Many companies are turning to third-party vendors for outsourcing certain business operations, such as software development, to attain faster software delivery times and maintain profitability. As per Statista's projections, the IT outsourcing industry is set to experience a significant 8.20% annual growth rate (CAGR 2022-2027), reaching a market worth of US$587.60bn by 2027, indicating a high demand for IT outsourcing.
However, while outsourcing can offer various competitive benefits, it can also present challenges that companies need to overcome while collaborating with their software vendors. This article explores some effective ways to foster fruitful cooperation with external software development outsourcing partners while minimizing business risks.
1. Conduct Due Diligence
It's challenging to find an appropriate software delivery partner, so it's crucial to have an explicit list of requirements to guide the search. When considering potential vendors, take into account their technology, cultural fit, product mix, and industry experience. Word-of-mouth recommendations can also be helpful, and independent platforms such as GoodFirms or Clutch can provide unbiased reviews to simplify the selection process. To determine whether a vendor is a good long-term fit, consider working with them on a trial or MVP basis, allowing them to complete several tasks and demonstrate their competence in a short time.
2. Increase trust
To build trust, it's important to ensure that your offshore team adheres to your country's legal, IP, and regulatory standards. Before disclosing confidential information about your project or clients, consider preparing a non-disclosure agreement (NDA) to protect your ideas. This can help you feel more confident about working with your offshore team in the long-term.
3. Have high transparency
In order to ensure that you meet your business goals and avoid missing important milestones, it's important to maintain clear and transparent operations, with smooth and open communication between all parties involved. This will enable companies to track progress in real-time, and by sharing the KPI system with your external partner, everyone can have a complete understanding of the situation. Doing so can increase team productivity and help achieve your determined business goals.
4. Ensure effective communication
It is important to agree upon the most suitable communication format, channels, and schedule between all parties involved in order to manage different time zones and national holidays effectively. It is recommended to set a mutually comfortable time span for virtual meetings with managers or team members, allocating a few hours per day to keep everyone up to date on the latest updates and processes.
Additionally, it may be beneficial to leverage the time difference to gain a competitive advantage. For example, when deploying a new version, it is better to choose a time that has the least impact on end-users. By having your overseas teamwork during their normal office hours, your customers can wake up to a new and improved version without any interruption.
5. Pay more attention to management
To ensure smooth operations and meet deadlines, it is advisable to consider hiring a local manager who can serve as the main point of contact between your organization and the offshore team. This person can delegate tasks, monitor development and testing activities, report progress and issues, and lead the teams to achieve the desired goals.
However, it is important to avoid micromanaging as this can lead to a lack of trust and negatively affect the working environment and outcomes. Instead, you can build trust with your assigned leader and ensure that every member of the offshore team understands their tasks, goals, and expected outcomes. Providing immediate feedback is crucial to achieving success as it helps define and meet expectations and deliver quality results within the defined budget.
Side-note:
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