7 painful mistakes companies make when outsourcing

ANDRII RYZHENKO

Published: 19 Feb 2019

Outsource

Have you ever tried deadly fugu fish? If you knew the risk, would you still try it?

For modern IT companies competing in the global market, the choice is obvious. Somewhere down the road, they decide to engage IT outsourcing services, even knowing everything about their pitfalls. This is because it's impossible to build a dream team – and a cost-effective one – while being restricted to a single region.

Outsourcing has become a necessity for companies that want to outpace their competitors and win time-to-market.

Decision makers are super skilled at their core business, but they are not immune to mistakes when it comes to outsourcing. Interested to know why pitfalls occur? Check out our list of the most exasperating mistakes and if any of them are relevant to your company, we'd love to hear from you.

Your competence needs when outsourcing

1. Outsourcing your core competence.

Keep your strategic elements of business at home and accept the fact that only your core team can stay fully dedicated to your goals. An outsourcing strategy is a good solution for keeping a lid on costs, but your offshore hires, no matter how qualified and dedicated they are, will not put their heart and soul into your project. Without the core team, your project will probably continue to move forward under its own momentum for some time but won't endure.

One more thing to mention – only your core team communicates with customers and understand their needs. The solution? Bring in extra resources that would add to your existing in-house set of skills. Outsourcing your core competence may put you at risk of losing control over the project, especially with very little oversight or control on your end.

2. Hiring for technical skills over communication skills.

The synergy of the team lies in communication between its members. Hard skills matter, but successful virtual teams need to communicate a lot and in an effective manner. Team members should feel comfortable working together, strive to deliver information in the best way possible and work on goals together.

Interviewing solely for hard skills is not the best approach. You can probably make an exception for candidates with rare and exclusive competence, but communication skills go a long way for effective teamwork.

The ability to get a message across clearly, request information, discuss problems, give instructions, and interact with team members – your virtual employees need to have these skills down in order to get things done and achieve goals.

3. One-sided recruitment.

Don't let the firm hire your key players without screening them yourself. The reason is that the requirements for candidates for the same position vary among countries. For example, if a candidate is positioned as a Senior in Ukraine, they may be qualified as Middle+ in North America.

It is essential to stay in the driver's seat when screening and making a final hiring decision. Otherwise, you might end up with employees who are not a culture fit. Many HR managers check technical skills, but it's also important is to estimate if a candidate is suited for working at your company.

A word of advice: Before making the final hiring decision, ask yourself “Do I see him or her as a part of my core team?” A positive answer will be a sign that a candidate suits your company. This being said, don't forget to include the right to relocate 1 or 2 employees in the agreement.

4. Not analyzing your partner's retention rate.

High attrition hinders the team's productivity, as it leads to the need to constantly bring in and train new employees. In an ideal scenario, your initial hires work on the project from start to finish. A low retention rate may identify that the company provides poor compensation and benefits package to the employees. Things like comfort, office cleanliness, positive employees' attitude and atmosphere are essential for keeping employees around.

This point is important because providers with different work environments and retention may offer similar rates. It makes no sense to save if their rates vary by only a few points. You can check the work environment first-hand by visiting the office.

Security while outsourcing: NCube tips

5. Outsourcing security or providing access to personal data.

It might be tempting to cut corners on security, but if data theft occurs, your company might run into danger. Reputation loss, legal costs and even shutting down – these are the most extreme consequences of a devil-may-care security policy. It's essential to understand that no contract with an outsourcing provider will protect you from a security breach and subsequent legal responsibility. To top it off, there is hardly a chance to get a compensation from the staff supplier in amount which would be enough to cover your losses. In the best case scenario, you'd probably be able to dispute the unsettled payouts for the past few months.

Relying on your provider in security matters is a faux pas. You can order services like security audit, CCTV monitoring, or alarm systems, there should be Chief Security Officer on your end.

6. Working with an abundance of providers.

Hiring a specialized company to do every type of job sounds reasonable. But when outsourcing your chores, cost-effectiveness is second to manageability. Selecting and managing providers takes a lot of time, slows down project development and eventually leads to the loss of focus. With this in mind, it would be better to partner with 2-3 providers in every area, depending on your company size. Our clients often rely on a cost-effective pool in India and a smart pool in Ukraine, Poland or any other Eastern Europe country for more specialized products and top engineering expertise.

7. Lack of feedback and established survey systems.

With your in-office team, it's easy to examine the atmosphere due to one-on-one meetings and watercooler talks. To deal with negativity at work, companies hire HR consultants, yoga coaches, and therapists.

With outsourcing, there is no way to instantly know about the swings in a provider's policies towards employees. Sometimes, you only learn it when the service quality goes downhill. As such, it's crucial to constantly measure your remote employees' satisfaction rate using surveys like Survey Monkey.

Make sure communication is two-way. Collect feedback from every team member and get back to them. Instead of having a manager submit surveys on behalf of an entire team, they should be filled out anonymously and by each employee individually. Ask the team to be as objective and detailed as possible.

Ask our team

If you've made it to the end, it's probably crucial for you to avoid pitfalls with your IT engagements. We would be happy to arrange a virtual meeting with our technology manager who knows everything about building and managing remote teams. Feel free to contact us anytime for consultancy or if you have anything to add to our list of outsourcing mistakes.

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