The Biggest Outsourcing Lessons of the Past 11 Years

BJIT
7 min readJul 26, 2022

Outsourcing may still appear to be a step too far for many organizations. Nonetheless, IT outsourcing continues to pique the curiosity of businesses throughout the world. After 20 years of experience as an outsourcing partner in the United States, Japan, Singapore, Sweden, the Netherlands, Bangladesh, and Finland, we have learned that many of the notions we have about outsourcing are not totally accurate.

Photo by Chris Montgomery on Unsplash

What first sparked the interest in IT outsourcing?

Maybe it was the promise of being able to rein in what many felt were unmanageable, upward spiraling IT costs, or the fascination of being able to reduce costs by around 3%. But traditionally, a lot of companies have seen outsourcing as a quick way to generate money by unloading their IT assets and effectively leasing them back while also reducing the number of non-core employees.

Whatever the underlying force, there have been numerous lessons learned that prospective outsourcing customers would do well to review before taking the plunge into this relatively uncharted territory. It might be challenging to see past the hype when the unpleasant lessons are deeply buried for many people.

Although IT offshore outsourcing is receiving a lot of attention, there is also a big controversy about the practice. Particularly among those who tried outsourcing early, the animosity will persist until the scars and the corporate memory of the failures fade. Many individuals are now realizing that hidden diamonds were sold along with the coal they were sold and that their return is proving to be rather expensive.

Of course, a lot of news reports talk about winning new, bigger contracts. Indeed, it was made known that one company intended to switch outsourcing partners after many years of service — something that many observers thought was not feasible. Since many other firms would probably try to make similar changes if this shift was successful, many people were interested in the outcome.

These contracts taught us a few quick things.

First, there was an excessive focus on short-term cost reductions and little attention was paid to better service quality or delivery.

Second, those contracts were drafted in a hurry and were unsure of what was anticipated; as a result, many of the savings that were anticipated did not occur, there was little flexibility, and adjustments to the business were not considered.

Here are the most important lessons learned from outsourcing over the past eleven years.

#1: Outsourcing is a methodology, but it’s not necessarily a money-saving move.

Offshoring is necessary to accomplish a true “change” in terms of cost reductions. However, moving to outsource offshore presents additional intriguing logistical and communication issues. Do not assume that you really should undergo Offshore IT Services in Bangladesh and Singapore just because everyone else is.

The most crucial question to ask when considering IT outsourcing is how vital technology and systems are to your company. If you believe that the clever application of technology may provide you with a competitive edge or that others may get that advantage over you, you might consider thinking beyond the traditional sorts of contracts.

Therefore, BJIT advises clients to choose outsourcing based on much more strategic considerations:

  • In order to cut financing expenses, finance long-term growth with short-term resources, and lower the chance of having their ownership stake reduced.
  • 24-hour operational redundancy
  • Operational responsibility may be increased in a champion-challenger structure.
  • Provide flexible capacity through security and analytics to prepare for unpredictable peaks and troughs.

The BJIT Advantage: BJIT provides onshore, nearshore, and offshore service models to drive deep strategic partnerships equipped with global delivery solutions that meet specific compliance requirements, talent, cost, proximity, language skills, effectiveness, sustainability, and business continuity requirements, as well as substantial savings through labor arbitrage.

#2: Timing is important when outsourcing.

Business owners and executives don’t need a lot of money to benefit from outsourcing. They must have a firm grasp of their core competencies, an essential process element, predictive and illuminating data, a well-defined operational plan, and the capacity for efficient online communication and collaboration. Along with being completely focused on the outcomes they must provide for their organizations, they also need the enthusiasm and appetite to investigate new areas.

The good news is that smaller companies may now get the components needed to effectively outsource. The problem is that acquiring the elements will take time, and many business owners feel they don’t have that kind of time. The specifications for development processes are always changing, including those for materials, time, and resources. Additionally, the rigidity of the fixed-price model could make it difficult to adapt to these changes. As a result, it would either increase your expenses or lower the quality of the final output.

The BJIT Advantage: Thoroughly comprehend the various outsourcing models and select the one that best suits your needs. There are three models.

  • Fixed-price arrangement: You may specify a list of needs as well as the budget and deadline. Because of the rigidity, outsourcing companies frequently sacrifice a few features in order to meet the deadline, so you would have to pay more in order to satisfy your expectations. This paradigm is best for tasks with strict deadlines and short durations.
  • The time and material approach: This helps you eliminate hidden expenses since you just have to pay for the time and material costs. Long-term collaborations work well with this concept.
  • Dedicated development team: In this strategy, the digital divide in your parent firm is filled by recruiting specialists or a talented development team. It is less expensive than having a team on staff. You’ll have more authority over your contracted team in this situation.

#3: The process of outsourcing exposes flaws in a company’s workflow.

The decision to outsource a company’s operations pushes the problem of process optimization in those areas. It defines handoff points and their associated accountabilities, at the very least. The outsourced workflow parts are then recorded, examined, and optimized.

There are several reasons why pilot programs fail, but in our opinion, the largest one by far is the absence of processes and structure on the part of potential clients. Simply said, many potential clients’ operations rely too much on certain individuals, making it impossible for work to go normally without them. Without these individuals, projects cannot be presented, process stages cannot be followed, and whole processes cannot be carried out.

The BJIT Advantage: We evaluate our abilities to collaborate as outsourcing partners during the pilot phase of our tried-and-tested outsourcing method before becoming the creative force for our customers. BJIT records examine and optimize processes to determine which elements need to be outsourced. Only after successfully completing this step do we move on to contracting.

#4: SMEs may use the same outsourcing business methods as larger corporations.

SMEs frequently view outsourcing from a very pragmatic and short-term perspective, seeing it merely as a tool to reduce costs. When SMEs contact us for assistance with their design, development, or digital marketing needs, they frequently only have certain projects in mind. Many of them order jobs in the same haste, contextless, and with little information as they would order fast food.

Big corporate clients, on the other hand, approach outsourcing with a lot more care and planning. Outsourcing is one of the techniques they use to achieve a certain goal that they have in mind.

They cooperate with us to finish pilot projects as a consequence, paying special attention to the results and procedures. They collaborate with us to map out procedures, pinpoint weak spots, come up with remedies, and test them.

Investing in trial initiatives doesn’t cost SMEs more than it does large corporate clients. In fact, because they frequently engage more people in the process, we estimate that our large corporate clients spend substantially more executive time working through pilot projects with us. Additionally, clients typically receive much higher returns since we can create highly efficient, successful outsourced teams that serve as virtual extensions of their onshore teams.

The BJIT Advantage: BJIT can assist you in imagining, delivering, and managing your future, wherever you compete, utilizing the newest technology, from strategy formulation through implementation, if you’re prepared to innovate and transform your organization. Because impact isn’t produced in a vacuum. As a team, we can change history.

#5: The future is in managed services

Over the years, offshore clients have transitioned through a variety of offshoring models, from straightforward pay-by-the-hour contracts to skills-based captives that they later sold. They are currently moving toward a phase that is best characterized as managed services.

For data center and storage services, clients are searching for AMS — application management services managed services. This outcome-based approach to outsourcing makes use of the standardization, process optimization, knowledge, and efficiencies that offshore service providers have been able to accomplish, in addition to the labor arbitrage offered by an offshore model.

The BJIT Advantage: The environment of information technology today is more complicated than ever, and its upkeep costs are rising. The application management experts at BJIT can assist businesses in overcoming these obstacles to enhance application performance and provide better business outcomes. With our adaptable framework, organizations can precisely tailor application management services (AMS) to their IT and operational goals. In addition to digital, enterprise resource planning, information management, and systems integration, we provide a broad spectrum of market-leading services. Our managed service advisory function, which helps our clients choose the best-managed service model and smoothly transition to the desired state, serves as the foundation for this capacity.

The Endnote

To keep a long-term software development project on track, both parties must maintain ongoing contact and support. Software development initiatives might go horribly wrong if they are seen as a “necessary evil.” Choosing the right outsourcing partner like BJIT may be a crucial ally in attaining corporate expansion.

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