The Outsourcing process contains risk factors which can be the game changer (positive or negative) for a company. So, an important question to ask in making the decision is whether there are specific strategies that can improve the likelihood that an outsourcing project will be successful and add value.

At Matrix Marketers which adopts outsourcing as a core process propose that the alignment of corporate goals and the goals of an outsourcing decision are a major factor in determining the success of outsourcing decisions.

The strategy literature has generally shown that a fit between strategy and structure has a positive impact on software products. However, the fit between operations strategy and drivers of outsourcing decisions are the questions of debate still.

Although a large set of instructions and successful case studies are available for the reference of decision-makers on outsourcing, few have considered them and the key indicator parameter of firm performance.

In this post, we are broadly discussing the strategies involved in decision making.

The Benefits of Alignment

An operations strategy should guide an organization’s activities. The outsourcing of work is a systematic approach in developing the product. The product-process matrix dictates that a firm’s software processes need to be aligned with SDLC and strong marketing policy.

Competitive strategies usually drive a firm to compete as a cost leader, differentiator, or focused solution provider. The competitive business strategy is translated into Competitive Priorities and executed via operational action plans.

In software development, there are five traditionally accepted competitive priorities: cost, time, innovativeness, quality, and flexibility.

When we outsource software products,  the competitive business strategy is translated into competitive priorities and executed via operational action plans. Competitive priorities are the strategic business objectives and goals of the software development. In the context of outsourcing, we believe that alignment between the competing priorities at the product level and the drivers of outsourcing decisions for that product will lead to improved performance for a firm.

Matrix Marketers suggest that the defined five competitive priorities should be considered and each should be weighed based on its relative importance to the software project. For example, a firm positioning a low-cost product should weigh cost higher than the other competing priorities, whereas a firm marketing a high-quality product should not focus on cost.

The selection process

It is highly important to develop the list of potential service providers before you decide to outsource. Criteria include performance history, experience, success in meeting goals and customer satisfaction.

In a case of software development, it’s important to understand the human resources aspect of the partner business. “What is the quality of the people that the outsourcing firm brings to the assignments?” is essential to know.

The size of outsourcing operation is another point to consider. To a small vendor, every organization automatically becomes an important customer. As a result, smaller vendors may be willing to customize services. On the other hand, a larger vendor is more likely to have greater resources and the ability to spread overhead across more clients. Larger vendors usually have the ability to offer greater quantities of services because they have more people and equipment with the knowledge of advanced technologies.

The experience of Matrix Marketers while selecting a vendor is different with each vendor. So, be sure to understand all costs involved. Treat every negotiation as a fresh start. Every contract is different, and every vendor is different. We must go for apple- to apple comparison.

Know the market

Look at the competitor’s services. The question whether the quoted price is an artificially low introductory price designed to lure customers or a true cost of the service. If the price is unrealistic, expect a hefty increase.

To make sure the rate is fair, ask whether the fee for services is based on an hourly rate or flat fee. That allows for a comparison to be made between the contract price and the in-house hourly rate for the same services.

The thumb rule in assigning the outsourced work is to get everything in writing and make all the processes transparent between the two companies. A good outsourcing strategy is to check every parameter during the development phase itself.

Benefits and pitfalls

To ensure a successful outsourcing venture, facility executives must appreciate the ups and downs that these relationships bring.

Logically, the benefits should include the opportunity to reduce costs. But that’s not the only benefit. A successful outsourcing relationship should be able to match resources to demands when demands are variable or when they change over time.

If the service you’re looking to provide deviates or changes or has periods of activity or inactivity, it doesn’t make sense to use staff to fill that role,

Outsourcing should deliver a greater level of task-related expertise and technology and more accountability than what you could deliver in-house.

Miscommunication is likely the biggest pitfall. To avoid a breakdown in communication, routine performance evaluations must be done.

Perception may be reality

The easiest way to smooth the transition is to seek suppliers who share common values and can adapt to an organization’s culture.

Culture can be as simple as dress code and how visitors are greeted. Any aspect of culture important enough for vendors to adopt is important enough to put into writing.

In the best-case scenarios, there should be seamless integration between the organization’s facility staff and the outsourcing staff. Building occupants and other customers should not be able to detect any difference in performance.

“The outsourced staff is merely an extension of the staff you already have. They provide the same services, and they look the same so that it should be transparent to people. If they are a true extension of your facilities department, it’s not that important whether they are staff or outsource personnel.”

The outsourced staff is merely an extension of the staff you already have. They provide the same services, and they look the same so that it should be clear to people.

Conclusion

The software market has become demanding and rapidly changing. In the coming times, you can’t imagine yourself to become the master of all technologies and platforms. Moreover, the infrastructure and other necessary requirements can’t be built by one company. So, Matrix Marketers suggests that follow the strategies and make up your mind to outsource software development and find the right partners for yourself.