Is IT Outsourcing a good choice?

 

Henry Ford argued, ” If there’s something we can’t do more efficiently, cheaper and better than our competitors, there’s no point in doing it, we should hire someone to do it better.” When searching for it specialists, companies often face the need to choose the most effective method of attracting specialists and organize their work. Outsourcing IT services is not a great and ideal solution for every organization, but there are many situations where it can be effective and viable. Being able to focus on the core business, access to tools and know-how, and cost reduction are the main factors in favor of outsourcing services, for which many companies choose this model.

 

Forecasts for the outsourcing market

In 2017. the outsourcing sector generated 88.9 billion USD in revenues. The total value of contracts in the information technology outsourcing (ITO) market amounted to $ 64.3 billion. Technavio analysts predict that by 2022 that figure will increase to more than $ 409 billion.

Source: http://www.abnewswire.com/pressreleases/it-outsourcing-market-2017-global-analysis-opportunities-and-forecast-to-2022_104181.html

 

According to the Whitelane Research report 2018/2019 European IT Sourcing Study Results over the next two years, companies will increasingly use outsourcing solutions. 75% of respondents plan to maintain or increase the volume of outsourcing. The number of companies that want to decrease outsourcing remains stable compared to past years and is at 11 %.

Overall, respondents are satisfied with their IT service providers, with 88% rating the relationship with IT providers as satisfactory.

Source: https://whitelane.com/2019/02/2018-2019-european-it-sourcing-results-published/

 

Such prospects of outsourcing development are promising for both customers and suppliers.

An increasing problem with IT professionals in Europe

Due to the rapid development of information technology and a sharp increase in demand for qualified professionals, according to the European Commission, the shortage of qualified IT professionals by 2020 could reach 825,000.

There is also a growing demand for IT testing professionals. According to a survey conducted among senior managers involved in IT management, the share of the IT budget dedicated to testing and quality assurance is expected to grow from 26% in 2017 up to 40% in 2019. In this situation, many companies may face a serious shortage of experienced quality assurance experts.

Therefore, companies are looking for specialists in the outsourcing model, in the countries where they work.  Many advantages encourage to choose Polish professionals for such an cooperation. For instance, geographical proximity, way of thinking associated with culture, exemplary quality of services, as well as a large group of experienced experts.

Is outsourcing effective?

 

In a report prepared by Deloitte based on a survey of CEOs from the United States, Europe and Asia (Source: https://www2.deloitte.com/us/en/pages/operations/articles/global-outsourcing-survey.html) the subjects noted the features of outsourcing that led them to consider the choice of this parameter, and are they:

 

  1. Partnerships that help organizations create and innovate faster than competitors.
    Companies see IT outsourcing service providers as a business solution that will enable them to effectively achieve their goals, innovate and improve the customer experience, not just a simple tool to reduce costs. Cost reductions are still expected, although many organizations plan to invest these savings in business development.
  2. Cyber-security management.
    For respondents, cyber-security threats are currently a priority, and most respondents actively manage risks by applying appropriate security measures from their suppliers.
  3. Negotiating flexible agreements.
    With service level agreements (SLAs), companies can implement clear escalation paths in the event of non-compliance with stated terms of service, giving them a sense of security when dealing with suppliers.

The key factors mentioned by respondents when using outsourcing are:

  1. 59% cost reduction
  2. 57% core business focus
  3. 47% possibility to solve problems
  4. 31% quality of the service improvements
  5. 28% critical solution for business requirements
  6. 28% flexible access to professionals
  7. 17% managing business environment
  8. 17% ability to drive transformation change

Source: Deloitte, Global outsourcing survey 2016

  

Advantages of outsourcing

Knowing the benefits of outsourcing will help you decide if it can work in your business:

 

  1. Focus on core, strategic activities for the company

When using outsourcing, the team can focus on core, crucial competencies and strategic objectives.

  1. Scalability

Outsourcing allows companies to respond flexibly to current needs. When there is a need to expand activities, enlarging the team and obtaining the appropriate competencies can take more time and require higher costs than renting external resources, especially if the project is short-term and hiring full-time employees is unprofitable.

  1. Objectivism

One of the biggest benefits of outsourcing software testing is maintaining objectivity. When participating in the creation of a product, it is easy to overlook its shortcomings.

  1. Reducing overhead costs

Insourcing is considered a more expensive option because of the need to introduce new processes and merge them with existing ones. Internal specialists may require additional training as well as time to learn new technologies. On the other hand, outsourcing can help you find a qualified team with extensive experience in various industries ready to perform tasks at once.

  1. Availability of resources and knowledge

Organizations often realize that building blocks do not have the appropriate level of knowledge to implement a planned change and require additional resources. Outsourcing providers can provide highly qualified professionals with appropriately matched skills, knowledge of a particular software, language, tool or industry. In addition, the presence of new team members means the emergence of different perspectives and ways to solve seemingly typical problems – and, as a consequence, faster problem solving.

  1. Access to tools

Access to and knowledge of technology means higher quality software and a more efficient process.

 

Does outsourcing have any disadvantages?

The most common problem with outsourcing is the loss of control over the project and the belief that insourcing makes it easier to manage teams, and monitor the progress of work. Whereas, in outsourcing projects, both parties usually try to put all mutual agreements in writing and create more accurate project documentation, which allows for more control, simplification of the process of bringing in new team members or transferring the project to another company. Outsourcing cooperation also requires long-term planning, which allows you to quickly identify potential risks of the project and take measures to minimize them.

Hiring professionals is often more expensive and less flexible in terms of changes and new technologies. IT outsourcing providers provide a variety of skilled it professionals who keep up with changing technologies and deliver results-based business services.

 

Is it worth looking for specialists abroad?

It is likely that local companies can provide all of the above: access to people, know-how and technology. So, is there a reason to look for outsourcing services abroad? The reason is, and quite simple: money. The services of testing companies from Central and Eastern Europe are arguably more expensive than those from another part of the globe, such as India, but so much cheaper than the offerings of companies from Western Europe.

 

Summary

Outsourcing is one of the best ideas that allow many companies to focus on what they do best and entrust them with what others can do better, faster, cheaper and of better quality.

In the past, outsourcing was simply a method of reducing costs. It has now become an effective strategy in achieving business goals. Using an external testing team is a good choice for companies that want to improve the quality of their software, reduce overall costs and improve ongoing testing processes.

Outsourcing can be a permanent or temporary solution to fill a gap in employment, gain technological knowledge or improve a faulty solution.

There are many pros of partnering with a reliable, external company. The key is to choose the right testing service provider that will provide high quality services.