IT outsourcing signifies that a company would move a part of its software development out of its business framework so that you can save costs plus control all its processes. You are basically handing over the implementation task to a third-party who is more efficient towards diving your certain business functionalities better.
You could look for IT Outsourcing Company both from within and outside the country. IT functionalities are based on three main types of outsourcing – one that refers to which areas the services are provided:
There are Three Types in IT Outsourcing
- Onshore – It is a process where professionals are hired within your locality, your city or nearby. It is a rather good option towards keeping everything within control at a reasonable price.
- Offshore – When you outsource to another country, you are actually taking help from one of the best resources that gives you global exposure.
- Nearshore – It is when you outsource in your neighbouring countries within the same time zone. By selecting this option, it is easier for you to communicate with developers. Nearshore may not be a profit-making endeavour always.
Research states that of every 8 of 10 small businesses plan on outsourcing their business functions. They also place forward that the main purpose behind IT outsourcing is to:
- Cutting costs
- Growing the company
- Work with experts who can work on multiple platforms
For all entrepreneurs, mainly the founders of start-up, IT outsourcing companies are holding the keys to propelling their business ahead much faster also save more money than they could using a small team that functions in-house. Bigger businesses like Google, etc. also outsource certain part of their work. It gives them the opportunity to access all professionals coming with different kinds of expertise.
Best Regions for IT Outsourcing
As we have already realized, it is cost reduction that drives any company big or small to outsource IT business functions most of the time. The main reason behind this is the fact that in different countries IT services may cost much less. Check below how the hourly rates may vary:
Region wise rates:
Asia – $20-40 per hour
Eastern Europe – $35-60 per hour
Western Europe – $60-80 per hour
Canada – $40-60 per hour
USA – $100- 200 per hour
The fact that price is not the single most factor a business needs to consider at the time of choosing outsourcing destination for IT. We would advice you of finding a balance between the level of proficiency, communication level, time zone, also prices.
Before your business signs a contract with an IT outsourcing agency, you would have to choose one cooperation model. While the types of information technology outsourcing would appeal solely towards a geographical location, the type of outsourcing business model you choose would define the manner how you collaborate also towards the final goals of this kind of collaboration. Let’s check the 3 most common models of IT outsourcing along with their positive and negative attributes.
The client would hire a team to implement that part of work that has already been defined and planned. The project manager who heads the outsourced team conducts the entire work taking complete responsibility for the performance and quality of your project.
- Usage time
- The IT outsourcing model that is project-based isn’t suitable for projects that are complicated and that come with well-studied and predictable functionality.
- Pros and cons of the model
- It clears all timelines also the output
- Saves time for all your in-house team
- Get all things done quickly
- Hearing process that is fast
- No need for micromanagement
- Complete responsibility is on the shoulders of the Project Manager
- Less control on the project
- Lacking in flexibility
- The result could be good also well-planned but maybe won’t meet the best practices or industry standards
Dedicated Team Model
The client would hire a team that creates a project for them, and they would work solely for the project assigned. Unlike a project-based model, a completely dedicated team would be more engaged in your consignment. The model has an outsourced team that advice you on product and the technicality. So, it could offer also suggest certain alternative solutions.
Advantages and Disadvantages:
- Higher control of the development process
- Working with the professionals who have greater expertise in your industry and come with specific qualifications to meet the need
- The final product would meet industry requirements also solve the problem
- Higher flexibility
- No kind of micromanagement
- Extra time is there for your in-house employees
- Long process of hiring
- You would have higher responsibility on the project
When should you use:
Dedicated team, with IT model of outsourcing, suits best for the startups in their nascent stage, a stage where they have the potential to grow, and meet the projects with vague requirements. If you need to validate your idea, look for a product-market that builds or fits an MVP to test the market, and there is a dedicated team to work for it.
Working Model: It’s that kind of outsourcing model that doesn’t need full-fledged team of developers and hire exclusive specialists. Sometimes this kind of model demands finding some additional professionals, also you are free to hire some outstaff members so that the scope of work is covered.
When should you use: Outsourcing outstaff model is best for the short-term project as there is a risk that your staff members could turn over within a long term.
Advantages and Disadvantages
- No need of hiring the entire team
- Quickly fill the gaps in your project
- You are flexible to hire as many
- The recruiting and search process is long
- Onboarding time is longer
Why to Use IT Outsourcing
Now that you understand what Outsourcing denotes, its models, plus types, it is time to clarify why you would require outsourcing and if you actually need one. Let us check a few situations that suggest that you should opt for IT outsourcing:
Top 3 Instances Why You Need IT Outsourcing
- You are domain expert with some idea
- You built an early stage start up
- You need technical support
You Have Ideas and Are a Domain Expert
In case you are an industry expert with the idea that comes with the ability to solve a real issue, IT outsourcing would be your choice. In the said case, the main goal for you is entering the market and testing the solution fast. An outsourced team would help you in validating the idea, building an MVP so that you could check the hypothesis, also implement all changes in your product based on market needs. It saves you enough money, time and allows you to reach your desired goal.
You Are an Early-Stage Start-up
It is usually a common case where all young start ups spend their money much quicker than they would get a solid team along with a product that’s ready-to-market. The study conducted by ParamInfo found that financial problems among the 3rd reason why the startup fails. So, it will make a lot of sense if you reduce the costs through hiring a team of outsourced professionals while your business is striving and surviving on the money of the investor. You could employ a full-cycle studio for product development that covers all the blind spots also brings your product to real life.
You Would Need a Technical Support
Even in case you have a ready solution, it would demand certain technical improvements or frameworks for the backend components, integrations with the business software, new language, UX and UI design – hence, it makes greater sense to identify an experienced partner in business. There are several functions that any IT outsourcing company could cover, also it saves you the time you would otherwise spend on by looking for the staffs that are qualified.
In the blog, we attempted to bring out the myth that outsourcing IT is a deliverable that is low-profile and a decision that’s last resort. We figured out that even the big tech companies outsource providing innumerable benefits. Also, this is a great option for all new start-ups to save time as well as money.