According to a report by ISG, IT services account for 72% of all worldwide outsourcing contract values in the outsourcing industry.

‍

Many businesses overlook the benefits of outsourcing their IT needs to a qualified agency. This is often due to some myths and misunderstandings about what offshoring entails and how it can help them grow. Some of these myths include concerns about security, ethics, and accessibility of offshore IT services.

‍

However, these myths are not based on facts and can limit the opportunities that outsourcing can provide. Outsourcing IT services can offer many advantages, such as cost savings, access to talent, and flexibility.

‍

In this article, we’re going to discover some popular misconceptions about IT outsourcing!

‍

1. No Control Over Development

Outsourcing software development does not mean giving up control over the project. The client has a say in how the project is run and what the final product should look like. The external team takes care of the technical aspects and reports to the client regularly.

‍

Communication is critical to the success of outsourcing. Meetings should be arranged on a regular basis between the customer and the external team to discuss the project's progress, issues, and solutions. Any significant decisions impacting the project must be authorized by the client. The external team cannot make those decisions without the client's permission. Both the customer and the external team share responsibility for the project's success.

‍

As a result, precise criteria are essential for each project. The more information offered to outsourced developers, the better the output of bespoke software development. Assuming you can abandon the project completely and forget about it until the product is completed, you risk producing a product that falls short of your expectations.

‍

2. Differences In Cultures And Communication Will Harm The Outcome

It is a prevalent misunderstanding that outsourcing to a foreign team will result in communication issues, cultural confrontations, and scheduling issues.

‍

This is not always true for all projects, particularly those with prior agreement on the primary aspects. When planning to outsource a significant project, it is critical to meet with the whole team, not just the project leader. If your team works with contractors, you should set up a meeting with them as well.

‍

Determine how you will handle any time differences. Set the essential members' availability hours and agree on how to contact them in an emergency.

‍

Create communication standards that encourage the teams to be proactive and thorough in resolving issues. Conduct online daily meetings, regular personal gatherings, and spontaneous live discussions when you need to brainstorm.

‍

3. Cheap Labor = Poor Quality

Some businesses believe that by engaging outsourced specialists at reduced prices, they are jeopardizing the quality of their jobs. This may appear fair, but it frequently indicates that these firms have not conducted adequate market research.

‍

Many factors influence the quality of outsourced work, one of which is the location of the outsourcing provider. Outsourced professionals are paid based on the cost of living in their respective countries.

‍

What is a cheap rate in one's own nation, while desirable, may not be the same when outsourcing to another country. Outsourced professionals from low-cost nations can provide great services at reasonable prices.

‍

Some regions known for their low outsourcing rates, like Vietnam, have a lot of highly skilled software developers. This proves that rates and quality are not always connected, and also shows the possibility of finding great talent at good rates.

‍

‍

‍

4. Outsourced Development Takes Longer Than In-House Development

Many businesses may believe that employing an in-house team is more cost-effective than outsourcing software development. They may have more faith in their own team because they are aware of their abilities and expertise. They may also believe that their own team can communicate more effectively and handle project issues more readily.

‍

However, there are several advantages to outsourcing software development that can make it faster and more effective than in-house development. You save time and money by not having to locate and hire new developers when you outsource. You may rely on the outsourcing company to offer you the most qualified personnel for your project.

‍

Outsourcing companies are also masters in custom development. They have developed procedures and strategies to ensure high-quality and timely delivery of software solutions.

‍

Furthermore, if your in-house staff is juggling too many tasks, they may become overwhelmed and lose productivity. Outsourcing some of your work might help you prevent burnout while also saving money. The goal is to strike the correct balance between utilizing in-house expertise and capitalizing on the advantages of external collaboration.

‍

5. Never Outsource Core Business Functions

The key services provided by an IT organization that underlie its value offer are referred to as core business functions. These services not only describe the company's mission, but also the many methods in which it serves its consumers and achieves its objectives.

‍

Interestingly, IT is one of the fundamental business operations of a software development organization, acting as the foundation upon which the company's technical solutions are built. 

‍

According to Deloitte's data from 2022, 76% of organizations outsourced much of their IT tasks. Smaller organizations, in our experience, tend to outsource accounting, customer support, and marketing in addition to software development services.

‍

‍

One of the key advantages of outsourcing software development is the ability to establish a team of professionals with the specific expertise required to build a product from the ground up - from software developers and QA engineers to project managers, designers, analysts, marketers, and customer support representatives.

‍

Furthermore, if the stage of growth or plan of your firm necessitates the outsourcing of critical business tasks, you cannot disregard this reality. The key to dispelling the myth is to invest time in locating a reliable outsourcing firm capable of offering the required professionals.

‍

IT Outsourcing: Beyond the Myths

‍

According to Statista, IT Outsourcing revenue is expected to show an annual growth rate (CAGR 2023-2028) of 11.07%, resulting in a market volume of US$777.70 billion by 2028.

‍

In 2022, as reported by Computer Economics (US & CA), 49.6% of businesses stated they planned to raise their outsourcing share. Only 10.4% wanted to reduce outsourcing, while 40% anticipated no change. As a result, the outsourcing market is expected to expand further.

‍

‍

Some of the factors driving this growth are the increasing demand for digital transformation, enterprise applications, and remote work solutions across various industries and regions. The leading countries in offshore business services are India, China, and the United States, followed by Germany, Spain, and the Netherlands.

‍

IT Outsourcing is divided into four main markets depending on different services:

‍

Administration Outsourcing refers to the market for services associated with the external sourcing of typical IT administration tasks such as hardware supply, setup, configuration, maintenance, security, and support.

Application Outsourcing refers to the market for all IT application services in a software production setting, encompassing everything from requirement assessments to software application idea and design.

Web Hosting encompasses all forms of internet hosting services that enable businesses or individuals to offer access to their website via the World Wide Web.

Other IT Outsourcing refers to the total revenue of IT outsourcing services that are not particularly listed in the other IT Outsourcing markets, such as infrastructure outsourcing, network outsourcing, and managed services.

‍

Conclusion

IT outsourcing offers advantages and disadvantages that you should carefully assess before hiring an overseas staff. However, don't let outsourcing preconceptions lead you astray. They do have a basis, but they are generally the result of a lax or sloppy approach. You will most likely have to go the additional mile to fine-tune the result of your outsourcing team's work, but this is your chance to delve into the broadest talent pool and profit from the most extreme prospects for innovation and change.

‍

Connect with Dirox today to discover how our outsourcing team can enhance your products at the most competitive quality and price!

‍

‍