5 reasons why companies choose to outsource
If there’s one thing that is likely to happen to any tech business, that’s outsourcing. As the years go by, the market of IT specialists expands — crossing and destroying geographical borders. With a huge heap of tech expertise available, why not benefit from it as a business?
According to Statista, the net worth of global outsourcing reached $85.6 billion in 2018 — so far, an absolute maximum. There’s no sign the trend is going away any time soon, so you’d better go explore it.
Who uses outsourcing?
Outsourcing tech services is a great way to strengthen your business while cutting costs on employee expenses. Most importantly, the outsourcing market creates a wide pool of expertise. So businesses don’t have to worry they lack resources any longer. Whenever you need a part-time UX specialist, or a QA to test your product, you can expect an outsourcing provider to give you the right expertise.
There’s a misconception that outsourcing is a small-business thing — a helping hand offered to those who don’t have enough employees. That’s a huge mistake. To understand that, it’s enough to look into the stats on average hiring time across IT companies: The global time to hire an IT/design employee equals 56 hours. 10 people makes 560 hours. With the help of an outsourcing service, these hours are not the part of your company’s workload. Isn’t it alone a huge advantage?
Take a look at the big market players that use outsourcing:
- GitHub: To develop one of their core sharing features, Gist, GitHub outsourced the services of Scott Chancon who eventually became GitHub’s CIO.
- BaseCamp: The initial version of BaseCamp, a globally known project management solution, was launched in 2004, quite unsuccessfully. It took the company a major app revamp to start generating revenue — all the changes have been implemented by an outsourced team.
- Slack: Yes, they’ve done it too. Slack outsourced web design and content services at the initial stages of product development. In fact, the huge part of the interface you see in Slack today have been created by outsourced teams.
The top 5 reasons to use outsourcing
Minimizing the hiring time is an important reason why companies choose outsourcing. But that’s only a fraction of all benefits. Check out our top 5 list:
1. Focus on the important stuff
Especially if your firm’s resources are limited, you don’t want to waste time on the operational tasks like IT system maintenance, but rather deal with crucial business growth decisions. Outsourcing gives you space.
If you look into the types of outsourced services, you’ll see that the majority of companies outsource accounting tasks, IT services, and digital marketing — those things they believe are not worth their time.
2. Avoid hiring specialists you won’t need
For every business there are jobs that are short-term. You may need a UX writer to write interface copy for your app, but unless you’re planning any major updates, you won’t need him/her to be a part of your team in a few months. Outsourcing helps you find external expertise without making any long-term hiring commitments.
3. World-class expertise readily available
The market is thriving, so why not benefit from it? Even if your business can spend heavy financial resources on recruitment, it’s doubtful whether it really needs to recruit. You can tap into global markets, check the most promising outsourcing destinations, engage in a few interviews, and get a pro-level team working on your project for just a fraction of costs.
In other words, if you’re asking yourself why to choose outsourcing, try to tweak the question and ask yourself why not.
4. Test the waters
Just as in case with GitHub, a person who has initially been hired via outsourcing can become a vital part of your team in the end. Many young startups are often in the dark about the type of expertise they will need to grow their business in the long run. Outsourcing gives them space to experiment with multiple approaches. Importantly, they don’t have to spend a fortune only to understand which core competencies they need and whom to hire in the future.
5. Let offshore companies save your money
If you compare the cost of development globally, you’ll see huge gaps — for example, $25 average hourly rate in Ukraine and Romania versus $50 in Northern America. This is why outsourcing production or service from an offshore company makes much sense for many companies — especially those based in the West.
How to choose an outsourcing provider
For many years, China and India have been the key outsourcing destinations for companies around the world. The leadership is shifting fast, though. The countries of Eastern and Central Europe — like Ukraine, Romania, and Serbia — are becoming more and more prominent on the market. This is due to the affordable cost of outsourcing in these countries, as well as a solid base of tech expertise.
Here are a few important points for you to consider before hiring an outsource partner:
- Portfolio is better than a business card. Always inquire the samples IT outsourcing projects the company has been working at. This will help you understand the types of expertise they own. Also, you can always make a contact to previous clients and ask them about their experience with the provider.
- Ensure it has well-established communication practices. The main thing about working with an outsource provider is you have to stay connected — before, during, and after the project completion. Ask whether a team hired for the project speaks your language, set up regular meetings, and inquire what online communication channels are available.
- Take part in candidate selection. Whether you have the expertise or not, ensure you’re present at the interviews. This will help you analyze the recruitment approach as well as serve as a huge asset in terms of your further communication with the team.
Outsourcing is an advantage as long as you have a valid strategy on how you want to grow your company. If you have what it takes, hiring specialists via third-party agencies will save your cost without decreasing production efficiency.