There was a time when organizations opted for outsourcing software development resources just to cut costs. Outsourcing means when a development team works on a project from a different country. This automatically ensures a lower burden of overheads and additional resources. But, cutting costs is no longer the only reason for choosing outsourcing in the current period, especially the post-Covid era.

Did you know that according to GrandViewResearch, the size of the global IT Outsourcing market was valued at $556.67 billion in 2020 accounting for 77.75% of the overall market and that it would be valued at around $ 806.63 billion by 2025.

Unplanned outsourcing could lead to significant losses in productivity as the developers might not completely understand the business requirements. If a proper approach is followed, building a successful outsourcing strategy can be easy.

Before we look at how a successful strategy can be built, let’s understand the three types of outsourcing models—Onshore, Offshore and Nearshore.

Onshore outsourcing means having a full-fledged in-house IT team for software services. It is a rather costly option. The talent pool is also limited.

Offshore outsourcing is the most cost-effective model. For the projects that won’t be affected majorly by difference in time zones, language, and culture, this model can work well. Projects that just need high-performing developers, no onsite visit or client interaction, an offshore team is the key.

In Nearshore outsourcing, the team is available within similar working hours and is easily reachable for consultations and meetings if needed. It enables enterprises to save costs and deliver high quality software without hassles with the help of Agile software development framework. It also offers access to a large talent pool.

However, none of the models might work for a project if not properly implemented. The following 6 major steps can help build a successful outsourcing strategy:

Defining detailed outsourcing goals: Outlining the outsourcing goals in detail before planning to invest in a particular model is not only the smart but also the most basic thing to do. It not only helps the company understand their personnel and tech needs but also ensures effective and efficient usage of the resources.

Plan budget for unexpected risks: Any project will have a budget limit. Every project’s budget limit varies depending on the needs and market dynamics. However, it is always wise to have contingencies, isn’t it? Planning ahead for the uncertainties like an employee leaving or a need to ramp up the team or a change in product needs due to varying market circumstances, can be advantageous.

Opt for the right outsourcing model: As we discussed above, there are three types of outsourcing models. Any organization must carefully decide on which model will be the most beneficial for them. They need to take into consideration several factors before making any decision. From cost, collaboration needs and Agility needs to technology stack and types of talent needed, the organization must know the needs for their projects properly before investing in a particular model.

Mitigate risks: No project is free of risks. No matter how much you plan ahead, there will be unexpected risks. It is important to ensure that the risks are mitigated timely before it can catastrophically impact the project. Risks like hidden costs, scope creep risk, deadline delays, security risk and not sticking to the core principle of the project, can all lead to the project failing.

Ensure continuous communication: The best way to deal with any risk is proper planning and ensuring continuous communication. Building trust is important for projects to be completed successfully. Any outsourcing vendor takes time to learn about a client’s business culture, and accordingly trains the team on how it functions and what it requires. This relationship helps vendors provide the most appropriate company-specific solutions while ensuring flexibility to predict a company’s changing needs in the future.

Track project progress: Finally, it is a must to track and monitor the progress of the project continuously. A company or development team must have clear key performance indicators (KPIs) in place. With continuous tracking, the company can ensure that the project is completed on time and the quality is maintained. It can also help them learn what to avoid the next time they outsource a project.

Outsourcing IT needs has several benefits. If a company makes meticulous choice when deciding on the right outsourcing model for a particular project, it can not only save costs but also deliver products of high quality. Aspire System’s Nearshoring Model offers the benefits of Offshoring model combined with the convenience of the Onshoring model.

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