Outsourcing or transferring some functions to an external team is a big step for any business, from a startup to a major corporation.
There is always the risk of failure or losing control, but positive experience prevails. Some statistics: in 2020, the outsourcing market amounted to a record $ 92.5 billion, and experts predict continued growth in 2021. 78 percent of companies positively assessed working with outsourcing teams.
What services can be outsourced?
Software development, design and QA are most often outsourced services.
Forecasts for the most popular services received from external teams in 2021: organization and maintenance of VPN channels, Next Generation Firewall, SIEM systems, investigation of security incidents, though outsourcing of maintenance services and technical support will not lose popularity .
Do you need an external team?
There are three main reasons for hiring an outsourcing company.
The first is the rapid growth of the company. For example, you have ten times as many orders a year, and ten employees who have been with you from the very beginning can’t cope with the workload. If you don’t want your team to burn out, decrease the product quality and lose business — look for outsourcing.
Why not just expand the staff? A full load of employees requires new people. You can add people to the team, but according to various research, the search for one middle developer takes approximately 3 months. Outsourcing is a fast and effective solution.
The second reason is entering a new market having little specific expertise in the field you're exploring. You have decided to change the vector of activity, for example, to shift the focus from development to website design or e-commerce. Your specialists have worked with similar projects, but did not fully manage them and cannot guarantee you the result. Or the developer tells you that he has not worked with this technology, but he can figure it out in a week. It is not worth taking risks: experiments with even strong employees on the new technology stack are too expensive.
The third reason is that your company does not specialize in web development, and you understand that it is essential. Instead of inviting programmers to join the inhouse staff, hire an outsourcing team, especially if you are a startup or small business.
ADVANTAGES OF OUTSOURCING
Reducing business costs
Savings is the main bonus of involving an external developer. According to Deloitte, almost 60 percent of companies outsource their services to reduce or control their costs.
What costs can be reduced? First of all, this is HR. You pay only for the work done, and sick leave, training, office rent and software installation are cut from your list of expenses.
It is much easier and cheaper to find personnel using online services. You can find software development teams in a few clicks. Calculate the costs of hiring an inhouse-employee: the ad price, the time spent on interviews, taxes. According to Glassdoor, it costs $ 4,000 to hire a new team member in the United States.
The company is looking for an experienced developer in the USA for 24 days. In addition, it’s a rare case when an inhouse specialist is right for all tasks: e.g. he is good as a programmer and as a designer. You can spend money and time on training, or you can hire an outsourcing team.
The main hosting service in the world, GitHub, has already been hiring international teams for outsourcing for a long time . The best ones are then invited to become in house staff. For example, the company's CIO was once an external contractor running iterations. To find this key employee, GitHub did not involve the HR department, did not spend a year on interviews, did not risk hiring an unverified specialist. The money and time savings are obvious.
The opportunity to hire the strongest team in the world
The main experts in IT-development, who are ideally suited for your company in terms of price and quality, may be located in another country. Poaching them to the inhouse team is not always the best approach , especially if it is a project work.
Outsourcing opens up a whole world for you: choose the top IT companies online and hire a team.
Thanks to Zoom and other video chats, collaborative development tools and task trackers. Many outsourcing teams give the customer (if desired) access to each stage of the process, and offer several solutions.
The ability to grow quickly
Many teams are aware of the enthusiastic drive at the launch of projects: eyes are burning, team believes strongly in the idea, everyone is ready to move Heaven & Earth and work 24/7. After the launch, the team often runs out of gas, especially when the project begins to grow rapidly.
When the project is already debugged, but requires additional “hands” or resources, outsourcing would be a good solution. Many transfer the development of their iOS or Android applications, scaling sites and applications, launching a franchise.
You can outsource the most expensive part of a growing business or specific expertise. For example, you transfer programming for beta testing, and you concentrate on design and content.
Types of outsourcing contracts
As a rule, each case is discussed individually, there is no single legally fixed sample. In addition, when hiring a foreign company, specify the tax issue - the amount of charges varies in different countries. And yet, there are three most popular options for working with an external team.
You pay for a specific solution, the price remains the same regardless of the outsourcer's load.
The disadvantage of this method is the price, it is 10-30 percent higher, since it takes into account the risks of an external company. The second question is temporary: before starting the project, the outsourcing company will spend time evaluating the task, determining the level of expertise, selecting specialists considering each and every potential risk, making the fixed format unlikely to be suitable for an urgent project.
T&M (time and material)
You pay for the time spent on your project. The cost of this method is much cheaper than fixed. The cost of work can increase only in proportion to the customer requirements . Often during the work flow it turns out that the client needs not one page site, but three; not a simple concise template, but a manually drawn complex design with a specially invented font or five more features in the application. All this will be done for you on a separate price list.
Plus, keep in mind that the time spent discussing the project with the manager, and not directly on the development, will also be included in the cost.
It assumes a full buyout of a team for the project.
If an outsourcing employee is ill, the company is obliged to send a new one within three days maximum, so downtime is minimized. The disadvantage of this approach is in control: you need a good product manager for clear technical specifications, you also need a QA specialist to check the development. You can solve the problem - hire a full team, with QA and a PM, discuss the plan with them and enjoy the resulting success.
Each type of outsourcing contract is appropriate for solving different types of tasks. Fixed price is an option, rather, for one-time small jobs. T&M – for projects where it is impossible to determine the full scope of work or the timing of the project’s implementation. A dedicated team, or full buyout of employees for the project – if you want maximum immersion of the team in the project and minimum risks.
In any case, a remote team is profitable. You will ensure the rapid progress of the project, as you will be able to gather the strongest specialists, save the HR department’s time and the company’s business costs .
You can assemble a remote team for your project using the FoxTail project. This is a platform where you can find any dedicated developer within 3 days. We recruit only middle and senior level employees with verified qualifications, and satisfaction is guaranteed.