Before You Decide to Outsource IT Skills

Many articles have been written about the benefits of using an outsourcing company’s services for a business. It is also often said that starting cooperation with an outsourcing company is a strategic decision for the company. This is true, and we agree with it.

However, since it is a crucial decision that significantly impacts the company’s development, it is worth preparing well for it. Strategic decisions should not be subject to fashion.

Several issues are crucial to its success before you decide to start such cooperation and sign a contract. They also significantly impact the budget.

• What is worth considering before the first conversation?
• What issues should be discussed with an IT skills outsourcing provider?
• How to choose an outsourcing provider wisely?
• You will find answers to these questions in this article.

 

IT skills outsourcing, like any other form of outsourcing, involves using the services of an external company. The difference is that you delegate only some of the activities, but you use the competencies of IT specialists within your organization.

Benefits of outsourcing?

• Flexibility in action
• Saving time and money
• Saving human resources
• Increasing efficiency

To fully appreciate the advantages of IT outsourcing, it is worth discussing these five issues with the outsourcing company before signing the contract. Your budget and finance department will thank you.

 

See also:

IT Outsourcing – advantages & disadvantages

Outsourcing IT services – critical aspects of choosing a company

 

As we mentioned in the introduction, mindlessly following company management trends is not wise.

Reasons why our customers decided to outsource competencies:

• They wanted to expand the team of programmers implementing the project quickly. They tried to engage only some employees in a short recruitment process.
• They wanted to implement a quick project without hiring more employees. They feared that after the additional hires completed the project, there would be no work for them.
• The project guidelines changed, and the employees needed sufficient knowledge to implement them. There was no time for training.
• They wanted to outsource part of the project to complete the whole thing on time.

These are just a few reasons why our clients decided to cooperate. The most frequently emphasized benefit is saving time, money and human resources. Not having to engage employees needed in the project for side processes (e.g. recruitment) is undoubtedly beneficial.

 

Before outsourcing IT competencies:

1. Consider what competencies are needed for the project.
2. Analyze what specialists you already have in your organization.
3. Diagnose competency gaps in the team.

 

Case 1

Consider training together if an employee needs more experience in your tool or technology. A few evenings may be enough to acquire this skill. Sometimes, the training costs and time spent on further education will still be more profitable than hiring an external consultant for a few months.

 

Case 2

If you need five programmers to implement a project and your company has only three specialists, outsourcing will fill the gap faster than traditional recruitment. Additionally, you will save the person-hours that your employees would spend on recruitment instead of, for example, programming.

Depending on the details of your cooperation with us, you will receive recommendations from 2-3 specialists we recommend to your team. A quick conversation lets you decide who to invite to the project.

If there is still employment for additional programmers after the end of this project, consider conducting the recruitment process yourself. It may take more time and require more work than if you used an external company. However, it also has advantages. Employees involved in the process will later be more involved in introducing new employees; they will immediately treat them “as their own.”

 

Our advice

Use outsourcing of competencies when:

• Unique knowledge and experience will enrich your team.
• You do not have the resources (money, people or time) to conduct the recruitment process independently, and you need new workers quickly.
• You have no guarantee that after the project is completed, you will have work for the specialists employed.

 

IT outsourcing consultants can work off-site or on-site. Your chosen model can affect the final cost of cooperation with an outsourcing company.

The off-site model is when the consultant works remotely or from Infolet’s office. Contact with the team is via a previously established tool.

Advantages:

• You do not need to increase office space
• No administrative and office costs
• A larger pool of experts (possibility of cooperation with specialists, e.g. from all over Poland)

Disadvantages:

• Complex knowledge flow between the external expert and employees
• The division into “we” (the team) versus “they” (consultants) may cause integration problems and, as a result, communication
• Implementation of the project may take longer
• Possible difficult access to data for the external consultant

 

The on-site model is when the consultant works directly with the team in your office.

Advantages:

• Easier and faster communication
• Easier and more natural exchange of know-how
• More effective implementation of the consultant in the project
• IT consultants integrate with the team

Disadvantages:

• A smaller pool of consultants (limited to a city or region)
• Increased office and administrative costs (media, coffee, tea)
• Sometimes, the need to acquire additional office space

In addition to the cooperation model, it is worth considering the topic of hardware and software on which the consultants will work.

 

There are at least two possibilities:

• The consultant works on the outsourcing company’s hardware and software. This option requires a detailed presentation of the technical and technological requirements to the outsourcing company. The outsourcing provider is responsible for the efficient operation of the equipment.
• The consultant works on the company’s hardware, software, and internal systems, for which he implements the IT project. The outsourcing party is responsible for the computer’s efficient operation.

Our clients more often decide on on-site cooperation and a hybrid work model. The Infolet expert visits the client’s office several times a week or month, where he meets with his team. On the remaining days, he works remotely.

We agree on the hardware individually with the client. Depending on the project and tools the client uses daily, our consultants work on the client’s hardware or their own. The choice is also motivated by security issues and efficient information flow. An additional advantage is that consultants can work on the same software and configurations as internal employees. This solution reduces the risk of inaccuracies, errors or downtime caused by internal hardware limitations.

Communication with consultants and the outsourcing company will be vital regardless of which cooperation model suits you better. Communication should take place on an ongoing basis by previous arrangements. The leader or the entire team can set the frequency, increasing the commitment to meeting quality and effectiveness. Meetings can be held daily or once a week. When the whole team is outsourced, there are more often weekly meetings.

 

When deciding to outsource skills, it is worth considering the issue of confidentiality and responsibility:

• What exactly will the consultant be responsible for? What will their duties be? What data will they have access to?
• How much information about the project and the company can you share with an external company?
• What will be the measure of success for which the consultant will be held accountable?
• What will be the measure of success for the outsourcing provider?

Knowing the answers to these questions before signing the contract is reasonable. If you know the answers, it will be easier for you to talk to the company representative and feel more confident in negotiations. Ultimately, the signed contracts will benefit both parties.

If you fear the outsourcing company getting involved in your company’s confidential data, sign a confidentiality agreement (NDA – Non-disclosure Agreement). Such an agreement is a guarantee that the details of your project or company will not be disclosed. It is worth signing it at the initial stage of negotiations. When the outsourcing company knows the specifics of your project, it can prepare a more accurate quote. It will be able to prepare a more comprehensive offer. It can draw your attention to project issues that seemed unimportant to you.

With well-thought-out success metrics, you can start discussing the quality of services the outsourcing company provides. Writing down (and signing) the agreements before starting cooperation in a service-level agreement (SLA) is vital.

In an SLA, you can describe specific functionality to be delivered at a particular time, adequately tested, verified, and documented. This may be the expected response time to some failures (e.g., consultants in Service desk or ITOps positions).

 

Also read: How to ensure data security in IT outsourcing?

 

We know that it is difficult to give a specific amount when you are in the first stage of talks with an IT outsourcing company. However, preparing well for this point is worth calculating at least an estimate.

What to consider?

• Remuneration for human work. If you do not know whether you pay “market,” use the available remuneration reports. You will know what rates are on the market, benefits, recruitment costs, and training costs.
• Costs for equipment, software, and office supplies. If an outsourcing company is responsible for the equipment and software, the price for the service may be higher, especially if the technological solutions you use are non-standard.
• Operating costs – office costs, media, operating expenses, infrastructure maintenance.
• Administrative costs include tools, supporting technologies, accounting and HR services.

Thanks to this knowledge, it will also be easier for you to assess whether the rates offered by IT outsourcing companies are fair. If they seem too high to you, ask what the reason for such a rate is. Ask what the service includes if the price should be higher. This will help you avoid hidden costs.

The second topic that affects the budget is the method of settling accounts with the company. Specify whether the billing will be hourly or fixed (e.g., monthly). Hourly billing is beneficial when you are still determining if you will need the consultant’s support for the entire duration of the cooperation. Fixed-price billing provides less flexibility.

Clients are afraid that consultants billed hourly will deliberately extend their working hours. However, with a well-planned work schedule and a reasonably managed project, such situations happen very rarely.

Estimated costs will help decide whether the outsourcing solution will bring an actual financial benefit. Moreover, having the costs written down will make it easier to discuss and negotiate.

 

Why is it so important to choose an outsourcing company that is right for your organization?

Implementing an outsourcing service involves implementing it not only for a project but also for the entire organization.

Treat the issues discussed above as tips for reflection. IT outsourcing, even if it involves using only a few external consultants, is a change in the organization’s functioning. An unskilled or hasty start to cooperation instead of success can bring disappointment, financial losses, and lower motivation among the company’s team. These are just a few risks caused by choosing the wrong outsourcing company.

Our advice

Talk to several outsourcing providers (3-4 companies) to compare their offer, method and operation philosophy. Compare the process of communication and organizational cultures. Ensure that the outsourcing company you choose is culturally similar to yours. Check online reviews not only from customers but also from employees. This can show the culture prevailing in the company and what kind of employer it is. The culture of the company and the atmosphere prevailing in it always have an impact on your business, even if this connection is not immediately visible. Suppose the supplier’s employees like working for them and are motivated mainly by the company’s vision rather than by monthly salary. In that case, they will work for you with a more significant commitment.

 

Using IT competence outsourcing services is a strategic decision. In addition, such cooperation can be expensive.

You should choose the provider carefully before you decide on such a solution for your company. Then, plan the implementation in detail.

This article aims to signal and bring the most vital issues closer together. If you discuss the topic thoroughly with decision-makers, you will decide for your company.

In the introduction to this article, we mentioned a bonus.

We have prepared a list of topics worth discussing in the company before the first conversation with the outsourcing company. This tool will help you prepare for the discussion with a potential IT outsourcing provider.