Why You Shouldn’t Be Afraid Of IT Outsourcing

Why You Shouldn’t Be Afraid Of IT Outsourcing

Facts, Figures, And Success Stories

Written by:

Yan Leseu

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14 min read

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Foreword

Are you holding back from IT outsourcing? Maybe you’re worried about how it will impact your budget. Or perhaps you’re afraid to delegate such an important job to people outside of your company for security or quality reasons. 

These are valid concerns, but they’re also easily allayed. Using facts and statistics, we are going to calm your fears about outsourcing IT services and explain how it benefits companies and helps them solve problems. We will also answer 8 common objections that many SMB/SME CTOs have on the subject.

IT Outsourcing Benefits

Ready to learn how IT services outsourcing can benefit your company? Read on to learn about 4 of the most important benefits.

1. Reduces Cost Of Keeping IT Personnel On Staff

You read that right: hiring a third-party to oversee your IT-based projects poses less of a financial burden on your budget than employing someone (or several people) in-house. 

Why? 

First of all, when you hire your own IT employees, you’re responsible for paying them regular wages, health insurance, benefits, paid time off, sick leave, and everything else that comes with keeping someone on your staff. But when you embrace IT outsourcing, you’re typically paying for the project as a whole rather than each individual person who is working on it. And once the project is finished and paid for, you no longer have to designate a portion of your budget for it. 

Second, you don’t have to provide extensive training or onboarding for a company you’re outsourcing IT services to. They already have the knowledge and expertise you’re looking for (that’s why you’re hiring them, after all). Eliminating this need can save you thousands of dollars — even up to 3–4 times an individual employee’s salary

On top of that, you can save even more if you outsource abroad (offshoring). Besides the already mentioned factors, there is the cost of labor which is significantly lower. So are the bills and any other costs. All of this combined can save you a real fortune. 

Finally, with IT outsourcing, employee turnover is not a concern. There’s no need for you to worry about members of your IT staff quitting, getting sick, or getting fired. Instead, you can focus on more important things, like getting your project out the door, and let the third party you’re outsourcing to manage their own personnel.

2. Expands Talent Pool

IT outsourcing expands talent pool

Another persistent problem with hiring your own IT staff to work on site or locally is a lack of talent. Depending on the area where your company is headquartered, there may not be a lot of potential employees with the range of skills and experience you’re looking for. 

Even if you decide to reach a little farther outside of your region and offer jobs to people living in other states or other countries, there’s the added cost of relocation — a bill you’ll likely have to foot — to consider. 

When you outsource IT, though, you instantly expand your talent pool to include the entire globe. There’s no end to the number of valuable and expert companies and individuals you’ll find to help you reach your software goals.

3. Diversifies Workplace Culture

IT outsourcing diversifies workplace culture

CTOs looking to diversify the culture of their staff and workplace should embrace IT outsourcing. It will give them the opportunity to meet, network, and collaborate with people from all across the world, as well as tap into talent that is unavailable or inaccessible in their own region.

For example, the HQ of our company, SENLA, is located in Poland with numerous development offices across Europe. This helped us embrace diversification ourselves and not only enrich communication within the company but also better understand different needs and workplace cultures of our Clients.  

As a result, we successfully helped large and well-known US and European enterprises bridge their skill gaps and also brought a “stranger” perspective to their projects. Frequently, the outcomes of such projects exceeded initial expectations of our Clients.

4. Reduces Organizational Complexity

IT Outsourcing reduces organizational complexity

The more departments you have, the thinner stretched you will be, especially as an SMB or SME owner. That’s more employees to keep track of and more hands that a project passes through. It also means a drain on your resources, which may be sparse as it is. 

For these reasons, IT outsourcing is also extremely beneficial. It reduces the complexity of your organization and takes enormous strain off you, your in-house staff, and your resources.

8 Common Objections To IT Outsourcing

“All those benefits sound well and good,” you say, “but I still have some concerns.” That’s completely understandable and expected even if you are an IT outsourcing guru.

To that end, we’ve compiled a list of 8 common objections that CTOs often have to outsourcing IT services and handled them, so you could make a more informed decision about what’s right for your company.

Objection #1: I don’t trust IT outsourcing

I don't trust IT outsourcing

Companies that provide IT outsourcing services for businesses have already proven their potential. 

More companies are finding value in IT outsourcing in just the past few years. By 2027, the global market for IT outsourcing is expected to balloon to $682.3 billion, a growth of over 4% from 2021.

Another usage-based indicator of trustworthiness is the caliber of business that is hiring third party companies to help them with their IT projects. For example, some of our clients include Bayer, Bosch, Western Union, and other well-known names. These are prestigious companies that have chosen to outsource a portion of their IT services to SENLA. 

When it comes to cost-effectiveness, companies are finding enormous savings with IT outsourcing — up to $30,600 in talent, hiring, support, and retention, and up to $16,200 in administrative expenses. 

You may be worried that with all these savings, sacrifices in quality must be made to offset the cheaper cost. But that simply isn’t the case. Our clients commonly experience a 55% increase in software development velocity, and our work often exceeds their expectations.

Witness yourself how much you can save with offshoring, using our calculator below. Just fill in your project needs and see how much of an economy you would’ve enjoyed.

When you trust IT outsourcing, you aren’t alone. You’re part of a growing market that has already invested billions of dollars into outsourcing in the IT sector, with plans to do so again in the future. The results speak for themselves.

Objection #2: Outsourced developers aren’t as good as the local ones

Outsourced developers aren't as good as the local ones

There is virtually no difference between outsourced developers and local ones, except, perhaps, accessibility. But even then, you can’t always count on a local individual or company to answer your questions or provide services any better than one from offshore.

It may surprise you to learn that most IT outsourcing goes offshore. For example, Poland is one of the top countries in the world for software development outsourcing. 

It ranks in the TOP-3 among the best programmers globally, as well as 1-st in Java and 2-nd in algorithms, which hints at the high volume and professionalism of IT experts working in this region.

In many cases, companies that outsource IT do so because the end result is better compared to that in-house. For example, according to Avasant Research’s IT Outsourcing Statistics report for 2020/2021, companies that outsource their IT security and disaster recovery, which are among the most expensive services, do so to obtain higher quality work than they can produce in-house.

At SENLA, we go a step further to ensuring we employ the best talent by consistently hiring the top 3%-level tech experts to our team. To learn how we do that, read our article about how we add 200 of these individuals to our team annually.

Objection #3: There are geographical and data security risks

There are always geographical and data security risks when it comes to IT and software development. Most CTOs are skeptical about IT outsourcing because they consider the risk too great when data and software are shared between companies, sometimes between one country and another. 

The key to optimizing safety when outsourcing IT services is to collaborate with developers that utilize secure platforms. For instance, SENLA partners with high-profile software companies like Salesforce, AWS, Oracle, and Camunda, all of which made their names by saving and securing sensitive data for businesses.

Along with the use of industry-leading software, another sign of professionalism and quality within the IT sector is standard certifications. As for SENLA, we hold ISO 9001 and 27001 certifications. 

Having the ISO 9001 certification shows that a company meets all the ISO’s requirements for a quality management system. With such a system in place, we ensure the ability to provide the best and highest quality products and services for our customers. 

Meanwhile, having the ISO 27001 shows that a company fulfills ISO’s standards for an information security management system. That means that when it comes to cybersecurity, the holder of the certificate is at the leading edge. 

With industry safety standards being established and enforced IT outsourcing is no longer a big risk to geographical or data security.

Objection #4: I can’t control an outsourced team as closely as a local team

I can’t control an outsourced team as closely as a local team

The beauty of outsourcing IT services is that you can choose which type of engagement model better fits your management style: hands-on or laissez-faire. 

Here’s how it works.

Outsourcing services are typically provided via three engagement models: staff augmentation, a dedicated team, and a development center. Each revolves around a different degree of a Сlient’s involvement. 

With staff augmentation, outsourced experts fill in vacant positions in a Сlient’s team and therefore report directly to the Сlient. This may be the desired choice for business owners who want to remain in more direct control of their developers. 

On the flip side, dedicated teams and development centers provide their own project management. With these types of services, the client checks in more rarely, i.e., once a sprint. 

At the end of the day, the amount of control you have over your outsourcing team is really up to you.

Objection #5: It will take a long time to integrate

Talking about onboarding times, outsourced experts can get to work very rapidly. This means you can start implementing your development plans almost right away, much faster than if you hired resources in-house.

For example SENLA teams of engineers can start delivering within only 10 business days after signing a contract. 

Objection #6: It won’t be able to scale for our needs

All outsourcing engagement models are highly flexible to make sure you are always supplied with enough workforce. At SENLA, we have an extensive pool of engineers on staff — over 600 software specialists located across 5 European countries — and can always add more to meet the demands of the project at hand. 

For instance, with the R&D center engagement model, you can get up to 100 top-class experts per year. Rest assured, all your development requirements will be satisfied.

Objection #7: There will be communication (language, time zone) and culture fit challenges

Communication challenges with IT outsourcing

When working with offshore software developers, as with local developers, communication is of paramount importance. 

The problem, as some CTOs may see it, is that these IT outsourcing services are based out of their home country. Can the developers communicate effectively in English? Wouldn’t it be difficult to have meetings due to different time zones? Will we be able to come to a cohesive vision despite culture differences?

This hurdle is actually smaller than you might think. First of all, English is the primary language of coders and software developers. That’s because much of the coding is based on English. 

Furthermore, since English is considered a global language, it’s vital to a wide range of industries, not just IT. It’s essential to know it for communication between companies around the world. And in Poland, many citizens speak English, including all our team members at SENLA. 

As far as time zones go, the disparity is not that difficult to get over. There are 2 possible scenarios:

  • If there is a couple-of-hours’ difference, vendors often ask their staff to shift their working time. This way, both parties are live at the same time and can promptly close any questions.
  • In the case of a larger gap, parties set a mandatory overlap time (daily, weekly, etc.) during which they assess the work done and discuss all important matters.

For example, when we partnered with Bosch — a Fortune 500 company — we delivered demos of our progress every Friday for six months until the project was complete. Read more about our collaboration with Bosch in our case study.

Finally, we’ve never found culture fit to be an issue. In fact, during our collaboration with Bayer — a global pharmaceutical company — several of our employees developed friendships and great working relationships with the other company’s team members. We worked with Bayer over a year, and during so long a time, these connections just formed naturally.

Objection #8: What if a vendor disappears?

What if an IT outsourcing vendor disappears?

Every trusted outsourcing vendor strives to establish a corresponding reputation. SENLA is not an exception. When we start a project, we sign an outsourcing contract where we lay down all terms and conditions as well as parties’ liability. Thus, it’s impossible for us to disappear — we are bound by the contract and will be legally and financially liable for breaching it. On top of that, we aim at forming long-lasting relationships with our Clients. Such an approach gives us more than 90% of repeat businesses.

Wrapup

Hopefully, we were able to dissipate your fears regarding IT outsourcing. As you can see — this is indeed a global trend and an increasing number of companies embrace it. If you’ve got any questions left, would like to receive quotes or need any other kind of assistance — fill in the form below and let’s start our next project together!

Why Senla?

Reducing costs

With us you can save up to $30,600 in talent, hiring, support, and retention, and up to $16,200 in administrative expenses per engineer.

Talent pool

We have 600+ technical experts on board so you can cherry pick the ones who suit your needs the most.

Reduced bureaucracy

By partnering with us, you free yourself from extensive hiring and onboarding routine and take enormous strain off you, your in-house staff, and your resources.

Frequently Asked Questions

How do we start cooperation?

First is an introductory call with our BD team to clarify the project needs. Upon your request we sign an NDA. After the evaluation, we offer a preliminary solution (CV, timelines, etc.). If everything is OK, our staff gets to work. 

What if the requirements change during cooperation?

No problem. We support all software development methodologies, including Agile. So, if anything suddenly changes — be sure we’ve got it. The same applies to scaling — if you need more hands, just give us a month’s notice.

Is there any kind of support after the project is finished?

Sure! We strive to form partnerships, not projects. Our cooperation, based on lifetime warranty, doesn’t stop with the development. If anything goes wrong, you are still covered. Additionally, we can maintain your system upon a request.

I am not happy with my current vendor. Can you overtake the development?

If you are not satisfied with your existing partnership, you can transition the work to us. We will take the ball and run with it.

I have legacy software requiring an update but I don’t want to shut down my business. Can you help?

Yes, we work with all kinds of systems including legacy ones. If you need to update it, we will develop a new system and gradually transfer functionality there to make sure you don’t miss a single customer!

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