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Six Common IT Outsourcing Mistakes And Ways To Avoid Them

Six Common IT Outsourcing Mistakes And Ways To Avoid Them

With the ever-increasing market competition and changing consumer demands, businesses are striving hard to cater to these demands and stay ahead of the growth curve. While SMEs lack the perfect infrastructure, big enterprises are overburdened with workloads. Both ways, it’s a variety of outsourcing contracts with external service providers that offers them perfect support - from manufacturing and logistics to IT and back-office work at considerably lower costs.

Defining IT Outsourcing

According to popular definition, the IT outsourcing process refers to a unique business model, where 3rd party service providers manage some of your crucial tasks. Outsourcing can bring expertise to an area your business doesn’t have in-house and helps in taking routine tasks off the plate of valuable employees. Although your business objectives might not align with their goals, IT outsourcing partners execute IT operations by freeing up your company resources thus taking your venture forward.

However, critical errors in IT outsourcing can lead to severe problems. Every business shares a unique and strong bond with its IT outsourcing partner. Critical issues might jeopardize such relationships to a great extent. Avoiding potential and common errors will save the day.

Engaging with experienced outsourcing providers can help you mitigate the risks of IT outsourcing. Learn how to select the best IT outsourcing partners.

Take a look at the following aspects and know the most crucial IT outsourcing mistakes worth avoiding.

1.Wrong price estimations

One of the foremost goals of outsourcing has always been cost-effectiveness. Wrong estimations without proper research will lead to a lot of problems. Make sure you pick and choose between a pricing model that best suits your organization’s specific budget and cash flow requirements.

Solution: Don’t go for fixed price models. While it is an ideal pricing model for projects with clear objectives, scope and a stable set of requirements, hybrid pricing will turn out to be the most convenient plan in this context.

2.Rigid and fixed business model

Most of the times, businesses fail to achieve their desired goals, just because their outsourcing partners haven’t delivered the right results. Rigid and fixed business models will fail to support unforeseen situations.

Solution:Try choosing agile and flexible business models, where experts can work according to the project needs.

3.Improper and insufficient targets

Most of the businesses work on set targets. However, unrealistic and improper targets don’t add to enterprise productivity. Your outsourcing partners will only work towards fulfilling these targets and not for improving their service quality. That’s not quite beneficial in the long run.

Solution:Create a dynamic work model and set realistic targets for your outsourcing partners. You can also evaluate and assess their work regularly.

4.Lack of defined exit strategies

The absence of proper exit strategies or contract renewal processes will lead to critical complications. There is a possibility that you may have to terminate or renegotiate outsourcing contracts before the contract term is finished. Hence it is imperative that your business has an exit strategy in place.

Solution:It is essential to ensure that IT outsourcing contracts include clauses to renegotiate or terminate services if need be. Develop crystal clear exit strategies and renewal terms, thus making things easier for your outsourcing partners.

5.Lack of creative and innovative capabilities

Clients usually fail to incorporate many basic components in their existing outsourcing contracts to ensure innovation.

Solution:Make sure you have enough room for updates and system improvements and look to provide pricing and incentive models that help initiate and drive innovation in your outsourcing relationship. Let your outsourcing partner put on his thinking caps. Always embrace innovations and accept new ideas. Be on the lookout for any signs of lack of experience, communication barriers or customer service issues.

6.Internal resistance

While assigning IT projects to outsourcing partners, most of the businesses face strong resistance from in-house staff. They might be apprehensive about losing control over core operations, but that’s not the right thing to do.

Solution:Discuss the project and why outsourcing is the best option for it. Steer clear of including uncommitted workforce in the project.

Parting Thoughts

Studying these crucial errors and unique tips in mind, you will surely experience a smooth and hassle-free IT outsourcing service experience.

Neologix is an IT outsourcing company that provides world-class resources to meet the needs of our customers. Get in touch with us if you have an immediate need of our offshore software development services. We'd love to help.

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