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Budget Planning for IT Outsourcing. Extra Costs You Should Be Ready For

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QArea Team
QArea Team Marketing Manager
September 26, 2013
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Budget planning for IT outsourcingOutsourcing services bring joy and satisfaction, but when you get a bill, these feelings are washed away with huge astonishment. Certain statistics show that turnout costs can overcome the expected amount by 65%. Please don’t think that business partner wants to make a fool out of you.

The problem is that many companies remember only about obvious things, but completely forget about principles of outsourcing that are obscure and don’t lie on the surface.

Thus, after the work is finished clients read their bills with eyes wide open and a condition close to heart attack. They see abnormal sums of money they need to pay for the services and in most cases it didn’t fit their budgets.

That is the main reason why it is vital for you to know about hidden costs that the process of outsourcing can bring on, so that in future you could efficiently manage your expenses.

  1. First you need to understand that there will be an additional cost of 1-10% whilst choosing the outsourcing vendor. So, first to expect is additional costs of 1-10% during the process of outsourcing vendor choice. These costs are connected with workflow maintenance, RFP preparation, also estimation and analysis of vendor’s feedback.
  2. Next issue of additional expenses stands 2-3% and it is due to work transfer to the outsourcing company. It can last up to a year and it is the most significant and high-priced phase of outsourcing.
  3. There are certain processes, such as staff organization of work, maintenance of all processes, project management, and client communication, all that require more time that you think. Please, keep in mind that it is unlikely to avoid cultural and language difficulties. It’s very common when misunderstandings based on them result in workers dismissal, delays in work execution and as a result – loss of productiveness and effectiveness. So be ready for additional expenses of 3-5%.
  4. It is as well important to enhance your software development processes, i.e. 1-10% of additional costs.
  5. Also, if any development testing involved, you can expect to bear more expenses.
  6. And eventually, 6-10% of additional costs can pop up during maintenance of offshore contracts and business processes. This issue is one of the vital ones. This happens because the project manager takes huge responsibility for intervening work. They should not only control production process, but also plan project funding, solve conflict situations, take control over expenses and deadlines, etc.

With QArea you can avoid most of these expenses covering them in the contract. Good English skills, offices that are located over the world, the own team of software testers and more will definitely help you to reduce costs related with outsourcing.

As a conclusion, let’s say that investment planning is a crucial phase when deciding whether start outsourcing or not. In this respect, you should know exactly where and how much the funds should be directed. We hope these hidden but significant expenses will help you planning your budget in a right way, so that you could avoid unforeseen costs in future. If you are really thinking of outsourcing you should know about benefits of offshore outsourcing.


Outsourcing Development


Check out our related articles:

IT Outsourcing VS. In-House: What Is The Best For Your Business?

100 And 5 Reasons Why Outsourcing To Ukraine Is Good For Your Business

Infographic: Why Outsourcing?

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