IT outsourcing or In-House development?

We have prepared 4 tips for you to know when to use IT outsourcing or to do it internally.

When to use IT outsourcing or internalize? When it comes to developing a system for companies, this is a question that has been recurring among managers and a very impactful one for decision making.

Undoubtedly, ROI (Return on Investment) is what will have the final saying to this decision, but there are some tips that should be very well analyzed when choosing.

Come see what our experts have to say about the differences that impact the model of choice for software development. Check it out.

How does IT outsourcing work?

IT outsourcing refers to the outsourcing of services (or a specific service) in this area, leaving it to a specialized company to take care of those functions. For example, it can be in charge of IT management, control and maintenance of information systems, observation of information security, testing, among others.

It can be done through three models, as we will see below.

• Offshore: outsourcing is carried out in developing countries, usually far from the contracting company‘s country, with significant cultural differences (India, China, Malaysia, among others);
• Onshore: outsourcing is carried out within the contracting company‘s country avoiding cultural and linguistic clashes in the processes;
• Nearshore: Outsourcing is done in nearby countries, with similar time zones and similar cultures. The geographic distance is smaller, however, the economic scenario of neighboring nations must be observed.

What are the 4 best tips for choosing the best time to implement IT outsourcing?

IT outsourcing can be advantageous for organizations. However, it is essential that your company is ready for its adoption. See below the 4 tips to assess if it is ready for it.

1- Observe the costs involved in the internal process and IT outsourcing

The costs involved in the project are many, but in terms of internal development, we have everything from hiring a qualified professional who understands and knows how to solve the company’s demand, to remuneration, required labor documentation and the installation of an adequate infrastructure (for companies that are not specific to IT). All these factors end up making Internal Development not so advantageous compared to IT outsourcing in relation to costs.

Although both approaches need to study the project and the necessary demand, an internal professional needs more training and hours from their managers in order to develop a system with quality.

With an IT outsourcing provider, you can get a fair cost and more specific solutions.

2- Focus on the core of the business

As the saying goes: “who does a little of everything, does nothing right”, this also fits in the context of IT outsourcing.

When you hire a professional, even if well qualified in the market, he still does not have the core of the business as a company that specializes in outsourcing software does.

Your company can be totally focused on what it does best, while an outsourcer takes care of the development part. In addition to having the leanest demand for professionals in your company, you are sure that you will receive the best documentation with all the hours specified and worked, since it is mandatory to record each step depending on the supplier you choose.

A good delivery from a supplier involves a lot of planning, possible allocation of professionals, monitoring and detailed recording of each stage of the project.

In addition, there is the management of risks that may occur during the process and post-delivery monitoring and validation of all features with automated tests to confirm the efficiency and efficacy of the solution.

3- Advanced technology in software development

With an in-house team, you will not always be sure that you are using the best technologies on the market, since you need a budget for the installation of programs, training, among other extra resources.

In order to meet deadlines and increase accuracy, there is also a need for test automation throughout the development process, which greatly guarantees delivery quality and speed.

These technological updates are already implicit within an IT company, which needs to remain competitive in the market and constantly seek evolution to retain its customers.

4- Agile development and automated testing

In most cases, IT outsourcing, when coming from a specialized company, tends to be a faster development due to the best technologies as mentioned above and the know-how of the team.

The main outsourcing software developers are already adapted to the cultural movement of agile methodologies. It is important to emphasize that the management processes need to follow the agile culture and be aligned in the activities that happen during the development.

These are some very good practices that are worth applying not only in the IT area, but also throughout the company. It is important, for example, to know the main agile frameworks.

It is important to highlight that the path to success of your software is the application of automated tests. That is, when you outsource software development to a specialized company, tests are applied to ensure the sphere of quality that makes sustainable software production possible.

In the case of internal development, observing behaviors, analyzing performance and quality indicators, updating the team, identifying problems and optimization points should be the daily tasks of every manager.

What are the main challenges of IT outsourcing?

Despite the points presented above, there is still a lot of controversy about hiring an outsourcing company for software development.

We can mention which are the most recurrent concerns that we hear at the time of negotiation. One of them is the case of strategic company information that is exposed and accessible to people outside the company.

In this regard, suppliers such as Objective have information security services, in addition to reinforcing in NDA (Non-Disclosure Agreement) contracts the non-disclosure of any confidential data.

Just look for a serious company with proven quality in the market so that there are no future problems. Remember that an NDA is mandatory in every project.

Another widely discussed point is the dependency that is created with the supplier, as software ages and may become a legacy system in the future, just like any other technology.

But when you create a partnership with the IT outsourcing company, the processes are developed in a transparent way to ensure that anyone else can follow up on the project, if necessary.

What are the main trends in IT outsourcing?

As outsourcing is one of the most adopted practices today, it is normal for constant updates to occur, as well as the adoption of new trends in this market. We will show the main ones applied below and stay tuned to implement them.

Competitive sourcing

It is a trend in which service providers compete for the service contract by their organization. It is like a kind of competition, in which the winner receives the reward for having delivered the best results.

Re-platforming

It is about the adoption of more flexible and scalable platforms, allowing greater automation resources, adoption of cloud computing and the use of modern enterprise applications. Therefore, outsourcing companies will begin to offer re-platforming services and guide their clients through this transition.

New ways of quantifying services and metrics

Traditional models for measuring services and metrics are falling into disuse, and new models are being applied. Service level agreements are shifting from traditional models to ones that are based on business outcome metrics. This way it becomes better to observe the results obtained.

Using Robotic Process Automation atscale

With automation taking an increasing space in organizations, Robotic Process Automation (RPA) becomes one of the major trends for IT outsourcing in the coming years. Automation at scale will play a significant role in their outcome to be included in service delivery. For contractors, this reduces service costs, as labor costs are reduced.

In addition, automation increasingly takes smarter forms, with the sophistication of machine learning, artificial intelligence, cognitive analytics, and data science. Hence, everyone wins.

In view of everything we’ve said, you must have realized the importance of IT outsourcing, right? When adopting it, it is important to choose a quality service, capable of performing actions consistently, equipped with technical knowledge and modern methodologies to bring what your company needs in the service being outsourced.

One way to choose the best company is to use the practical project model, also known as Proof of Concept, or POC. Through it, you will have a company specialized in collecting data and calculating the costs in order to know if it is really advantageous to hire outsourcing.

It also helps you to know more about your supplier, with concrete evidence and technological and market information.

Do you wish to evaluate IT outsourcing services? You can request a POC from Objective for this. Get in touch with us and talk to one of our consultants about the topic.