Risks of partial outsourcing: why having multiple contractors may not be the best idea for your business
Most businesses that use outsourcing software development services need help managing and supervising the work of various contractors. The situation worsens when there is a miscommunication between different outsourcing companies working on a project for the same customer. TRIARE provides its partners with the solution to this issue due to the ability to meet all clients’ needs. Such an approach is the best way to enjoy the benefits of outsourcing companies’ engagement.
What is IT outsourcing? Why do many companies underestimate it?
Outsourcing is delegating certain tasks and management functions to external performers who can implement these projects more efficiently. Such relationships have two agents, including the customer and the contractor. Therefore, an important feature of outsourcing involves transferring core business processes outside the company’s work processes. More than 76% of businesses use the advantages of IT outsourcing.
Particular enterprises tend to underestimate outsourcing software development services due to the following reasons:
Overpriced services. A potential monopoly on the part of an outsourcing service provider may lead to an unreasonable and dramatic increase in the price of an outsourced product or service in the future.
Degradation of business processes. The decrease in the efficiency of the business process below the required level occurs due to an increase in the terms of the service provision. Outsourcing companies can slow down major working processes.
The need to search for several outsourcing companies for one project. The absence of reliable service providers in certain business sectors causes additional risks. They should not be tolerated in the continuous business process of the organization. The increase in the number of contractors complicates the management of business activities and communication.
Why do most companies outsource tasks to different IT performers?
Entrepreneurs tend to assign tasks to different outsourcing software development companies because of the following preconceptions:
- Limited area of specialization of one contractor
- Financial benefits of finding the cheapest services provided by different work groups
- Guarantees of receiving a partially completed task in case of failure of one of the outsourcing enterprises
The business owners make every effort to create the safest conditions for cooperation with contractors by delegating tasks to different outsourcing providers. However, these approaches create only an illusory feeling of confidence in the successful completion of the project by disjointed specialists. The involvement of different IT performers in project realizations represents a source of additional risks and communication difficulties.
How can you lose time, money, and reputation when several teams work on a project?
Partial software development outsourcing can lead to the following issues:
Deadline neglect. Control over tasks performed by different contractors implies complex communication. Non-compliance with the planned time frame for the project implementation by one outsourcing provider limits the ability of other specialists to show results before the deadline. The integrity of one contractor is not a guarantee for a high level of collective responsibility.
Unforeseen financial expenses. Only a holistic implementation of the project can be a justified budget expenditure. A poorly executed task by one of the contractors nullifies the work of all outsourcing agencies, making a partially implemented project irrelevant. Solutions to this problem may require a return to the starting point and refinancing.
Reputational damage. Delegating tasks to different contractors can cause conflicts based on differences in corporate ethics and imperfect communication between all participants in business processes. The absence of one center of control and direct influence on all task performers complicates obtaining a high-quality result of collective work.
Outsourcing to different teams. Main business risks (Control loss, Hidden costs, Compromised quality, Communication breakdowns, Security issues)
Despite all the positive aspects of outsourcing, these services can expose clients to serious risks. Poorly selected contractors may violate deadlines or develop digital products of poor quality. Therefore, bad performers can cause a loss of profit instead of saving money. It makes sense to take care of these moments in advance to prevent this from happening.
The disadvantages of partial outsourcing can cause the following risks:
- Control loss. It takes a lot of work to manage workflows initiated by different companies. This task requires additional time and resource costs. Lack of overall project control and meticulous attention to the work of each contractor can lead to the destruction of a systematic approach to obtaining effective results.
- Hidden costs. Fragmentation of the budget for project financing may lead to unforeseen increases in contractors’ costs. This situation can occur during cooperation with any outsourcing company. However, the likelihood of such unfavorable financial spendingы increases proportionately to the number of contractors.
- Compromised quality. The presence of several contractors makes it difficult to control the quality of the work performed by each provider. In this case, poor-quality work performed by one of the contractors may hurt the final result. Such errors are difficult to correct due to the need to change even well-performed tasks by other outsourcing agencies.
- Communication breakdowns. The engagement of many contractors in implementing one project requires the introduction of a complex communication hierarchy involving all the executors of the task. The coordination of such interaction is most often subject to negative influence caused by miscommunication problems.
- Security issues. As a rule, outsourcing software development companies conclude non-disclosure agreements with their clients. However, a large number of contractors makes it impossible to identify a channel for corporate data breaches when many external employees are involved. Consequently, the risk of intentional data theft increases without actual prosecution of attackers.
Why outsource to one team? What are the risks in this case?
The clients should choose the cooperation with one web development outsourcing company due to following reasons:
- The balance between price and quality of services. A client asking for the implementation of the entire project by one contractor can receive a loyal pricing policy. This approach excludes the occurrence of various sources of uncontrolled additional costs.
- Simplified communication with the outsourcing company. The client can choose one project manager to handle all work processes. In this case, the control of the work dynamics occurs quickly and promptly for making changes and productive execution of the task.
- Increased security of corporate data. The sole contractor will be immediately found violating the NDA. This situation motivates the outsourcing company to be especially careful about the privacy of corporate customer data.
Interaction with more than one outsourcing software development company can cause the same issues as during the work with several contractors. However, these problems may be fixed in several hours due to the absence of the need to look for the source of delays, the responsible manager, and ways to redo the entire project. A short chat with the project manager of one outsourcing company can root out the problem to continue a productive workflow.
What does the business say about the benefits of IT outsourcing to one team?
The benefits of outsourcing software development services to one team are well known, implying the following opportunities:
- Save money due to minimum unexpected expenses
- Improve team efficiency based on simplified workflow management
- Increase company productivity by avoiding issues occurring in case of gaps in communication with multiple contractors
Delegation of business processes is essential in modern realities because it helps enterprises achieve their goals faster. However, there should be the right balance. For example, GrowthForce, an advanced accounting company, claims that it is highly beneficial to cooperate with a single contractor that has a high level of professionalism and can gather teams that fulfill different tasks.
The advanced level of cooperation with an outsourcing company allows customers to flex the engagement models, switching to outstaffing or dedicated teams. For example, outstaffing provides the ability to avoid any restrictions within a certain outsourcing company. Its action algorithm implies collaboration with specific professionals to complete tasks leading to close collaboration and low costs. Working with dedicated teams is the best way to attract certain experts to realize the project.
How to optimize the budget and time when to use outsourcing of all tasks by one team?
In 2022, cost-cutting was a priority for 42% of businesses. A single team of web development outsourcing specialists can optimize the budget and time by the following approaches:
- Uniform cost reduction policy. Companies have long used the practice of cooperation with one outsourcing team to cut costs. Consolidating cash flows for project sponsorship and their permanent control is easy to implement within the interaction framework with one contractor.
- Implementation of exponential technologies. Innovation driven by simple management practices allows customers to grow faster without requiring new business models. The involvement of one contractor allows the clients to complete tasks faster with minimal financial spending.
- Simplification of legal relations. When a company hires a specialist, an employment relationship arises. The employer binds himself with obligations that are complicated to terminate. In the case of outsourcing with one enterprise, a contract is concluded between the two parties. It is easy to terminate if one of the parties fails to fulfill obligations or provides poor-quality services.
How do good communication and well-established IT outsourcing processes help to develop clients’ businesses?
The advanced communication and well-planned software development outsourcing process are a basis for developing client’s business because they:
- Focusing on the primary activity. This fact is especially important for businesses constantly developing in different regions of the country and the world.
- Using modern technology and qualified professional resources. This approach allows the clients of outsourcing companies to delegate responsibility for the performance of specific functions.
- Reduce costs and upgrade the investment attractiveness of the company.
- Increase competitiveness with a high level of staff mobility.
- Free up internal resources for other purposes and improve the quality of the products or services received.
The use of outsourcing services makes it possible to achieve an increase in the efficiency of the entire company. The clients can avoid unnecessary investments in expensive production and technological bases. This approach allows enterprises to enter the world market painlessly by enjoying the professional support of an external team of specialists.
IT outsourcing complex in TRIARE. What tasks does our team do? Real cases
IT outsourcing services represent a modern business model that provides additional competitive advantages to companies with limited resources and areas of activity. The main source of the advantages lies in cooperating with one professional contractor to achieve success in the market.
TRIARE offers its clients an extended complex of outsourcing software development services, including:
Mobile Development. The team performs all tasks needed to launch a high-quality mobile application that meets the client’s requirements to achieve a wide range of business goals. At the same time, the clients can enjoy the support of the digital product for an unlimited time at the customer’s request. Smile App is a perfect example of an advanced digital product developed by TRIARE as an AI-based dental marketing solution.
Web Development. TRIARE’s specialists have the experience and skills to perform full-stack website development services. The company prioritizes the client’s needs by following individual algorithms to achieve the desired results. The website developed for Dark Burn exceeded all customer expectations with a unique design and high productivity in fulfilling all tasks.
UI/UX Design. The team has experience in creating exceptional mobile UI/UX designs helping businesses to enjoy attractive and high-tech digital products. TRIARE allows customers to use the benefits of elegant and intuitive UX UI CRM design.
Software Testing. The proper functioning of websites and applications is only possible by fixing bugs and implementing updates. TRIARE allows clients to enjoy ongoing support for using digital products. EventSource app receives constant updates and timely testing provided by TRIARE to perform its functions.
TRIARE shows advanced skills and long experience in providing IT outsourcing services to businesses expressing a desire to delegate tasks to external specialists. The professionals have the resources and capacity to handle all project tasks from inception to completion. In this case, the clients can avoid all risks caused by cooperation with different contractors. The companies can enjoy full support, high levels of responsibility, and advanced business process management to achieve ambitious goals.