5 Problems with Outsourcing and How You Can Overcome Them All
According to Statista, the global outsourcing market in 2019 amounted to over 92 billion dollars — and it doesn’t show signs of slowing down. While there are many reasons why an organization outsources its operations, the primary motivation has always been cost-cutting. Though that is an undeniable advantage, there are still many problems with outsourcing that are often overlooked. In this piece, we’ll discuss the common drawbacks of the model and how you can overcome them all with one solution.
What is outsourcing?
In order to discuss the drawbacks of the model, it is first essential to understand what outsourcing is all about.
In the tech industry, outsourcing is the practice of engaging third-party vendors on a contract basis to deliver software. This means either partnering with freelancers or companies that hire freelancers for one-off projects.
As mentioned earlier, it is one of the cheapest ways of getting work done and is usually used by companies looking to reduce operational costs over the short term.
What are the common problems with outsourcing?
1. Loss of control
When you outsource your development processes to a third-party vendor, you’re going to be working with an external company and not your in-house team. In other words, you’re hiring a contractor, not an employee.
This means that while you can provide details of what tasks or projects need to be accomplished, you have little to no control over the people working on the said project. Also, because the team is not working out of your local office, maintaining the level of control you desire over the entire project can be a challenge.
2. Exposure to data security threats
One of the primary concerns organizations have regarding working with distributed teams is cybersecurity and the protection of intellectual data. Unfortunately, when you work with an outsourcing agency, it isn’t something that you can always control.
And that’s because typically, the developers you work with on a contract basis will also be working simultaneously for other clients. In some cases, even your competitors. In such a scenario, ensuring that sensitive data is handled correctly and no security breach occurs can be a significant challenge.
Another reason is that, more often than not, outsourcing vendors don’t stress the need for GDPR policies, procedures, and other technical safety measures, exposing your business to potential security threats. And that’s one of the biggest problems with outsourcing.
3. Hidden costs
Earlier in the article, we discussed how organizations outsource to cut costs. However, it still doesn’t mean that it’s going to be as cheap as chips. For starters, if an outsourcing partner is offering you access to engineers at 10–20% of the costs as compared to hiring locally, then you best bet that the quality is going to be pretty low.
Secondly, since outsourcing is usually a pay-as-you-go model, you might end up spending way more than you planned for. Extra equipment, unaccounted overtime hours, and timeline extensions are some of the many hidden costs that you’ll have to consider
4. Focus on quantity, not quality
With outsourcing, since the lowest price is the main driver, it’s common for businesses to choose outsourcing vendors that offer the least expensive deal.
However, this means that the quality of the software delivered isn’t always the best. In order to meet deadlines and finish projects within the stipulated time, outsourcing vendors may assign developers at random to the project. You don’t get to interview them, learn their technical background, or decide if they are best suited to deliver the project.
On the other hand, since these engineers work for multiple clients, they do not have 100% customer focus, nor do they understand the entire scope of the project and the overall business. In such situations, the quality can really be hit-or-miss.
5. Cultural barriers
Sometimes, it’s easy to focus on reducing operational costs and simply getting the job done. However, if you choose to go the outsourcing route, then you must keep in mind that one of the common problems with outsourcing is that there are going to be some cultural barriers that you may have to overcome.
That’s because the engineers you hire are temporary teammates who don’t see or understand what your business stands for. They don’t need to embrace the unique DNA of your company or feel invested in the short and long-term goals of your business because they’re not in it for the long haul. This leads to a disconnect between your in-house and outsourced teams, leading to a culture gap that’s often hard to fix.
What’s our solution?
The above-listed problems with outsourcing can be fixed with one simple solution — offshore software development.
Read the full article at: https://thescalers.com/5-problems-with-outsourcing-and-how-you-can-overcome-them-all/
