Seven Painful Outsourcing Mistakes Companies Make
Many companies competing in the global market choose to go with IT outsourcing, even knowing about the pitfalls that come with it. A seemingly risky decision like this can be explained by the fact that it can be problematic to build a cost-effective team when your hiring search is restricted to a single talent pool. Moreover, outsourcing has become a necessity for companies who want to outpace their competitors and win time-to-market.
Decision-makers are super skilled at their core business, but they aren’t entirely immune to mistakes when it comes to an outsourcing strategy. Thus, the question arises – how to overcome outsourcing mistakes? If you’re interested in finding out more about the nature of outsourcing mistakes, below is a list of the most exasperating ones and recipes to avoid them.
Outsourcing your core competence
Without a home-based core team, your project can hardly stand a chance to endure. Outsourcing a line of work assumes little oversight on the customer’s end, which is typically associated with some risks. Outsourcing your core competence may put your company at an even greater risk of losing control over the entire project. Thus, hiring someone offshore for your core business activities isn’t the best idea. No matter how dedicated, your hires may lack the right kind of expertise to set your company in the right direction. Another important thing is that only your core team knows how to build proper communication with customers, as it profoundly understands their needs. As such, if you need more resources to fulfill your core strategy, it’s best to expand your in-house team.
Hiring for technical skills over communication skills
The synergy of the team lies in communication between its members. Hard skills matter, but successful virtual teams communicate extensively and in an effective manner. Besides, team members should feel comfortable working together, strive to deliver information in the best way possible, and work on goals as one. Your virtual employees need to have a wealth of skills, including the ability to get a message across clearly, report and discuss problems, offer feedback, to name a few.
With this in mind, choosing candidates purely for their hard skills is one of the most common outsourcing mistakes. It’s probably worth making an exception for candidates with rare competencies. Still, it’s best to remember that solid communication skills play a vital role in your outsourced solution.
The requirements for candidates for the same position tend to vary across countries. For example, the requirements for a senior candidate in the US may differ from those in Eastern Europe. Thus, it’s essential to stay in the driver’s seat during the recruitment process. Making a hiring decision should be on you as well. Otherwise, you might end up with employees who aren’t a good fit for your organization.
The bottom line here is not to make one of the most biting outsourcing mistakes: Letting the vendor hire team members without screening them yourself. Many vendors focus solely on candidates’ technical skills, whereas it’s equally important is to estimate if a candidate suits your company culture-wise. That’s something that can be adequately estimated by the client.
Ignoring the vendor’s retention rate
High attrition impedes the team’s productivity, as it leads to the need to bring in and train new employees all the time. In an ideal scenario, your initial hires will work on the outsourced solution development from start to finish, which requires a certain amount of effort on the vendor’s side. A negative retention rate may identify that the company provides inadequate compensation and benefits packages to the employees.
The amenities such as comfort, good office location, and a positive atmosphere matter, given that they keep employees around. With this in mind, it’s essential to check the vendor’s ability to provide these things, especially when choosing between vendors with the same rate range. It’s best to see the work environment of your potential team members by visiting the office.
Outsourcing security or providing access to personal data
In this day and age, security is the top priority on tech leaders’ agenda. If a data leak occurs, your company is immediately put in danger of going belly up due to the ensuing reputational and financial losses. When it comes to your virtual team’s security, you can order extra services, such as security audits, CCTV monitoring, or alarm systems. To steer clear of outsourcing mistakes like this, it’s best to hire a local Chief Security Officer to oversee security on your end.
Outsourcing providers rarely regard data breach liabilities as part of their responsibility, and therefore won’t be legally obliged to compensate for the losses adequately. Your outsourcing strategy needs to include all the necessary measures to get proper compensation from the staff vendor that would be enough to cover potential losses. Otherwise, the best-case scenario you can count on is the reimbursement of a few paid invoices.
Partnering with multiple providers
Hiring a specialized company for each type of job seems like a reasonable approach. But with your outsourcing strategy, cost-effectiveness should be second to manageability. Selecting and juggling an abundance of providers takes a lot of time, slows project development, and eventually leads to the loss of focus on your outsourced solution. With this in mind, it’s better to partner with 2-3 providers in every area, depending on your company size. Our clients often rely on a problem-solving approach to software development in Ukraine to build products that call for top engineering expertise.
Lack of feedback and established survey systems
It’s easy to examine your local team’s atmosphere thanks to face-to-face meetings and daily informal chats. In a bid to instill the right kind of atmosphere companies bring in HR consultants, therapists, and even yoga coaches.
When it comes to outsourcing mistakes, there is no way to instantly know about the swings in a provider’s policies towards their employees. More often than not, companies learn about issues after the quality of their outsourced solution goes downhill. As such, it’s crucial to constantly measure your remote employees’ satisfaction using survey services, for example, Survey Monkey.
It’s also essential to make sure that communication between you and the outsourced solution development team goes in both ways. You should collect (and offer) feedback from every team member instead of having a team leader submit surveys on behalf of the team. You can make the feedback process anonymous as well.
Ask our team
If you’ve made it to the end of this post, it’s probably crucial for you to avoid pitfalls with your outsourcing strategy. We would be happy to arrange a virtual meeting with our tech manager, who knows everything about building and managing remote teams. Feel free to contact us anytime for a consultation – or if you have anything to add to our list of outsourcing mistakes.