Co-founder and CEO of Ideamotive. Entrepreneur, mentor and startup advisor.
Pandemics reshape all aspects of our life, and many businesses try to keep pace with our changeable world and benefit from outsourcing. McKinsey Global Survey suggests that Covid-19 accelerated digitization processes and many companies seek to enhance their operations and profitability with the help of modern technologies. Outsourcing and offshoring is a great solution for IT companies striving for business development and expansion without losing their time and money. The State of CEE IT Outsourcing and Offshoring 2021 Report shows other reasons for outsourcing IT services, including access to skills not available in-house, ability to innovate, flexibility, and organization scale.
IT outsourcing is the use of external services that enable effective delivery of business processes, application services, and infrastructure solutions for IT business benefits. It includes utility services, software, and cloud-enabled outsourcing. With outsourcing, clients can easily develop sourcing strategies, choose the best IT service providers, sign the most lucrative contracts, and establish a fulfilling partnership with foreign providers.
COO of Ideamotive Kamil Osiecki has recently held a webinar in which he profoundly described main IT outsourcing challenges and offered potential solutions. In this article, we’ve collected the main insights from the webinar, but we recommend watching the full version in order to get a better understanding of the current industry trends.
In this article, we want to show you some roadblocks you may encounter on your way to success. You should be aware of the foremost IT issues related to the internal and external outsourcing operations and not be afraid to solve them. We hope that after reading about the top 7 challenges you can easily recognize them, and be ready to withstand any difficulties.
Global & European IT Outsourcing Overview
IT outsourcing contracts became an integral element of modern business worldwide. Despite maligning Covid-19 outcomes, the IT market regains its positions. The global IT outsourcing market was valued at USD 333.7 billion in 2019, and it is expected to reach USD 397.6 billion by 2025, registering a CAGR of 4.5%. This tendency is reflected in the developers’ activity as well. We can see it from the report showing 45% of IT employees have more working hours than they had before quarantine, and 30% of the respondents didn’t see major changes in their working hours. However, the pandemic altered our work paradigm, and now many people are used to remote work. Hiring remote software developers is the best strategy in post-Covid times, and outsourcing is a great option for software development services. Today, cost optimization via outsourcing became more accessible throughout the world.
CEE countries: Poland, Belarus, Romania, and Ukraine is a promising IT outsourcing region with a plethora of factors attracting foreign investors. They include strong technical expertise, good command of English, cultural proximity, and an innovative mindset. Outsourced technologies that are likely to experience a sharp increase in popularity are AR/VR, RPA, AI automation, and the cloud. There are many companies, taking advantage of CEE IT outsourcing, such as Google, PayPal, Uber, Github, Facebook, Samsung, etc. But they mostly include small entities and boutique companies, and one in four of these entities employ less than ten people. It shows market fragmentation, as many companies specialize in peculiar vertical industries and technologies like e-commerce.
Take a look at the excerpt from the webinar to learn more:
Top IT Outsourcing Challenges
The concept of outsourcing entails offshoring and nearshoring processes, but you should not mix them up. Offshoring is a business transferring from a developed economy into an emerging and nearshoring means dealing with a close country. For more detailed information on this topic, read the article Pros And Cons Of IT Nearshoring And Offshoring on our site. If you are considering outsourcing in your team but worry about possible outcomes, pay attention to the list of IT outsourcing challenges that will allow you to manage all of them in the future.
Challenge 1: Overseeing Outsourced Developers
Many businesses cannot resolve to outsource because of a lack of trust and a need to control outcomes. In order to manage the issue of trust, you should resort to the following methods. The first step is a trial period that is a short-term engagement allowing you to save your time and money. Hire a developer for several weeks and decide whether you want to continue doing business with them.
Another way is a partner’s ownership that will provide you with a good match. Many developers consider only technical skills, but cultural adherence is a major trust component. You can overcome management challenges with reports on-demand and communication.
Review this excerpt from the webinar to discover more about this challenge:
Challenge 2: Choosing Right Tools
Among IT outsourcing challenges to consider, we want to draw your attention to the issue of tools. You may find it difficult to find a common language with your outsourcing team, but time management and communication tools will come in handy in case of misunderstandings. Remember that people should respect your rules and adjust to them. Develop your own communication tools to secure a healthy environment and build trustful relationships. We want to underline that it may not be the only possible way to deal with a tools challenge, and there are always risks involved.
Check the webinar’s excerpt about the importance of adapting your outsourcing team to your communication tools:
Challenge 3: Working in Different Timezones
Timezones issue is another difficulty that discourages IT companies from outsourcing practices. In project development,
The principal thing to look at in timezones management is overlap and shifted time. For example, the outsourcing team that works for PayPal starts at noon and ends at 8 pm resulting in a 5-6 hours overlap.
You should decide for yourself whether it is challenging for you since different companies have different viewpoints regarding this question. On the one hand, you couldn’t be able to have a developer on demand, but on the other, it may be unprofitable to hire an employee in the same timezone for double pay.
Take a look at the excerpt from the webinar to learn more about working with developers from different timezones:
Challenge 4: Checking Developers Experience
Customers face a challenge when they need to define if a developer is vetted to pay as much as an employee deserves. The most convenient and simple way is to conduct a job interview on your own as you know what professional is suitable for your team. However, it can take much time to review CVs and interview every person you hire. Consider the following tips necessary for selecting the best candidate for a position in your company.
Try to be specific in outlining not only must-haves but also nice-haves and soft skills. Explain what a senior position means to you, giving specific details of experience and skills the candidate must possess. Ask for pre-screening that includes GitHub profiles, records of tech interviews, as well as code challenges. It’d be great to have recorded an internal interview to assess the developer immediately. You should also ask them about guarantees and require soft or HR interviews. Take into account that the cultural fit is a crucial thing for an outsourced developer and entails values, perspectives, and communication skills.
Our COO explains in more detail how to check developers’ experience in this webinar’s excerpt:
Challenge 5: Ensuring Security and IP
Big firms and enterprises need to pay attention to the security and IP outsourcing challenge. Such concepts as cyber risk profile, low and high provision are of great importance for making business securely. Statistics say that 70,73% of the European countries have low exposure risk. That’s predetermined by the European membership that provides additional protection to the outsourcers.
The EU has established intellectual property law to manage intangible assets effectively. It means that computer programs are legally protected against unauthorized reproduction. Moreover, the EU standardized other legislations for personal and general data protection.
You can find more details on security and IP challenges in this webinar’s excerpt:
Challenge 6: Establishing Communication Between Outsourced Developers and Your Team
Language is an important communication aspect, and your team must have a good command of English that is a global language. However, there are several other aspects to consider for managing the communication challenge within your team. There are sprint plannings, brainstorming meetings, and dailies that refer to the overlap you have with your developers. Take advantage of different communication tools and choose yours. You should as well require constant access to the developer. The main tip is to treat all the employees as a part of your team, as the force is in unity.
Check the webinar’s excerpt for more tips on establishing communication between your in-house team and the outsourcing developers:
Challenge 7: Solving the Problem of Developers Dropping Out of the Project
It may be a rather challenging situation when your developer drops out of a project. Try to keep calm and remember that your project will not fail because of it. Everything is ruled by contracts, so take care that you have the right partner in place. Partnership presupposes employee replacement; that’s why it’s not your problem to worry about. The only thing is that you should care in advance that your partnership agreement includes these provisions.
Find more details on solving this challenge in the webinar’s expert:
We hope that this summary of the Ideamotive webinar helped you learn more about the main IT outsourcing challenges and their potential solutions. If you want to get access to the full webinar containing even more useful insights and actionable tips, feel free to get the webinar recording here.
Despite damaging pandemic outcomes, you need to find forces and means to make your business successful, and outsourcing is one of the best possible ways for this. Consider outsourced or offshore developers to build your digital product, which you can reach on our site. We have dozens of web and mobile app development remote experts in our talent network to support you at every stage of the process, from business validation and ideation to design, development, and release. We will provide you with business expertise and build a product team from scratch composed of experts perfectly matched with your technology, industry, company culture, and team dynamics.
Robert is a co-founder of Ideamotive. Entrepreneur, who with passion spreads digital revolution all around the internet. Mentor and advisor at startup accelerators. Loves to learn and discover new business models.