Running a business can often be challenging by itself, and even more when one is planning to upscale operations. The idea of having more tasks, operations, processes, and people can often overwhelm business owners, as now they have more on their plate to manage.
This is where business owners usually plan to digitalize their operations and build a platform that helps them manage their business digitally. Some entrepreneurs also use these digital platforms as a selling channel to offer their goods and service to their target customers.
Regardless of the reason, one common string among businesses planning to digitalize their operations is the approach they use for the purpose. In this case, most businesses prefer to outsource their IT requirements. Speaking factually, over 90% of startup businesses planning digitalization are estimated to outsource their IT requirements in 2022.
However, let us tell you that outsourcing your IT service requirements is not a cakewalk process and involves numerous challenges. There is a lot that can go wrong from the business’s end that can tragedically result in business failure.
In this blog, we will discuss 8 of the most common mistakes that businesses make when planning to outsource their IT requirements. By the end of the blog, you will be clear on what to do and what not to do when outsourcing your digital product’s design and development. Let’s start the blog by understanding what exactly development outsourcing is.
Source: Precedence Research
Development outsourcing is essentially the process of hiring an external individual developer/ development team to work on your project. While one can also develop a digital product by themself or hire an in-house development team, outsourcing your IT requirements ensures that you get high-end results in less time and cost investment.
Owing to this factor, IT outsourcing is a billion-dollar industry globally and is a popular choice among businesses planning digitalization. Today, businesses outsource web development, app development, software development, and numerous other IT services. This approach helps businesses and individuals to benefit from high-end development conducted by experts without incurring extremely high project costs, as it is in the in-house development approach.
Moreover, it is worth noting that there are three approaches to development outsourcing, which are onshore, nearshore, and offshore development. Each of these approaches has its own impact on the final product’s quality and the project’s cost and completion time.
Additionally, you must know that when planning to outsource your requirements, you can either go with the freelancer approach or hire a design and development agency. The upcoming section will throw light on the two models for their better understanding.
Freelancers are remote workers that work on the individual requirements of your project. You can either hire a team of freelancers to take complete care of your project or hire individual freelancers for a particular stage of the development lifecycle.
Either way, you will have to manage each and every freelancer working under you, which will require additional time. Alternatively, you can also hire a project manager who can supervise the freelancers on your behalf. Naturally, this will require additional cost investment as you will have to pay project managers’ as well as freelancers’ salaries.
You would have understood by now that hiring freelancers isn’t a feasible option in many cases. One of the best alternatives, in this case, is to hire an agency for development outsourcing. Here, you outsource your entire project to an experienced IT service agency, from market research to feature planning, UI/UX design, coding, QA testing, and launch.
These development agencies hire different specialists for different roles, therefore guaranteeing high-end results. All you need to do is find an agency that is suitable to your requirements and communicate your needs, and the rest is taken care of by these experts.
Let us tell you that this is the most popular approach to outsourcing and is widely preferred over hiring freelancers. However, even with all the benefits of outsourcing development to an agency, there is a lot that can go wrong. A minute error in the outsourcing process can result in tremendous business loss.
Therefore, it is only natural for businesses to wonder, ‘how to safely outsource design and development requirements?’ The upcoming section will provide detailed information on common yet grave mistakes that businesses make when outsourcing their requirements and what can be done to avoid them, so read carefully.
We discussed earlier that there are numerous different approaches to outsourcing development, which are onshore, nearshore, and offshore development. The approach that is suitable for your requirement largely depends on your project’s size and scope and your location.
For example, for a US-based business, it is the best idea to go with the offshore development approach and hire a development agency based in Asian countries like India and the Philippines. These countries are known to have some of the lowest development rates across the globe and high technology expertise, making them the best locations for development outsourcing.
On the contrary, by hiring US or Canada-based outsourcing agencies, you are likely to do more harm to your project and increase the overall cost of your project. This is because these countries are known to have some of the highest development rates across the globe, with hourly rates in the US reaching as high as $150.
Cost saving is one of the most important aspects of doing business. Naturally, all business owners aim to maximize cost-cutting and focus on increasing the profitability of their operations. However, focusing only on cost-cutting without considering its possible consequences can be a disaster for businesses.
When planning to outsource IT service requirements, most businesses focus on getting the project completed at minimal cost, disregarding the quality of the final product. This often results in tremendous market failures, as launching a product with substandard quality can often degrade the user’s experience of using it.
Some of the ways in which businesses practice cost-cutting in IT product development are by choosing the wrong approach (hiring freelancers), skipping stages in the development lifecycle, hiring inexperienced development partners, etc. We suggest you avoid making these mistakes and focus on the quality of your product, as digitalization offers high ROI.
Finding the right development partner is not a five-finger exercise. A lot goes into the hiring process in order to find a capable and experienced development partner to outsource your project. This includes finding a list of potential agencies/ freelancers, checking their portfolios, getting quotations, negotiating the deal, etc.
However, most businesses overlook the importance of a well-conducted hiring process and often skip numerous steps. This results in businesses hiring the wrong agency with inadequate skills or expertise that is required for the project or, in many cases, a relatively high price quotation.
As a result, it is in the best interest of businesses undergoing digitalization to take ample time while screening potential development partners. This will ensure that you select the right partner for your project and get maximum benefits from development outsourcing.
One of the major challenges that a business faces when outsourcing its IT service requirements is time zone, language, and cultural differences. This is especially the case when you go with nearshore and offshore development.
Overlooking these differences can be lethal for businesses and can result in major disasters. To elaborate, if you appoint a US-based development agency, it is essential that you are proficient in the English language in order to clearly communicate your project requirements.
However, most of the development agencies are aware of this challenge and have started learning the local language of their target countries. Moreover, many development agencies work in their client’s time zone to facilitate seamless communication at all times. This ensures optimal project efficiency and guarantees high-end results from development outsourcing.
Numerous design and development agencies offer their solutions for specific industries and market niches. This factor enables these agencies to deliver high-end solutions that meet the requirements of the businesses operating in these particular industries.
One of the gravest mistakes that a business can make while outsourcing its IT requirements is not researching the appointed development partner’s niche. For example, if you are planning to build an eCommerce website for your business, selecting a development agency specializing in fintech software isn’t the best option.
Of course, the programmers will still be able to code your platform but selecting an agency that specializes in your industry ensures that you get superior-quality solutions for your digitalization requirements. Therefore, it is essential that you hire a development partner that holds specialization and experience in your particular industry for the best results.
It is worth noting that business ideas are highly sensitive and need to be protected to ensure their integrity and uniqueness. This is where the role of NDA (Non-Disclosure Agreement) comes into the scenario.
When you are planning to outsource your requirements to an agency or a freelancer, you are likely to share your project requirements, business ideas, and business model with numerous potential development partners during the screening process.
Signing a mutual NDA at this stage will ensure that your ideas remain unique and their ownership is limited solely to you. Another important aspect of development outsourcing is signing a project contract with the selected development partner.
This contract usually contains the estimated duration of the project, development cost, work models, development milestones, and other specifications of the project that will govern its execution. Having a contract ready ensures that both parties are on the same page and that the requirements are clear on both ends.
On the other hand, not having an NDA or a contract often poses a risk to your project and can result in tremendous failure. In this case, the project is completed at the development partner’s convenience, further limiting your control over the process.
It is commonly understood that business owners come up with new ideas from time to time, as it helps them improvise their projects and add value to the final product. However, it increases the challenges of UI/UX designers and programmers and brings numerous hurdles to the development process.
To explain, adding new features to your platform after your product’s prototype is ready leaves the UI/UX design team with no choice but to start the entire design process from scratch, further increasing the final time and capital requirement of the project.
Moreover, if you decide to add or remove certain features from the platform amid the programming process, the programmers, as well as designers, will have to work extra to meet your requirements. This is also likely to increase the chances of bugs and errors and can significantly reduce the overall quality of your platform.
Therefore, we suggest you clearly define your requirements before the commencement of the development process. You can also consider extending the duration of the research and feature planning stage. This will enable you to get hold of the best features and ideas beforehand and will reduce the chances of skipping ideas, ensuring the project’s timely and hurdle-free completion.
Follow-ups are one of the most important aspects of the development process. Taking timely follow-ups enables businesses to ensure that the development process is going as planned and that the project will be completed within the expected time frame.
Moreover, by taking follow-ups from time to time, businesses can ensure that the product that is being developed is in alignment with their requirements and expectations. Failing to take these follow-ups often results in project failures and launch delays.
One of the best ways to overcome this challenge is to follow agile methodology and pre-determine benchmarks for the project. Today, most development agencies work with the agile approach and provide project updates from time to time for optimum efficiency.
For businesses planning digitalization, outsourcing design and development requirements is the best option to get cost-efficient and on-time solutions for their needs. However, outsourcing IT service requirements comes with its own challenges.
A business has to make numerous choices, such as whether to outsource to an agency or appoint a freelancer and which outsourcing model to choose (onshore, nearshore, or offshore). In addition, hiring the right development outsourcing partner is a challenge in itself for businesses.
All of these processes are prone to risks and errors, and a single mistake can cause severe damage to your project. However, by following the right development approaches and practices and taking note of the common outsourcing mistakes mentioned in this blog, you are certain to find the most optimal development partner for your project and can efficiently outsource your requirements.