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Jan 30, 2015

8 outsourcing myths debunked (part I)

Author: Silviu Panait

Myth: The main reason why companies decide to outsource is cost-reduction

Fact: The main reason behind outsourcing is the company’s growth, in terms of capability, capacity and geographic reach

For a long time, reducing costs had been the only reason why companies looked into outsourcing. Many times, however, this turned out to be just a mirage, due to the mismatch between expectations and reality. Now that the process is much better understood, the requirements are clearer and the services of a higher quality, the reasons behind outsourcing have also evolved. Cost-reduction is no longer the main incentive to outsource, but rather the quality of the services provided has become the main drive. Getting quick access to the right specialist for a specific job is much more efficient than getting someone on board full-time to fill a position that might not even be needed 6 months later. Let’s face it: if you’re not a Software Development company, chances are that an outsourcing partner, which specializes in software development, will do better at it than you would.

Myth: Cultural differences are easy to circumvent and don’t have a big impact on my project

Fact: Cultural differences are one of the main reasons – if not The main reason – why outsourcing fails

The cultural gap myth could not be further from the truth. Just as your organizational culture is important, the cultural compatibility between you and your outsourcing partner is of the utmost importance as well. Always do your best to understand the people you are trying to work with – it will save you time and money. It’s, again, a matter of expectations vs reality – it doesn’t matter what working climate you’re accustomed to; what’s important is that you speak the same language as your outsourcing partner (both literally and figuratively).

Myth: The customer wastes too much time training the outsourcing partner’s employees

Fact: Trainings are necessary if it’s more than just a simple capacity project, but it should never be perceived as wasted time

Just like with the start of any relationship, a period of adjustments is needed with outsourcing as well. 10 clients from the same industry, wanting the same thing, will request it in 10 different ways. It’s the outsourcing partner’s job to understand the client’s real needs, and the client’s job to define them as clearly as possible. There is no universal formula, but with the right project management, trainings and procedures in place, the knowledge transfer phase should be smooth and efficient – and will certainly prove well worth its time.

Myth: You need a bulletproof contract to ensure a good partnership

Fact: Most of the time, writing lengthy contracts that try to encompass all possible situations is just a waste of time

Sometimes, customers approach outsourcing companies with doubts, and with the fear that they might be wrong to consider outsourcing in the first place. In other cases, the client brings bad experiences form previous collaborations into the relationship. In both situations, they try to fix all of that with an ironclad contract they think should solve everything. This is an impossible task, a quest for the unattainable – and it only wastes a lot of time on both sides. That’s because an efficient outsourcing collaboration is flexible, constantly evolving, changing according to the client’s needs, so trying to predict all the possible scenarios is a pipe dream. All that a solid contract needs is the best possible understanding of roles and responsibilities, and efficient procedures for change management.

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