How to Plan Outsourcing Strategy

QArea Team by QArea Team on August 2, 2012

How to Plan Outsourcing Strategy
Reading Time: 2 minutes


Since IT market has become global and software development companies have started to search for new competitive advantages they finally found out the possibility of offshore outsourcing.

Outsourcing enables software development companies to reduce labor costs and to execute IT projects of any complexity level and with any equipment requirements.

However, as any other process an offshore outsourcing needs its detailed planning. Otherwise you will not achieve the desired results. The following steps will help you to plan your outsourcing project in the best possible way.

Step 1: Define your goals

  • Make a long-term plan in case if you want to reduce costs as well as to get an access to other resources. Find reliable and experienced offshoring provider.
  • Outsource non-core and labour intensive functions in case if you want to reduce costs only.

Step 2: Choose optimal management policy

  • Make sure your employees feel secure and try to rest any kind of rumors. Your management policy should be clear and focused on the employees’ rights.
  • Do not expect to get extra cost savings by means of flexibility reducing.

Step 3: Define the functions to outsource

  • To avoid failures outsource functions which are of the little dependence on people and know-how transfer.
  • At the beginning outsource functions which are of less importance.
  • Non-core functions are to be outsourced in case of prompt short-term cost savings.

Step 4: Provider selection

  • To reach long-term cost savings select experienced, customer-driven provider with a lot of references.
  • To reach short-term cost savings select offshoring provider who has sufficient resources and lower service rates.
  • For long-term outsourcing projects it’s reasonable to pay more attention to the offshore destination’s features. Make time to compare information concerning economic stability and IT resources availability in different countries.
  • Visit your provider’s company for the sake of good order.

Step 5: Make sure your company is ready for changes

  • Inform your employees about both long-term and short-term goals of outsourcing process.
  • Avoid appearing any kind of rumors and make the situation as clear as possible.
  • Try to close cultural gap between you team and provider’s team in order to establish good job climate.

Step 6: Upgrade your operation

  • When providing the offshore outsourced team with network access make sure its security policy is up-to-dated.
  • You must see about uninterruptable communication between offshore team and your onshore employees.

Step 7: Take your time

  • Never start with outsourcing core functions and complex activities. Start low, go slow.

Step 8. Maximize the opportunity

  • Choose an economy on scale strategy in order to attract more suitable rates from an offshore provider.
  • At the beginning outsource only those functions in which your provider has a competitive advantage.

Outsourcing Development

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