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IT outsourcing

by Omate

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While large companies are making a fortune from outsourcing, SMEs are still struggling to realise the benefits from it. In this blog, I would like to cover some common pitfalls of IT outsourcing and how to avoid them

1.Choosing the wrong vendor/freelancer: Finding the right service provider for your requirements is the first step towards IT outsourcing success. Many companies rush through this process, believing whatever the freelancer says, and assign jobs to them without proper analysis and interview sessions. You can mitigate this by:

a. Conducting interviews – when a face to face interview is not possible, a Skype call is the next best thing. You should be speaking to the same person who will be working on your project.

b. Checking references – talk to their references and find out if they are genuine. When you are dealing with an overseas freelancer or service provider, see if they can provide some references in your city.

c. Having the right selection criteria – What is the basis for selecting a vendor or freelancer? It shouldn’t only be based on cheaper prices or higher points/feedback in Odesk/eLance. Find out how much their skills match your project requirements. Technology skills and domain knowledge relevant to your project is very important. If you find great programmers but if they can’t understand the business context, then you are going to have a tough time in communicating the requirements.

2. Weak scoping: Dr Sara Cullen, author of Intelligent IT outsourcing, often mentions this during her lectures. “In outsourced projects, you get what you said not what you meant”. It is your responsibility to make sure all your requirements are clearly specified in the scope document. It should specify what is included and what is NOT included within the scope of the project. This is the key if you want your project to be delivered on time and on budget.

3. Poor management/coordination: Often businesses assume that once they outsource a project to a service provider, everything will run smoothly without them managing the project. This is a common misconception as you are equally responsible for the execution of the project. It is imperative that you respond to their questions and give feedback in a timely manner, monitor the progress and ensure that work is being done on time right from the beginning. One cannot go in at the very last minute and expect everything to be done perfectly.

4. Not understanding cultural differences: When you deal with companies/freelancers from a different culture, it is important to understand the cultural differences. For example, many developers from the Indian subcontinent will not say ‘NO’. If you ask them if they understood a requirement after explaining it, they will probably say ‘YES’ even if they are unclear. You need to ask them to explain the requirements in their own words and listen to them patiently and carefully. That is how you make sure that they have understood your requirements correctly.

5. Ignoring contracts and SLAs: Most businesses overlook the importance of having proper contracts in place when they deal with an outsourced service provider. Legal contracts are very important to protect yourself. Getting sued for your service providers’ mistake or getting your idea stolen by your freelancer is the last thing you want happening to you. In addition to protecting you from undesirable situations, signing legal contracts shows your service provider the seriousness you place on your project and intellectual property from day one.

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