Articles | September 12, 2019

Why are you afraid of nearshore? – IT outsourcing lifecycle part 2

The global IT outsourcing industry stood at $375 billion in 2017. In the same year, about 31% of all IT services were outsourced. Disruptive outsourcing, which encompasses technologies that make buying IT services externally faster and more scalable, has made nearshoring a more viable option for businesses. Now, IT companies offer disruptive outsourcing solutions, such as automation and cloud, to customers as added value.

   

However, many businesses still struggle with adjusting to partnerships with IT companies. After signing a contract with an IT vendor, transition and transformation begin. But there are several challenges during and after transition you will contend with. This second part of the outsourcing lifecycle series will tell you all about the transition and transformation stage of software outsourcing lifecycle. Do you need help finding an outsourcing partner nearshore? Read our first article of this series: How to find good nearshore vendor – IT outsourcing lifecycle part 1.

Transition and transformation stage in IT outsourcing

In outsourcing IT, the transition phase refers to the process of bringing the vendor on board. It is what sets the ball rolling. Transition encompasses things such as allocating resources like space to the vendor, giving them network access, transferring staff, and so on. This stage starts immediately after the contract between you and the vendor is signed.

Transformation refers to any action the outsourcing firm takes that brings a change to your business. It could, for example, be the migration of IT infrastructure from your company data center to the cloud. The leading teams for both you and the vendor should develop the transition plan jointly. Once the transition plan has been drawn up, the operational phase begins.

Fears about outsourcing software development

Even with the benefits of IT outsourcing, you may still be afraid to outsource. What if the vendor is unfair? Will they mishandle sensitive and confidential information you share with them? What if they deliver low-quality work? In other cases, communication may become a problem because of different languages and time zones.

To avoid these challenges, choose a professional vendor who has five or more years of experience. Check if they have good written and spoken English, and a good reputation when it comes to confidentiality. You can also ask the outsourced team to sign a Confidentiality Agreement. Lastly, agree on online hours that work for both of you.

4 Challenges you may encounter during the transition process

Transitioning doesn’t come without challenges. The first obstacle is documenting the existing IT environment. The service provider should understand your current IT landscape before embarking on the task at hand. Without proper documentation of what your IT looks like, it is also difficult to transfer the needed knowledge to the new partner. Another problem is managing internal changes. Making adjustments such as transfer of staff or restructuring department to accommodate the new partner may be difficult.  

A third challenge is maintaining service level. It may be tough to accomplish the same performance level attained before outsourcing. The fourth and last challenge is contractual hurdles. Sometimes, problems associated with the contract you signed with the vendor might arise during the transition. Through proper planning, collaboration, and communication of both teams involved, you can avoid most of these challenges. 

4 obstacles you may face after the transition

After the transition, these challenges might crop up:

  • Reduced innovations over time
  • Loss of IT specialists from the initial team
  • Diminished quality of the developed software
  • Inflexibility on the part of the vendor

As a solution to these problems, you can sign a service level agreement (SLA) between you and the vendor, which will specify what they will provide in measurable terms. SLAs are used to monitor and measure a vendor’s performance and gives customers the right to charge penalties if certain conditions are not met.

Conclusion

Outsourcing remains a great go-to solution for many businesses that want to save cost and get quality software. However, it is important to get prepared for challenges that may arise when doing business with an IT vendor. Be sure to plan everything and be aware of possible obstacles for the transition process, and the transformation stage of your software outsourcing lifecycle will go smoothly.

Justyna Mikolajczyk
International Account Manager

Supports and advises European companies which search for IT individuals that fit the remote-working environment and helps customers to boost their software development team’s capabilities.