Outsourcing – Does Remotely Mean Worse?
One of the most common indications of a lack of trust is a reluctance to cooperate remotely. In my opinion this is a somewhat paradoxical phenomenon. We live in a time of technological development unprecedented throughout the history of civilization. We can conduct a video chat from Munich or London with a cousin from Australia, or show our parents in Poland photos of our trips from Canada, or study via courses taught by lecturers in the United States without leaving home in Manchester. Moreover, doctors who are hundreds of kilometers away from the patient can consult and even perform surgical procedures.
So why would a potential customer, on hearing that a developer could work for him remotely, respond as if someone was trying to get him to dive head-first into an empty swimming pool?
Where does this need for control, which may be illusory in practice, come from? Why assume that remote tasks must involve lower quality, as well as security risks? The paradox is that often the same person shares his private network and confidential matters in good faith that no one will use this data against him, yet prefers traditional forms of carrying out projects at work. But technology can carry a threat in both our private and professional lives, because eavesdropping, tracking, or data theft are just as commonplace as the positive examples mentioned earlier. Technology is ethically neutral, but the way it is used is determined by people. Security is also a product of the technologies, rules and good practices used, both privately and professionally. The same is true both remotely and on-site.
But returning to the topic at hand – an unwillingness to work remotely is most often explained by the following arguments:
- integration of the team is necessary,
- real-time communication between team members is required,
- workers are physically present at headquarters out of habit,
- management is unwilling to run such risks,
- it has been tried, but didn’t work out,
- we don’t want to lose control of security,
- it’s important that people are connected to us.
But let’s look at the facts. Around 70-80% of developers at JCommerce work remotely for clients. Interestingly, these clients are mostly foreign companies: from Switzerland, Germany, and Scandinavia. How is it that cooperation proves successful, despite the tyranny of distance, the rarity of face-to-face encounters (due to the optimization of flight and accommodation costs) and the need to communicate in a foreign language? Communication works smoothly, the quality of service is high, and problems are solved as and when they arise.
It is also important that the customer does not have to take care of office space, furniture and equipment. Security, which is of vital importance, is ensured through the appropriate management of access and permissions (in accordance with previously agreed procedures). In some cases, the client passes equipment on to the developer, including the computers they administer according to the company’s standards. Remote work is generally not a security risk, at least no more than on-site work.
Finally, we come to the so-called ‘soft’ issues, such as the problem of employee integration. The brutal truth is that if the project is badly run and such factors as chaos, lack of documentation, lack of consistency, or a bad working atmosphere arise, then even the physical presence of team members in the office will not change anything. Developers, whether they are permanently employed or just on a contract basis, will look for other options, and will soon find them in today’s business climate. Conversely, a good atmosphere and efficient communication within the project can also be achieved from a distance, merely by using the appropriate tools and techniques of team management. The conclusion is that the integration of workers and the possible problem of rotation within the project are not in any way dependent on geography.
In summary, it is worth knowingly leaving one’s comfort zone, abandoning the stereotypical limits to development, and exploiting the benefits of remote work, which would mean:
- no office overheads or cost of commuting,
- a broader choice of specialists (we have developers from many cities, even countries, at our disposal),
- better quality work – here the phenomenon of scale comes into play, i.e. an employee of the service provider, working remotely, can more easily and quickly consult on the problem with equally or even more experienced colleagues from his or other teams,
- a good IT service provider will also have no issues with allowing the customer to test the remote work option in practice (e.g. a trial period with the possibility of terminating without notice and then proposing a different specialist).
Agile Outsourcing Increases the Efficiency of IT Projects
Rising competitive pressures, a reduced product lifecycle and technology-driven changes in business processes have significantly limited the ability to explicitly specify the scope and objectives of IT projects. This makes the classic transactional approach, in which the customer and the service provider sign a contract for the delivery of a particular service (usually software or outsourcing services), usually at a fixed price, anachronistic and therefore increasingly difficult to apply. The initial detailed project assumptions in the contract at the beginning of cooperation will probably be outdated after just a few months of development work.
Agile outsourcing solves the problems of recruiting IT professionals
Agile management helps to rise to the challenges of the market – short sprints and iterations, which end up with the provision of a functioning part of the software and checking that it is done in line with the customer’s expectations, lessening the risks inherent in project development. With the Agile approach, changes in the project are programmed into the service delivery process, in order that they do not disrupt workflow, which is a common problem with traditional waterfall approaches.
Agile methods break down barriers in the form of differences in corporate culture, making collaboration between organizations much easier and more effective. “Agile is to IT outsourcing services what English is to the business world – it’s a community of organizations that blurs the boundaries between companies regardless of their geographical location: we all speak the same language, we use the same concepts, we work the same way, we know the same rules. The concepts of sprints, daily meetings, and scrum masters mean the same everywhere. An outsourced worker does not land at a new client’s premises like an alien from another planet. With Agile, everywhere feels like home” – says Piotr Zyguła, CEO of JCommerce. “The Agile approach in software development processes allows us to easily become part of the customer’s organization.”
Agile IT outsourcing also enables service scalability – the customer can be flexible in customizing the number of employees to match the skills they need at that particular point in time. This is a significant change, because under the classic approach, the time it takes to bring a new IT specialist on board (from the time when the need to find someone is noted, through the recruitment and onboarding processes, to the point when the new employee becomes a productive staff member) is very long, and in the face of the shortage of programmers on the market, is further encumbered by the risk of failure.
IT outsourcing ensures cost flexibility, which has traditionally been one of the most commonly advanced arguments in its favor. At present, the issue of cost is raised more and more by big business executives; IT outsourcing is increasingly seen as a way to provide organizations with innovative technologies and solutions that are emerging from among startup environments, as well as individual enthusiasts of modern technology.
Outsourcing in the Agile model
People and interactions over processes and tools. Agile outsourcing strongly emphasizes the role of transparent communication, because cooperation in this model requires a lot of trust on both sides. Employees sent to the client by the outsourcer expect a degree of independence, respect for their ideas and participation in decision-making. The customer expects professional service, results and the fulfillment of their business needs. These expectations complement one another, but only open and efficient communication can ensure that they stay aligned during the project.
Results over bureaucracy. The goal of outsourcing services is to provide specific business benefits. Creating reliable documentation is of course important from the point of view of the project; however, it will never be more important than delivering working solutions, fixing problems which may emerge, or tailoring the project to the changing needs of the client.
Cooperation is more important than a detailed contract. Instead of creating a contract based on a list of specific requirements, it is worth asking the outsourcing partner for a proposal for how to deliver a particular service, and then negotiating the terms based on that. This is an excellent starting point for creating an outsourcing contract that should not be treated as a rigid plan for the implementation of the project. A good outsourcing contract will maintain flexibility while also safeguarding the fundamental interests of both parties.
ING Bank (ING Bank Śląski) owes its performance to Agile outsourcing
ING Bank Śląski has a great deal of experience in IT outsourcing in the Agile model, building the entire organizational structure and methodology of working on Agile principles.
“Collaboration in the Agile model should primarily guarantee open communication and enable the application of Agile approaches in practice. Openness, commitment and having the courage to communicate are key qualities in achieving success. Transparency is also important, as is the willingness to understand that what was important at the beginning of cooperation or at a particular moment in time can change – just like the measures of success. It is therefore important to maintain an Agile ‘inspect & adapt’ approach” – says Seweryn Papierz, Senior Agile Coach in the Agile Transformation Support Team at ING Bank Śląski.
Responding to changes is more important than implementing plans. In the case of the Agile model, both parties to the outsourcing contract should be aware that the goal is to achieve tangible benefits and fulfill customer needs, which are dynamically changing in today’s world. Such cooperation cannot be implemented on the basis of calculations adopted at the beginning of cooperation; reaping the benefits of a flexible model of cooperation with the outsourcing partner requires a flexible approach from the client’s side.
Agile outsourcing – where to start
The largest beneficiaries of IT outsourcing in the Agile model will be organizations that already operate according to these principles. In such companies, the use of outsourcing services is an extension of operational strategy.
For organizations with no Agile experience, it is worth considering a simplified approach – otherwise the Agile management model may encounter resistance from employees.
The best option in this situation may be Talent Leasing (i.e. outsourcing in the team extension model), meaning hiring an employee who already has experience in Agile methodology. This person will complement the existing team of IT specialists and allow them to gradually adapt to the new organizational culture. The number of outsourced workers can later be adjusted to the needs of the client. The result will be the transfer of knowledge, experience and the ability to operate according to Agile principles, as well as the gradual preparation of employees for cooperation on projects with employees of external companies.
IT Service Provider – Trusted Technology Partner
Sales representatives, account managers, project managers and implementation specialists, as well as programmers themselves – in other words, the entire team responsible for the fulfillment of the contract with the customer – have been arduously working on changing the image of the service provider and building essential trust. What is such work based on? Firstly, the development of effective communication methods between the parties involved. The market has evolved over time, the terms of cooperation have stabilized, business relationships have changed, and more and more often, the client has a desire to strengthen cooperation, which can bring greater operational effectiveness as well as measurable benefits for both parties, not least in financial terms. However, certain conditions must be fulfilled.
Most of them are related to the broadly understood quality of cooperation that the service provider must offer to gain the trust of the customer and deserve to be called a professional partner. I will focus on a few selected factors only.
Ethics and loyalty in business
The principles of fair play, meaning how the parties treat each other, how they fulfill promises made in business meetings and negotiations, and how they talk about each other after cooperation has been completed, can all be called business ethics in general. These are by definition unspoken rules, because no contract is able to ensure loyalty, but without them, business cooperation cannot meet the expectations of both parties.
Expertise / technological competence
Technological competence, or the so-called technological stack offered by the service provider, and therefore the scope and level of expertise in the technology delivered, is extremely important from the perspective of trust in business. The technology partner needs to have specific skills, by which I don’t mean image, but the objective professionalism that allows for fairness in cooperation. Both competence in terms of the technology used in the project and knowledge and design experience beyond the scope of the contract are important here, as they help to rise to unexpected challenges that may arise in the project.
Maturity of the services rendered
The business maturity of a technology partner is manifested in experience, the ability to anticipate, and the awareness that the work done for the client is really an investment in the future and development of his own business. In this case, I chose the three most important areas to focus on: involvement, planning and timeliness. Of course, you can create a long list of qualities that show the maturity of your business partner, but these are undoubtedly key in building trust. Involvement is expressed in an active approach to the project undertaken jointly with the client. There is no question of passively waiting for allocated tasks. For example, in the team-extension model of collaboration, the members of the service provider’s team will not only carry out the tasks assigned to them, but also demonstrate their activity in more complex issues such as planning the architecture of the target solution, creative problem solving, or offering best-of-breed tools.
Correct planning and punctuality are very important, if not the most important, factors, and most often depend on whether trust is built between both parties. For this reason, an estimation is created on the contractor’s side pertaining to the time required for development and other necessary work. On this basis, a timetable is established. The partner’s business maturity can be seen in estimates of time-consumption that are realistic and not just created to offer a better deal. An experienced technology partner knows how much time it will take to complete the project, so estimates will not be artificially underestimated or inflated (which is likely to be the case with an inexperienced supplier who fights for a price at all costs or fails to adequately estimate the time needed and bumps up the estimation as a result). Experience and maturity allow for the creation of a plan for which the supplier will be able to take responsibility, and deliver the product on time.
The client and design challenges
We must not forget the client in all this, as in the end, cooperation has an effect on both parties. Without a suitable approach on the client side, a true partnership in cooperation is obviously not entirely possible. The customer should have the flexibility, commitment and good will to cooperate with the other party. Aspects of a project where significant customer flexibility can be significant are:
- the start date of the project, if more advanced preparation is required or if it is better to wait for a specialist with the requisite skills who may not be available immediately,
- the tools and technologies used, if the technology partner presents substantive arguments in favor of changing them;
- the work mode, for example, work done remotely by the service provider’s team,
- service hours if the standard work hours for the customer are different from those proposed by the service provider (a frequent phenomenon in the case of international co-operation),
even if at the beginning such changes were not assumed.
In addition, over the course of the contract, the parties may encounter various potential challenges which they must face in order to continue the project smoothly. I will refer here to examples in terms of body leasing / team leasing cooperation:
- the need to undertake proper onboarding processes,
- challenges in communication,
- the willingness of the person working on the project on the service provider’s side to change the project,
- the likelihood that the person responsible for the project on the service provider’s side may change job.
The client may not have a direct influence on some of these situations, and, if understanding and engagement are demonstrated, it is proof that he or she is willing to engage in a partnership with the service provider.
Win – win
If each party understands that a win-win situation is possible in the outsourcing relationship, and apart from short-term business goals, other values such as loyalty or partnership count, then we may expect that cooperation can be truly long-lasting and fruitful. In such cases, the benefits are evenly distributed, so that both parties are committed to growing them and to the continuation of cooperation for as long as possible. And isn’t that what it’s all about?
Reduce Uncertainty in Business
A safe haven seems to be the idea of a network economy in which companies coexist on the basis of partnerships and mutually interchangeable services. Instead of competing, there would be a gentlemen’s agreement in which each party develops in its specialist field. And specialization is the way to gain unique value, differentiate yourself from others, and also maximize profits and stability in today’s uncertain environment. In a network economy where companies constitute a network of connected vessels, the risk is scattered. But such a model requires one of the most scarce resources – trust.
How to build competitive advantage?
From the point of view of survival on the market, the most important element of the company is its competitive advantage, which is what distinguishes it from other companies in the same industry. Traditionally, it can simply be price, but also prestige, i.e. consumer brand recognition, the high quality of products or services, experience in the industry, or knowledge. A common feature of these elements is their uniqueness, the internal characteristics of a particular organization that enable them to offer products and services of a certain value to the customer, leaving competitors behind. Features such as the ability to offer a lower price than others, but still earn a profit, or to build a reputable brand, are very difficult to copy. And it is on precisely these characteristics that organizational strategy should be based. Consequently, the greatest effort should be invested in developing these unique qualities. If a company “spreads itself too thin” it will be at the expense of investing in key activities.
The solution is the network economy, i.e. an ecosystem of many companies which focus on the development of their unique characteristics, and work together in other areas to develop mutual benefits. What are these benefits?
- reduction of uncertainty – resulting from the sharing and spread of risk. The network of dependency ensures cooperative behavior, rather than competitive;
- access to scarce resources and skills – especially important in knowledge-based industries; companies no longer have to compete with each other for specialists, competences become a service;
- new development opportunities and access to knowledge – thanks to access to the business partner’s knowledge and experience, the company gains a broader view of its situation and the ability to utilize solutions that it would not have considered if left to its own devices;
- increased flexibility – web services are implemented as and when necessary, on demand, without wasting time, which arises in the traditional model due to the need to obtain appropriate resources independently
IT is a highly specific industry. On the one hand, every company, regardless of its area of activity, is forced to use widely understood IT technology. On the other hand, competence in this area is relatively difficult to access. This means that a business may invest in a digital transformation of business strategy, but investment in the development of their own IT team does not often go in step with the abovementioned focus on what the company really does, i.e. its specialization. Should a furniture manufacturer, for example, begin to build extensive IT structures, and hire teams of developers and administrators? The problems in this case are the costs of infrastructure, the high costs of salaries and training required in this industry to keep up to date in the dynamically changing market, and the need for specialized knowledge such as a management team.
No wonder, then, that most companies are looking for a business partner who is in a position to take IT projects on. Companies offering IT services, such as those which specialize in IT technologies, employ professionals who have essential, often niche competencies, and with design, business and industry expertise. Business partnerships can be highly fruitful in this case – as in the previous example of the furniture company working with an IT service provider, which can therefore focus on the most important aspects of business, such as product design, production, marketing, or sales. It draws on the benefits of cutting-edge technology such as optimization of the production process, automation, data analysis, and adapting the product to the client’s needs (e.g. so-called mass customization). The IT partner thus acquires specific design and technology expertise from the client’s industry, thereby gaining an advantage in the market.
IT services which are worth utilizing:
– talent leasing and team leasing – talent leasing, which enables the recruitment of a specialist, especially in situations when such skills are difficult to come by on the labor market, or a whole team of specialists selected for the optimum implementation of a particular IT project.
– IT consulting – due to the fact that information technology is so deeply ingrained in all aspects of the company’s operations, IT services are becoming more and more popular, meaning that companies can obtain information on technology and business opportunities in their area or industry.
– IT Transformation – IT has the potential to introduce revolutionary changes in any company, no matter what kind – whether it be product manufacturing, service providers, commercial firms, financial companies, health care facilities, and so on. Technological transformation should, however, be carried out in a well-thought-out, orderly manner with clearly defined objectives. IT Transformation is an end-to-end service in which a technology partner carries out an in-depth analysis of a company’s processes, presents a plan for their digitization and optimization, and then follows the digital transformation plan of the company step by step.
IT outsourcing Helps Companies Solve their Recruitment Issues
I have prepared a list of the most important benefits of outsourcing, but also – to balance the arguments – a list of risks and threats that we must consider when deciding on such a service. So before I go on to present the benefits that the knowledge and skills of our specialists provide our customers with, let’s pause for a moment to analyze any potential threats. During the process of preparing your own company to use an IT outsourcing service provider, you should consider the risks that may arise during such cooperation. Below is a list of some of the most commonly encountered threats along with possible ways to mitigate them, on both the provider and customer side.
Possible risks that you may want to consider, whether by yourself or together with your chosen provider, may include failure to accept and support part of line management and staff in the assignment of tasks to an outside worker, as well as communication issues or the possibility of knowledge loss. If we are aware of these threats and openly discuss them with the provider, it can go a long way to minimizing or even eliminating them. It is essential, however, to prepare mutual trust, knowledge and planning, as well as continuous monitoring of the effectiveness of outsourced activities.
Get your company ready for outsourcing
Outsourcing on a certain scale, such as when we involve the entire external development team, can become a strategic process which deeply rebuilds the structure of the company and influences the functioning of its processes. For this reason, the decision to delegate certain tasks to the outsourced team must be preceded by sufficient preparation, which consists of the following steps:
- an analysis of the needs and situations requiring the involvement of an external specialist;
- planning cooperation with the provider, requiring the designation of decision-makers who will be responsible for operational contact with the provider, as well as the preparation of appropriate internal communication which will prevent any conflict or misunderstanding of the role of the external specialist;
- planning the process of selecting the right provider;
- planning the introduction process for an external employee or team;
- monitoring the effectiveness of the service and accomplishing the entrusted tasks.
Benefits of outsourcing
So if the service provider is able to guarantee from their side that the risks are minimized and the potential consequences are mitigated, and the client plans the process of introducing outsourcing services adequately, the enterprise will begin to benefit relatively quickly from the involvement of an external specialist or team. A carefully considered and structured process of partnering with the provider and the subsequent deployment of an outsourcer to our project will free up our internal resources or allow our employees to move to other jobs. In addition, the outsourcing model will allow you to experience the following benefits in the short term:
- no recruitment costs – the outsourcing company bears the cost of acquiring an employee in exchange for a later opportunity to make a consistent profit from outsourcing;
- swift access to the required specialists, due to the outsourcing company’s resources and established candidate database;
- contract flexibility – immediate response to the increasing or decreasing need for employees;
- matching the competences to the needs of the project and the possibility of substantive support in the project from the service provider’s side in case of unforeseen situations;
- outsourcing does not increase the fixed costs of your business;
- the invoice received from the outsourcing company can be counted as a project cost;
- no costs associated with vacation and medical leave;
- the possibility of exchanging an employee whose work is unsatisfactory with a notice period agreed with the provider;
- savings in terms of the cost and time spent on searching for and selecting candidates;
- reduction in the risk of selecting an unsuitable candidate;
- no HR and payroll costs.
To outsource, or not to outsource? That is the question…
At this point, it is worth considering when to use outsourced IT staff. Here is a list of these situations:
- a large number of applications are sent to the company, but the effectiveness of the recruitment process is low;
- candidates withdraw from the interview process at an early stage of recruitment;
- we do not have an appropriately recognizable brand as an employer hiring IT specialists;
- we observe constant staff turnover and people frequently leaving a job during the course of the project;
- we need to complete the project in a timely manner and / or to start work on the project within a short timeframe (e.g. up to a week);
- we do not have a sufficient number of tasks to entrust to IT professionals to ensure effective working hours, or our projects are somewhat seasonal in character;
- we would like to build a new team or department in a relatively short space of time.
The outsourcing company will be better than us in terms of carrying out certain recruitment tasks, due to – among other things – consistent and intensive presence on the candidate market, and the brand recognition of the employer. They also provide timely and flexible access to professional resources whenever it is deemed necessary, and not only when suitable professionals can be provided. IT outsourcing is primarily a choice of operational strategy that enables the company to quickly adapt to the business environment, internal requirements and customer expectations.
IT Outsourcing Agreements Under the Magnifying Glass
Let’s take a look at non-disclosure or data protection agreements, which is the most common agreement that we use here at JCommerce. It’s something that starts with cooperation really, and makes the trust between both parties just a little bit stronger.
This type of agreement specifies who is who in the business relationship – just explaining which companies are the signatories, where they’re registered, their official ID numbers and so on. It is important that the person who signs the agreement on behalf of the company, for example the CEO, should be listed as such on official documentation or should have the official acceptance of the board of directors to sign such documents. Don’t be afraid to hand over company information if the Contractor asks you for that as well. From their perspective, they would just like to be sure that they’re signing the right contract with the right person as well. I think this is just a normal part of doing business.
Another very important point to include in the NDA relates to definitions. Remember that you may understand something very differently than someone else from another company. To avoid misunderstandings or miscommunication, it is important to put definitions at the very beginning. Remember to define what is “affiliate”, “confidential information”, “disclosing party”, “permitted recipients”, and “receiving party”. Write these definitions in a clear way so everybody can understand them, not just lawyers or the like. The language should be simple, and definitions as short as it is possible.
As you can see, “confidentiality” is another very important element for the NDA to keep information private. The parties agree not to disclose any information they both sign at the NDA. Moreover, the parties can’t make copies of those Confidential Information. You should also consider whether you need extra 1:1 NDAs with the engineers or directly with the team that provides services for you. This is very common practice, because when you work with sensitive data your partners would like to rest assured that all information is protected.
Standard framework outsourcing agreement
At this level of the agreement we should specify further important details and definitions that define our business relationship and co-operation. And one more time, you should write those definitions in understandable way. At that point, when established with the Contractor, you can describe “business days” and “the worksheet”. Also, you should define the specification of IT services, the period of ordered consultation days and a person responsible for the implementation of the Agreement.
As you probably expect, it is just the beginning before your IT outsourcing agreement will be fully ready. Let’s take a closer look at the following parts of the contract like subject matter and obligations in an agreement – including the terms of payment, the force majeure clause or copyrights.
Subject matter and obligations
The subject matter of the agreement is the provision of outsourcing services by the Contractor for the Ordering Party, consisting in analytical, design, testing, programming, system maintenance and other which relate specifically to the area of software development and Information Technologies.
The services commissioned are based on Time and Material model, in which the Ordering Party agrees to pay the Contractor based upon the time spent by the Contractor’s Consultants and to perform the work. The services covered by such agreement shall be provided by seconded Contractor’s Consultants. A list of the team, their roles, order’s start and end dates, hourly rates and any other project or profile specific information, like e.g. communication methods, you should include at a separate written Order. Also you should include in the Order the purpose of the service order and scope of work, all schedules, living expenses (flight tickets, accommodation) and contacts. Of course, there is more aspects that you should consider, but those should be good at first.
It isn’t a secret that both parties have obligations to each other. The Contractor undertakes to carry out the work connected with the implementation of the provisions of the agreement and Orders. From the other hand, the Ordering Party is obligated to assign tasks and set timelines for completion of work to the Consultants according to the IT services identified in the Order. Furthermore, on your side is to ensure that Consultants have the possibility to work by providing them the access to worksite when necessary, and if needed secure access to devices, equipment and so on. I know that all of those information are logical, but it is good to have them written.
Nobody likes to talk about money, but when it comes to the agreement, don’t hesitate to do it. Focus on the formal issues like:
– how to calculate the total remuneration for all the seconded Contractor’s employees,
– where outsourced employees report the working hours,
– what’s the procedure when the developers have overtime work during business days or at the weekend.
Last but not least, every IT outsourcing agreement have two clauses, Non-performance of obligations and Force majeure event. Like I said at the beginning, agreements are for the bad times because we can’t predict the future, for e.g. war, natural catastrophes, explosion etc. Therefore, the Parties shall be free from any liability for total or partial non-performance or undue performance of the obligations specified in the contents of the agreement in cases caused by Force Majeure. In the end of the agreement you should include the Copyrights, IP Rights, Law and final provisions.
I hope that you realize now how value can be every piece of document at the agreement. Don’t prepare the agreement in rush, because every element is relevant for both sides. Do you recall my question from the beginning of this article? It was: do we really need written agreements? If you ask me, we don’t exactly need them, but nevertheless it is good to have them just in case. In other words, agreements are written not for the good times but for the bad times. Especially in the IT world.
Will the Next Uber-like Company Hit Your Business?
Competence on demand
No matter what the industry, your company is – or will be – forced to cross over to the digital side. All branches of the economy are digitizing at a dizzying pace, because so far it is the best way to prepare for the unpredictable. Data analysis, Big Data, machine learning, it all means the tools that can predict threats before it is too late to react to them. Do not delude yourself that you are not involved. Technology is a powerful weapon – the biggest threat, however, is in the hands of the competition. Not every company is prepared for the digital arms race. This is not always deliberate and effective. It requires having the right people, creating a team, and developing the right business model.
The process of building an effective team is long and complicated. It is worth taking a moment to answer the following questions:
– is IT my core business?
– Do I have sufficient knowledge of how the team should help in the development of my business, and how it should function?
– Do I have the opportunity to find suitable specialists on the labor market for the right price?
– Can I afford to wait until my team is complete, established and has the requisite project qualifications?
If the answer to any of these questions is no, you should probably think about IT outsourcing, which can be vividly illustrated as a service to share competences on demand.
Competence as a Service
Outsourcing IT services allows a company to acquire knowledge, experience and skills without having to incur the costs associated with recruiting employees, building a team and training them, and can be done exactly at the point at which it becomes necessary. This means that the organization does not have to invest valuable resources and time in activities that are not the primary goal of its activities, and can therefore focus its efforts on what it knows and specializes in. The IT outsourcing service provider acts as a technological security agency that responds quickly to customer needs. The on-demand services model ensures that, in the case of necessary changes to the structure of the company, changing priorities or backing out of certain projects, this process can be carried out quickly, efficiently and painlessly.
Outsourcing of IT services means:
– just-in-time competencies – exactly when they are needed rather than as and when an organization manages to create a team with the proper qualifications; the team does not become a financial burden in the intervals between projects or when the project ends.
– scalability – meaning the ability to adjust the number of specialists and their work to the needs of the company;
– diversification – depends on the possibilities of one internal team or specific people, the possibility of acquiring competencies from different sources, suppliers, even different regions and countries, which reduces the exposure of the firm to political and economic risk;
Team leasing, Body Leasing and Managed services – find what suits you best
IT outsourcing service providers offer different models which the client is able to adapt according to specific needs:
Talent Leasing – If your company lacks specific expertise, you can take the opportunity to hire a specialist who can help you implement a project or solve specific problems. This method can also be used to complement your existing team e.g. in case of a sudden vacancy or difficulties in recruiting specialists. Using this model, you can benefit from the expertise of specialists such as programmers, consultants, business analysts, and testers, as well as Technical Team Leaders and Project Managers.
Team Leasing – in this model you hire an entire team, consisting of specialists who will be indispensable to your project. The service provider helps you to specify a list of competencies that will be required, based on which technologies must be applied, what form of team management will be used, and to what extent the software will be tested. Such a team can be managed directly by the customer or by Project Managers or Project Owners, who are also outsourced specialists.
Managed Services – is a comprehensive service of business application management in the IT environment, from the implementation of applications, their development and maintenance, to technological support. In practice, this means that all processes related to IT infrastructure and the use of business applications are supported by the service provider. This service thus relies on outsourcing all business operations to a company which specializes in such projects. Without a doubt, such a model requires an appropriate level of confidence in business relationships between cooperating organizations; however it brings great advantages, particularly relieving the burden on companies in terms of particularly technologically complicated areas of the company’s operations.
Trust is The Rock on which Outsourcing is Built
There’s nothing strange about that. Outsourcing is, after all, inherently risky. One should realize, however, that the risks are no greater than in the case of any other type of business. And just as with any other kind of transaction – this risk can be estimated, and also minimized.
Trust, but verify
If you want to minimize the risks related to cooperation in terms of outsourcing IT services, it will be necessary to conduct a preliminary analysis, both in terms of location and the qualifications of potential business partners. In business, trust must result from calculation, not from naivety or a lack of proper knowledge.
Location: the choice of location for an IT services provider is undoubtedly crucial. The qualifications of potential employees are diametrically opposed if we take location into account – for example, in a recent HackerRank report the most valued programmers were from China, Russia and Poland, leaving professionals from countries such as Germany (14th place) the US (28th place), and the UK (29th place) far behind. Also important are factors such as the economic, legal and political stability of the region or country, cultural and legal differences, and access to experts. Most published recent reports indicate that the most attractive, and therefore also the safest, European outsourcing centers are located in Central Europe, namely Poland, the Czech Republic, Bulgaria, Romania, and the Baltic countries – Lithuania, Latvia and Estonia.
Business partner: as in any situation in which we are obliged to choose a company (regardless of whether it is a toothpaste manufacturer, or a business partner), we should pay attention primarily to the brand’s tradition, the period it has been operating, and existing customers. If we decide to outsource services abroad, a good way to reduce risk is to find a company with an established position on the local market, and thus a “good brand”. Such a company should have extensive experience in the provision of the kind of services we are looking for, meaning tradition that also results from the period it has been operating in the industry (however, in the case of IT, you need to remember that this period of time will be much shorter than in traditional industries). We should also check recommendations from the company’s customers, especially those who have similar requirements to our company.
Not convinced? Negotiate
Confidence in a business partner is above all gained, or lost, during negotiations. If you haven’t yet built a degree of trust in the other company – negotiate and find out more. It’s a simple rule, but very effective. In fact, at this stage the key is to get to know the organizational culture and the way the company operates. Perhaps not all your requirements will be met, but by negotiating you’ll find out if the outsourcing company which you are considering has the required experience, or asks the right questions, or if it can properly value its services and has a realistic approach to the project. It may turn out that the company simply wants to “catch the customer” at any price, artificially lowering the costs, or setting deadlines which are impossible to achieve. An offer which seems “too good to be true” should always at least raise some suspicions. Unrealistic deadlines cannot be kept, and reduced costs often get you work experience kids, or people of limited experience, who will not be able to ensure the quality you require.
You can recognize a trustworthy outsourcing partner by the following signs:
- Such a partner wants to get to know your business, your goals and the business environment, in order to determine whether cooperation will be effective and how best to help you. Let the partner get to know you.
- Knowledge, business experience, the people who work at the company, and also customers create a good business and are something to be proud of. Trustworthy firms are open and transparent, and don’t try to hide anything. Ask as many questions as possible and pay attention to the answers.
- Such a partner has the requisite experience to ask the right questions, which will also help you to formulate expectations and goals. Before using their services, speak with company representatives and specialists. Together you can check how, if at all, you are able to help each other.
- The growth of your business is also a means of growth for the outsourcing partner. If a company operates with this rule in mind, their employees will work for you with the same commitment as if you employed them directly.
- The outsourcing partner will help you set goals and priorities. On that basis you can create an agreement for cooperation, to ensure that the interests of both sides are protected.
A well-written contract, which protects your interests, is absolutely essential. Apart from the price and the date of completion, it should include specific instructions pertaining to what is to be done and what the control indicators are, and evaluate the work processes at various stages. But that’s not all. Before signing you need to find out what the chances are of actually enforcing the provisions of the contract. Check the legal culture in the country in which you plan to sign the contract. For example, in the European Union certain legal norms and forms of activity are imposed from above, so outsourcing to a country within the EU already gives some insight as to whether you will have the opportunity to assert your rights before an independent court which will take your argument into account.
If you have already analyzed the pros and cons, and also checked your potential outsourcing partner, but you still have doubts, it may be helpful to remember what Ernest Hemingway wrote: „The best way to find out if you can trust somebody is to trust them”.
Outsourcing – the Answer to Labor Market Issues in The UK’s IT Industry
An employee worth his weight in gold
As many as 75% percent of the nearly 60,000 IT companies in the UK are located outside London. Not surprisingly, both salaries and costs are highest in the capital – smaller companies must therefore look for cheaper alternatives. Yet London is one of the most attractive places for employees, in terms of both earnings and prestige, as well as the presence of international companies whose headquarters are based there. It is the outflow of the most talented IT professionals to the largest players in the IT market which is the main concern of local businesses, which cannot compete in the race to attract employees.
Recent years have seen an explosion not only in the wages of IT specialists, but also in the range and value of perks offered by desperate employers. Cars, gym memberships, healthcare, pension schemes, nurseries, attractive training courses – these are just some of the extra benefits offered to tempt specialists to join. Major corporations compete directly with one another in inventing ever more extravagant incentives, from health insurance for cats and dogs, to massages, and everything in between.
Costs just keep growing
Even if a company provides its employees with all of these benefits, as well as a fully-furnished office with a climbing wall and space for afternoon naps, the costs don’t stop there. The recruitment process is getting longer and requires ever more creative activities. Regardless of whether you hire an outside recruitment firm or whether recruiting stays in-house, the cost of actually getting the employee will be many times his or her monthly salary. At the same time, there is no way to be sure that the employee will not leave after a mere few months, tempted by a seemingly better proposition.
Of course, the largest single expense in the context of employment remains the salary itself. The exact amount naturally depends on the location, as I mentioned earlier, but salaries in the IT industry are much higher than the average, irrespective of whereabouts. In the largest cities in the UK, the average annual salaries as cited in job offers range from £36,000 in Belfast to nearly £59,000 in London. It is also worth remembering that the final figure, as negotiated by the employee, may be even higher. But that’s not all – because according to cost calculator estimates, after adding the cost of taxes, equipment, training, licensing, and leave of absence, it turns out that the full cost of an employee in London may even exceed £97,000 per year. Or about £47 per hour!
Even higher sums are associated with the hiring of contract workers, whose wages don’t contain so many hidden costs, but nonetheless are much higher than workers employed on a standard employment contract – and may be as high as £120,000 a year.
Not all programmers are created equal
With such high demand for IT specialists nowadays, companies are often forced to compromise, resulting in the hiring of workers who subsequently fail to meet expectations. This situation unfortunately also spoils the labor market, as large numbers of employees have low skill levels and minimal motivation to do anything about it because work will come to them. One such programmer working in the UK, who has extensive experience working on international IT projects, honestly lays out for us the cons of hiring this kind of worker:
- lack of basic programming skills,
- superficial knowledge of programming languages,
- lack of independence and problem-solving skills,
- low productivity, and the creation of low-quality software,
- lack of documented experience in that worker’s CV,
- excessively high expectations in relation to skill level.
Unfortunately, employers often assume that they simply have no alternative, due to the difficult situation on the labor market. So they agree to the lesser of two evils, which unfortunately affects the quality of the services they offer, or the applied IT infrastructure. Instead of investing in new technologies and moving with the times, they waste ever more money on old solutions, which consequently leads to technological debt.
Outsourcing – the scalability of resources
And now we get to the point. In the current heyday of cloud services that allow you to customize resources to suit the needs and capabilities of the company, outsourcing IT services and hiring employees from external service providers is truly a sign of the times. Outsourcing allows you to choose the best specialists in the field, without burdening the company with all the costs of hiring the employee full-time. It provides great opportunities in terms of scalability: highly qualified staff with experience in various projects in many countries are available within a short period of time, for a reasonable price. For example, in terms of Polish IT specialists, acclaimed by HackerRank as some of the best in the world, if we take into account the actual costs of employment and the hourly rate, the wage of a programmer may be only half as much as in London. Moreover, all obligations in terms of hiring workers which may be borne by the employer, are now the responsibility of the outsourcing services provider, and workers are hired for a predetermined period equivalent to the duration of the project. After completion, their employment may be extended for additional maintenance services, or they are simply transferred to another project, or to another customer.
Most importantly, it is the outsourcing company which is responsible for the quality of services provided, and which must satisfy its obligations according to the contract which regulates all aspects of co-operation, from the project deadline, to the budget, and finally to objective indicators of the quality of the services provided.
Such a model of cooperation may, however, benefit all parties – the customer may utilize the service itself, the service provider earns remuneration, and employees get secure and attractive employment, as well as the opportunity to work on interesting and diverse projects.
Nearshoring – Almost Like at Home
Onboarding in sunny Valencia
The recent launch of JCommerce’s support project for the Dutch company Helloprint is excellent proof that the onboarding process greatly facilitates further cooperation. The outsourcing contract in this case includes the maintenance and development of the QlikView platform for the rapidly growing international online printing service. In accordance with the customer’s wishes, Łukasz Czajka, Business Intelligence specialist, spent two weeks in one of the company’s offices located in beautiful and sunny Valencia.
Łukasz said of his trip: “In June, at the invitation of the customer, I went to Valencia, the third largest city in Spain. The trip was to meet the client directly, to get to know the company and discuss the work that I was to do. The trip should certainly be considered a success, because apart from the tourist attractions (plenty of incredible sights to see and the wonderful de la Malvarrosa beach), I had the opportunity to take a closer look at the style of work at the client’s premises, to assuage misconceptions or doubts and get to know the business “from the inside.” Thanks to my trip, after returning to Poland, the task is much easier thanks to the contact established there and the fact that I met the people who I’m working with on a daily basis.”
As you can see, thanks to the well-thought-out onboarding process, the employee has the opportunity to learn about the project requirements, the users, and build the relationships and trust which are the basis for long-term and effective cooperation.
Onboarding – the first step to quality cooperation.
Those responsible for the decision to begin cooperation in terms of the outsourcing of IT services usually indicate the following questions and concerns:
- communication problems (language barriers, remote communications – video conferencing, teleconferencing, lack of face-to-face meetings);
- difficult contact;
- lack of integration with the outsourced team;
- lack of involvement of the outsourced team;
- loss of control over the quality and speed of the project (risk of dissatisfaction of the final customer);
- coordination problems;
- cultural differences;
- the risk of a bad reception within the company to the decision to cooperate with a third-party vendor (a bad effect on the atmosphere within the team);
- the risk of an ‘us’ and ‘them’ mentality developing within the project;
- bad experiences of one’s own or other companies in terms of IT offshoring;
- unpredictability and ‘surprises’ which may pop up during cooperation.
Without a doubt, these concerns are reasonable, and therefore the organization of such collaboration is especially important in order to minimize the potential risk. From the very beginning honest communication and clearly defined rules should be established, and – perhaps most importantly – the two parties involved must be able to get to know each other better. If it should prove possible, both parties should move toward the process of onboarding, which initiates cooperation and consists of meeting people directly engaged in the execution of the project. Normally, onboarding should last between 3 and 5 days, during which the client managers on the client’s side, such as the Project Manager, Product Owner and Software Architect, meet with the team put together by their business partner: the Project Manager, Technical Leader and developers.
Onboarding is designed to:
- help with understanding the business objectives of the client and the project itself;
- establish the principles and tools of communication;
- establish roles within the team;
- prepare hardware and software for use in the project;
- get to know colleagues through initial integration.
Ideally, onboarding is done on-site at the customer’s premises. Thanks to this process, the whole team has the opportunity to get to know and understand the “client organization”, as well as the people who they will work with. The integration process is of great importance, especially in the team extension model where the project and the work of particular outsourced employees are managed by the client. If onboarding and subsequent integration are carried out effectively, it may even lead to a situation in which the employee will identify more with the final customer than with the organization in which he is formally employed. Strong identification with the client means greater loyalty and engagement from the employee, which translates into greater efficiency and the satisfaction of both parties.
In the case of foreign projects, it sometimes turns out that the onboarding stage can be extended by up to several weeks – as it was in the case of Helloprint. Why do customers from Germany, Finland and the Netherlands choose to extend this initial stage? It gives them a sense of control and security – during those first few weeks, it is possible to get to know the staff, to present their expectations, and finally to verify whether cooperation in the form of the outsourcing model will be feasible. At this stage, understanding and trust are built, without which fruitful cooperation cannot be ensured.
What comes next after onboarding?
Of course, integration and building good relationships do not end with onboarding itself. We realize that over the course of the project, some topics should be discussed face-to-face from time to time. It is also important to remember the need to maintain proper motivation and integration within a team, or people working together. That’s why JCommerce takes care to regularly organize such meetings for their employees.
Depending on the needs of the client, on-site visits and work can also take place regularly. The proportion of on-site work (at the customer’s premises) often constitutes up to 25% of foreign projects. As an example, the team can spend an entire week on-site at the customer’s premises each month, and spend the rest of the time working remotely. From this perspective, nearshoring is no longer something distant, unknown and difficult to manage. Fortunately, Polish developers are increasingly mobile, amenable and willing to undertake foreign travel. Through the experience gained during such trips, they build self-confidence and improve their communication skills, not to mention taking the opportunity to gain international experience and visit interesting places. With the proper organization of cooperation, both parties can gain a great deal.