Software development and maintenance outsourcing is an effective business strategic decision and it can benefit any organization in many ways provided implemented wisely.
Invest 5 minutes of your valuable time reading this blog to know the answers to following questions:
- What is outsourcing?
- What to be outsourced and what not to be outsourced?
- How to outsource and various engagement models?
- Apogaeis recommendations.
What is outsourcing?
Let’s try to understand the meaning by splitting the word into two meaningful words.
Someone who is not a part of your internal team but carries tremendous expertise in any specific domain and can deliver assignments effectively. Engage talents to complete the assignments keeping time, cost and quality as prime factors. Software Outsourcing is an approach for reducing cost, improving overall service quality and keeping focus on your core business activities.
What is IT outsourcing?
Information Technology Outsourcing is a process optimization strategy to get into contractual agreement with foreign or domestic Technology Service Provider involving an exchange of services and payments.
Let’s simplify by a start-up example: Mr. Albert is a non-technical visionary entrepreneur lives in the United State of America and got an idea to help people to find drugs easily and on cheap price. Mr. Albert finds Apogaeis and takes help to build, host, maintain and periodically upgrade cheap and easy pharma platform consisting mobile (iOS and Android) and web applications (Pharma Managers, Administrative purpose and B2B integration). Mr. Albert is able to keeps 100% focus on strategic decision for the platform to bring it to next level and outsource all the operations to Apogaeis.
IT Outsourcing is one of the major type of job, which gets outsourced across the globe.
What to be outsourced and what not to be outsourced?
Do what you do best and outsource the rest to a Trusted Technology Partner. To take the best advantage of IT Outsourcing, it is very important for an organization to introspect the business and find out answers to following questions:
What is the business of organization w.r.t. to the functions and operations?
Every company has its unique vision and mission. This question to be answered here with respect to fundamental business values and problems that the company plans to solve. Let’s take an example and figure out.
ORGANIZATION GOAL
To help Android mobile developers/app owners to promote their app and get higher ranking.
SOLUTION TO PROBLEM
Technology Enabled Platform helps app owner to advertise their app and engage the mobile users who are actively seeking for new and promising applications.
ACTIVITIES TO SUCCEED IN BUSINESS
- Process establishment to identify developers willing to promote their app.
- Process implementation to Identify developers willing to promote their app.
- Identify value addition to the platform to attract mobile users looking for new apps.
- Implement value added services in the platform to attract mobile users looking for new apps.
- Analyse and determine core initiative for sales and marketing of the product.
- Implementation of initiatives related to product development, sales and marketing, and business processes.
What could be outsourced without any impact on strategic operation?
- Parents do not send their children to play-school for forever, there are being groomed there.
- Similarly, needless to say, activities should be outsourced not business unless you do not want to own the business.
- Identify activities those are possible to be outsourced without impact on the business.
BUSINESS ACTIVITIES COULD BE OUTSOURCED
- Process implementation to identify developers willing to promote their app.
- Implement value added services in the platform to attract mobile users looking for new apps.
- Implementation of initiatives related to product development, sales and marketing, and business processes.
What needs to be under the control of business owner?
Activities those determines the future of the business should be kept under the control of the business owner and implementation operations should be outsourced to the technology partner.
CORE BUSINESS NOT TO BE OUTSOURCED
- Process establishment to identify developers willing to promote their app.
- Identify value addition to the platform to attract mobile users looking for new apps.
- Analyse and determine core initiative for sales and marketing of the product.
- There are engagement models and are exceptions to this paragraph. There is scope to outsource even core business activities to service providers.
What are the guidelines, legalities and proven process to outsource?
The organization should ensure that their Technology Service Provider maintains the same level of governance, rigour and consistency as themselves. Following are a few pointers:
When is the right time to start outsourcing process?
As a business owner, it is expected from you to lead the complete process at your end and coordinate with the partner in an effective manner. The organization should have following information before outsourcing.
- Define the goal of the business and identify what to be outsourced and what not to be outsourced.
- Cash flow is the oxygen of business. The organization should have a proper plan for cash in-out flow for outsourcing.
- Break down the business goal and get a robust plan to overcome constraints and challenges.
- If you have a great idea, outsourcing raises a question, who came first ‘egg or chicken’ w.r.t. financials. Outsource work and pay to technology partner to implement ideas which helps you to make money. In this process, you ensure you do not get into debt which you are unable to take care of.
- Legal documentation for all the policies and contractual agreement.
- The most important, find out a capable and honest Technology Service provider to partner for outsourcing.
What are the various Engagement Models for IT Outsourcing?
Information Technology Outsourcing (for techie to understand, it is a kind of REST – REpresentational State Transfer) is a concept for getting the job done by third party service provider and could take form based on the contract between the parties. Broadly, IT Outsourcing can be effectively implemented (we would say contracted) following any of the following six engagement models.
MANAGED SERVICES/GLOBAL DELIVERY MODE
This engagement model is good for organizations having Long Term Outlook and willing to outsource complete product (Tech, Non-Tech).
OFFSHORE TEAM
This engagement model is good if a client is looking for an extended team and have a long term outlook for technology outsourcing.
CONSULTING AND ASSESSMENT
This engagement model is good for clients who already have solutions and willing to restructure the business & IT. The organization expects helps from Technology Partner to improve the efficiency of existing operations, boost profits & reduces operational cost.
This engagement model also suits for the entrepreneurs who have ideas and wants to market research before getting into desecrate planning and implementation.
STRATEGIC ALLIANCE PARTNERSHIP
Individuals or organizations who have great ideas and having Partnership mind-set can get into this engagement model. Organization or individuals expect help from service providers from investment and execution, both point of view.
In this engagement model complete concept and product (Tech, Non-tech) gets outsourced.
FIXED PRICE BASED PROJECT
Do you have clear requirement, short term engagement plan and cash inflow with you? Outsource work under this engagement model and avail following benefits
TIME AND MATERIAL
If you have an idea and wants to try, requirements are not clear and want to get into the flexible engagement model, this is the right choice for you. This model helps clients to control financial risk and adapt releases as you wish and ongoing basis.
OUR RECOMMENDATION
IT Outsourcing is a very good strategic decision to grow and be profitable in business provided implemented correctly with the right Technology Partner. Organization/business owners should introspect the business and ideas, and make the plan as guided in this blog, before getting into IT Outsourcing. Do not plan for IT Outsourcing until you are clear and have sufficient means to outsource work. Organization/business owners should discuss clearly various points with Technology Partner like your expectation, performance metrics, service level agreement, and entrance & exit process, past work, recommendation from old clients, verification and value for money.
Still confused, talk with our consultants to get the answers. Contact Us for a free consultation.
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