outsourcing properly.

What is an Outsourcing Strategy?

What is outsourcing

An outsourcing strategy is a technique that lets your business connect with any other third party. This is usually done by those companies who want to outsource certain tasks to any other capable technical resource. There are various reasons why they opt for this strategy, such as lack of in-house resources available, short of time, non-technical workforce and more others.

Nowadays, building an outsourcing strategy is important for every company. The reason is that there are various tasks that needs management from the external resources. They usually become headache for the company when lesser resources are available for the work. That is where the need of strong outsourcing strategies comes into play. They become necessary for those companies who cannot disrupt their operations, neither could also risk to lose client projects.

These companies then look for the outsourcing partners to share their work. They look for such resources that are technically capable to handle certain jobs such as database administration, security analysis and more others. A strong outsourcing strategy helps them to manage multiple tasks at a single time without disrupting anything in the performance.

Importance of Building Different Types of Outsourcing Strategies

Building a strong outsourcing strategy brings heaps of benefits for the businesses. It not only simplifies the allocation of work, but also saves time of the in-house work force on many occasions. Considering the amount of projects running at one time, it is not necessary that every task could be handled smoothly by the available resources. These are the times when good outsourcing strategies are needed by the businesses. It allows them to share the work and complete every task on time without worrying about the end-quality.

By outsourcing any project, you can also save a lot of money as a well as valuable resources. It has been noted that outsourcing often gives cheaper labor results as compared to the teams sitting inside. This mostly happens when freelancers are available in abundance, and you can choose easily among them by lowering down the cost. This practice is considered good, but it cannot be termed excellent because lower level freelancers can also compromise quality in the work.

It is therefore recommended to always build your outsourcing strategies centered around strong professionals. Though they would be hired with some additional bucks, but that would be totally reasonable when you can expect a good quality work from them.

What Type of Work Could Be Outsourced?

Outsourcing work

It is often asked by the people that what kind of work can be outsourced to third parties. Well, this actually depends on the requirement of project and deadline given for its completion. Normally, companies do not outsource projects that are easier to handle within the given time. They go for outsourcing when the projects are more complicated given with a very little time of completion.

According to the market data, web development projects are outsourced more to the third party companies and freelancers. We all know very well that the market of web development is continuously growing as everyone is looking to build different types of websites for online presence. This automatically increases the demand of its projects, enforcing companies to go for outsourcing strategies effectively.

Besides website development, there are also some projects that are often outsourced to other companies. Some of them are listed below.

  • Application development
  • Custom software development
  • Application maintenance and support
  • Database management
  • Data center management
  • Data cloud storage services
  • Web security services

How to Build an Outsourcing Strategy?

Outsourcing strategy buildup

Building an outsourcing strategy is not simple as it looks like. The reason is that you cannot outsource every project to the freelancers or any third party. You have to be very decisive in picking particular tasks and projects that should be outsourced. It will require a bit of prior planning, as well as detailed look into the nature of the task that is going to be outsourced.

If you do not have any solid strategy to outsource projects to other teams, you will certainly start to struggle in the work. Here are some points that will help to build a correct outsourcing strategy for your business. Let’s take a look at them in detail below.

Analyze the Complexity of the Project/Task

The first thing you need to analyze before outsourcing any project is the overall complexity of the work. The reason is that you cannot just blindly outsource projects every time without knowing about its type and nature of work. You have to first look into the details of the project to decide whether it can be handled by the internal teams or not. The objectives of the project will give you a rough overview how the work should be done. You can then analyze whether it should be done by the in-house people or by any external resource.

The role of project manager looks to be very important in this regard. He is primarily responsible to access the nature of work and then take decisions according to it. The project managers basically know everything about the resources available to them. They know the capability of the internal teams, as well as the time slot available for their work. They can easily take the initial call whether the project should be outsourced or not.

Build Project Description

Project description

After deciding to outsource the project to any external team, you need to build a complete description of the project. This is necessary because it provides explanation to both parties about the functional requirements of the project. It offers good assistance to understand the technicalities of the work, especially when complicated tasks are assigned to the third party resources. This documentation should be ideally done in the excel sheet, as it is considered the standard platform to write such type of project details.

Depending upon the type of work, the documentation could well go long to multiple pages or sheets. For instance, if you are outsourcing a marketing project to any freelancing agency, then you must need to describe every possible detail to them. It would offer a brief list of requirements to them, which will precisely bring clarity in the project objectives. This will help both parties to understand the project and come on the same page before starting the execution.

Appoint a New Outsourcing Manager

It is also considered a wise move to appoint an additional outsourcing manager to oversee all the operations. Sometimes, internal teams and managers cannot go into the micro management with external teams. It often creates a clash of interest and a series of arguments between the two teams. The best way to avoid this type of scenario is by hiring a new outsourcing manager for the job. He/she will be primarily responsible to monitor all the situation and take appropriate decisions according to that.

The appointment of new outsourcing manager should be done smartly by looking at the background experience and credentials. Both of these things will determine his capability for the role of project management appropriately. Ideally, you need to find a candidate who has got prior experience in project outsourcing specifically. His knowledge in handling such projects will come very handy, allowing you to work with full trust on him. 

Choose the Right Third Party Company

Outsourcing company

It is also very important to select the right third party agency to outsource any company project. A lot of times, businesses get their selection wrong which eventually brings a heavy toll on their projects. The lack of market knowledge often leads them to the amateur names that are simply not capable to handle any complicated project. They not only waste critical time, but also plenty of hard earned company money in the process.

It is therefore recommended to choose the outsourcing company wisely, so that you would not have to bear any embarrassment at the end of the project. Nowadays, there are tons of names available in the market offering software outsourcing services to the clients. You need to pick the best one from by looking at their overall experience in outsourcing. It will help you to make the correct decision and bring in the best company for outsourcing certain projects.

Monitor Results

Once the project has been completed, it is important to look into its results smartly. Ideally, the projects should be completed with the desired outcome stated in the description. Anything below it will be considered a substandard performance, leading to the revision of the work. However, some exceptions can be considered in the project, but that will also be done by mutual understanding.

By doing the correct result analysis, you will get to know about the performance of external teams as well. This will let you know whether they should be hired for any other project, or how they can be managed to get better results next time.

Final Words

That concludes our entire article in which we have discussed about outsourcing strategies in detail. It is quite important to know the correct way of outsourcing any project to the third party companies. The reason is that you cannot just pick any company randomly for this job. You would have to build a strategy to pick the best name from the market, so that your projects could be completed properly within the given time frame.

In this article, we have discussed some core principles to let you understand the basics of software outsourcing. It is an important process that should be handled by those professionals who have got good knowledge about project outsourcing. If you are looking for a reliable name that fits perfect on all these points, contact us today. We will assist you to develop/manage all types of software projects, rightly as per the given custom requirements.

Frequently Asked Questions (FAQs)

What is outsourcing?
Outsourcing is a method in which companies allot their internal projects/tasks to any external resource. This is primarily done due to the lack of available resources or shortage of project completion time.
Why do software companies outsource their projects?
Software companies usually outsource their projects due to a variety of reasons. It mostly happens when they are short of resources or their in-house teams aren’t considered good enough to handle those projects.
What is the cost of outsourcing?
The cost of software outsourcing depends on the nature of projects. Sometimes, projects with bigger scope are outsourced with a hefty price tag. This is done to accommodate all the resources involved in the project ranging from development to QA teams.
What is the best software outsourcing strategy?
Software outsourcing strategies can vary depending upon the type of projects. The best way to do it is by looking at the description of the project and then selecting the best team for it.
What are the four types of outsourcing?
Outsourcing is generally divided into four types. This includes IT outsourcing, manufacturing outsourcing, process outsourcing and operational outsourcing. All of these types offer different benefits if they are used perfectly according to the given situation.
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