How to Plan Outsourcing Strategy

In this short article, we’ve only scratched the surface of this paramount topic. You can get more information about outsourcing from Onix Systems – Ukrainian development company, who covered a long journey from a small to almost a 150-staff outsourcing company with offices both in Ukraine and in the US.

IT is becoming an increasingly global place. Companies are in a constant pursuit for more cutting-edge competitive strategies. Unarguably, one of the top strategies is an offshore outsourcing.

A carefully crafted outsourcing strategy allows companies to meet their organizational objectives with greater efficiency, curtail on workforce expenses and carry out all of their IT projects more expediently.

However, there are many factors involved in devising a bullet-proof strategy: from the evaluation of financial costs, risk assessment to profit expectation. In other words, the strategizing needs some intentionality and reflection. As Pete Johnson put it:

“Strategy is style of thinking, a conscious and deliberate process, an intensive implementation system, the science of insuring future success.”

The following step-by-step guide of outsourcing strategy is here to help your company achieve its fullest potential in a bold step of outsourcing.

1. Zero down your raison d’être for outsourcing

What is the prime reason for your desire to outsource? You’ve got to do some thorough analysis: do hard work of careful evaluation of your in-house tools and skills. Are they really not enough? Perhaps you are hard-pressed, and in need of operational costs reduction, then you must consider an outsourcing option.

2. Set clear objectives

Your goal might be helping to launch a new startup. You might be wanting to grow exponentially and simultaneously cut some unnecessary expenses. That’s also fair. Above all, make sure you find a trustworthy offshore provider. Ultimately, long-term planning helps not only to reduce the costs but also provide access to a greater variety of resources.

3. Develop a meticulously-detailed plan

Do inventory and determine what you want as a company: are you offering a new product or expanding a new service abroad? If necessary, your detailed plan might prescribe in-house training staff to ship services or to hire new recruits for your foreign office.

4. Research foreign resources

One of the reasons for outsourcing a particular service is not only a cheaper labor force but also learning from foreign talents. In this stage, you can do the cost analysis and compare the pricing policies. You can also check the integrity of your future vendors or service providers. In the end, honesty is the best policy, and you don’t want to end up having a team of crooked managers abroad…

5. Evaluate the costs and inherent hazards

Training in-house workers and hiring an appropriate office space might be pricier than outsourcing your services abroad. So sit down, take a calculator, and count the cost. For instance, you’ve got to know the value of maintenance cost. In-house personnel will sooner or later has to travel abroad to monitor the work of foreign hired hands (travel costs). On top of that, there could be equipment costs. Spend some time in careful research if the same talents could be hired in your home country without the need to employ outside vendors, contractors, etc.

6. Emphasize the expected quality

The real risk here is having the outside vendor or contractor who doesn’t have a clue about the quality requirements of your company. If this is the case, then you might incur more expenses due to revisiting the mistakes of such a vendor. So it’s preferable to have a ready-made list of quality standards ahead of time. Your policy should be known to the offshore and in-house team. At the end of the day, you want to be on the same page with all the folks both your in-house and offshore team.

7. Determine which functions to outsource first

To avoid some hidden pitfalls define which functions to outsource as a top priority. It would be wise to transfer those functions of your business which are less people-dependent and require minimum know-how. These might be your non-core functions especially if you are looking for a quick cost reduction. Later on, you could expand the range of your tasks.

8. Study the cultural and linguistic aspects

Make sure you know that your ideas are relevantly transferred (interpreted, translated) to your target culture. Cultural differences have to be overcome, let alone language barriers. There is a specific business climate that has to be mastered before you venture into the great unknown of the outside world. Your needs might be a bit too abstract or technical for your target country. Be relevant both to in-house and external personnel.

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