We should face it: if you can afford building an in-house team – do that! Duh, it goes without saying that having professional skilled employees within close reach is a rosy dream for the most entrepreneurs. But the reality reveals that such model is of great demand today, so let’s think what drives companies to outsource.
Reasons go first
It’s not about the costs
First let’s have a deal: we are not going to tiptoe around the issue trying to persuade you to outsource. No. We aim to share our ideas based on our customers’ experience to help you make the right decision. That’s it.
Very often we hear outsourcing in the context of costs’ cutting. But here we won’t put this reason as foremost. Why?
Our market became global and in terms of cheap software development it has divided into 2 main criteria: outsourcing for costs’ cutting, and outsourcing for talent.
This article is about those who look for talent and eager to create outstanding products with their remote teams involved.
We decided to reveal some true relevant facts that won’t put rose glasses on you. The latest research by Sourcing Pulse reveals that a vast majority of 76% of companies aim to reduce up to 50% of the costs for software development by outsourcing their development. Anyway outsourcing companies shout their heads out with this argument putting this reason in the first place.
Of course the difference between the salary of a developer from San Francisco (the USA) and Lviv (Ukraine) vary, but this factor should not come first since real professionals worth their wages.
Another way to is operational expenses reduction (it’s obviously cheaper to maintain an offshore team in a country with lower cost of living).
So the luckiest manage to cut their costs by only 30%, less than promised 50%, but a satisfactory outcome. The trouble is that many underestimate their costs for management, meetings and travelling. So it turns that the majority only benefits from 10-20% of saved charges. That is the truth and obviously that can’t be a reason for choosing to outsource for strong companies.
So after we have put the cost issue into perspective, let’s discuss some other factors that make remote teams so much in demand.
Access to the latest technologies
Have you ever tried to hire a Senior Java developer in Canada within a month? Or let’s say you need a Xamarin developer that is of high demand in most countries. We can go on with the list.
So a fact that only in Ukraine 130 391 engineers graduate annually from universities. This number is greater than in France (104 746) and halves the US number of grads (237 826). Those who wish to upgrade or get IT knowledge attend any of the 50 private IT educational courses available.
So the facts speak volumes. Chances to hire skilled professional in short terms are high and real. That’s a rescue option also for agencies from the USA when they have strict deadlines for their clients and projects.
No lay off compensations
Developed countries protect the employees’ interests and keep them on a safe side. In the USA, most European countries and especially in the UK, employers have a great headache on their way to fire a specialist.
By the way we have previously discussed this issue. To put it in a nutshell, companies are to compensate up to $100 000 in favour of a dismissed employee depending on a single case and country.
In contrast, most outsourcing contracts of Ukrainian providers have very safe and customer-oriented terms. Outsourcing providers chase each other on their way to offer the most advantageous conditions in terms of hiring and dismissing employees.
Let’s say if you have an outsourced team for less than a year, there’s only a 2-weeks notice needed. No compensation, extra costs and nerves. That’s on average.
Flexibility
Well, this point may refer to the idea above, but we have to be more detailed here. When you have a remote team it becomes very easy to grow it. All you need to do is to request your current provider with such a great news! You can bring new specialists with no charges for search, evaluation and interviewing, since your provider will take care of all that stuff for you.
Depending on the specific needs customers are welcome to choose any of the business models providers offer: T&M, Fixed Price or Dedicated team, so you can get all the necessary resources without hiring a specialist (QA, testing, design etc.) for a single use on your project.
Here are just 3 major reasons we outline for our customers. No fairy-tales about saved costs, but obvious factors that any company can benefit from provided that it smartly chooses an outsourcing partner. The trick is not doing outsourcing smarty, but choose your provider smartly.
Risk comes from not knowing what you’re doing. (Warren Buffet)
He was right. The first and foremost thing one should remember is that you should clearly realise what functions you need to have outsourced. The reasons why to do so and a vision what kind of team and specialists to look for.
But from our experience customers fail to hire a perfect match for their project from the first try. You should perfectly know your requirements or have a trusted partner who can do that for you. That’s why all our customer do not overpay for superstar developers since we honestly tell them there’ll be enough to hire a skilled Middle for a reasonable rate.
But here we’d like to discuss some other kind of risks.
Many customers claim it’s hard to outsource some specific functions or part of a project.
Here in order to be on a safe side you need to be sure your provider is competent enough to deliver solutions of appropriate quality. It happens that many organizations work with specific technologies or have particular processes their remote team should stick to. So double-check your dedicated team is skilled enough to handle all that aspects.
Mismanagement
When you have an in-house team it’s sometimes a challenge to bring new team players traceleslly. You already have a clear working process, be it Scrum, Lean or any other management tool. So while choosing a provider make sure the company will do its best to smoothly integrate your remote team into the existing.
In this context, going back to stats by Ardour Sourcing Pulse 54% of companies which succeeded in their outsourcing activities (cut costs, hired great dedicated specialists, their product grows etc.) of them collaborate with external advisors on choosing an outsourcing provider.
The best thing to do is hiring a specialized agency that would focus not only on hiring process, but also take care of all communication, integration and management of your remote team and keep a close eye on your employees.
In-house team morale may decrease
Once you hire an outsourced team willing to replace some functions and lay off some of your in-house team members, so the rest of the team will feel the risk of the same fortune. The team spirit may decrease.
In order to avoid that be clear and share you vision with the rest on how you plan to organize collaboration with the outsourced developers. If you are honest and give enough information to your employees, they will trust you and continue to bring value to your business.
Pay a great attention to the situation, especially at the beginning.
“Long distance relationship” is not for everyone
We have already discussed the issue of management, but it was in the context of internal company communication process. And when it is affected by distance since many remote teams are located several time zones away and not every business process can easily be adapted to such schedule.
In such case any tracking and task management tool will help to make the process structured and clear for all team members. Your remote team has to be informed on all your expectations and deadlines. Provided that you can expect the result.
Another claim is that a dedicated employee would never perform the same effective as an in-house who is under full control. But such troubles appear when there’s a hole in IT staff management at all and can be eliminated by skilled manager who will handle all communication and performance control issues.
A good outsourcing provider will always warn you on the most probable risks your company may face and do their best to eliminate them.
The game worth the candle
Well, we are done with all the disadvantages and while we have already discussed some positive aspects as the reasons, there are some more benefits that go far beyond money.
Focus on core activities
Going deep into development may hurt your business growth. A business owner doesn’t have to concentrate on everyday issues and should have an opportunity to think strategically to make his business grow.
Increase efficiency of your in-house employees
By delegating some tasks to your remote team you’ll have a chance to expect better delivery of your in-house team and use their time for primary business tasks.
Run your business 24/7
Outsourcing to a country with a different time zone may give you an opportunity not only to cut your costs but improve quality and customer experience. See the case for web hosting company outsourced customer service support to Ukraine as a nice example.
Knowledge transfer
More often than not your remote team is not only a nice supplement to existing one, but they can share valuable knowledge and bring unexpected value to your in-house developers.
Reduce business overheads
In most countries offering outsourcing services the cost of living is lower than in countries with developed economies. So you won’t have to compensate healthcare insurance for example of invest in upgrading of working infrastructure since your provider will care of all that.
Hire skilled professionals at lower rates
And finally the most obvious but definitely reasonable point is that outsourced software engineers are great enthusiasts and bring a lot of new ideas to their customers projects. By hiring developers especially
from Eastern European countries you’ll get not just coding staff, but a team of real geeks.
We’ve heard numerous positive feedbacks from customers working with Ukrainian teams. These guys have strong engineering background that all our customers highly appreciate.
Though outsourcing has its pros and cons, the reasons to hire a remote team definitely outweigh. As you see, the main pitfalls can be easily avoided once you choose an appropriate outsourcing provider.
So a ticket to success is doing outsourcing smartly. Choosing a “do-it-for-me” concept when a specialized agency undertakes all the aspects on search, evaluation, hiring and especially managing your remote team.
P.S. We hope to have contributed to your decision and would like to stay in touch! Subscribe to our regular updates and keep up to the latest and the greatest from IT world
