Hiring an overseas workforce to outsource business functions? Expect benefits like:
- Lower overheads
- Focus on core business activities
- Better service quality
- Faster growth
- Rapid releases
- Ongoing innovation
All in all, it’s a win-win for your business’ bottom line!
The thing is, not all outsourcing service providers are the right fit for your projects. For example, a provider specializing in staff augmentation cannot handle digital marketing engagement. Always select the right outsourcing partner and the right outsourcing engagement. This will bring long-term business success.
The right choice can drive competitive advantage. But in an industry with a global market size of $92.5 billion, that’s easier said than done. That’s why due diligence is necessary. Find outsourcing partners that cater to your segment and have the necessary expertise and resources.
Factors to Consider When Selecting an Outsourcing Service Provider
1. Meeting Your Scalability Goals
Scaling up your business’ internal team is expensive and time-consuming. You must hire new people, create new teams, and develop new policies and procedures. Your IT infrastructure must grow too.
Outsourcing provides an on-demand team at a fraction of the cost. Here’s how remote teams help your business:
- Build new infrastructure as required
- Track and manage infrastructure
- Free up other teams to focus on growth, sales, customer engagement
Outsourcing, thus, offers unmatched scalability along with flexibility.
No wonder 43 percent of US companies outsource IT jobs. The right outsourcing provider allows business managers to schedule staff effectively. This reduces cost-per-project and helps agents work efficiently.
Outsourced service providers also have the staff and size to ramp up quickly. This is handy when project volumes spike during major marketing campaigns or seasonal activity.
2. The Outsourcing Model You Wish to Go With
Outsourcing models vary depending on two primary factors:
- Client-provider relationship
These are not mutually exclusive. Rather they are two perspectives framing various types of outsourcing engagements. Find out which of these suits your requirements the best:
Location-based Types of Outsourcing
Distance defines location-based outsourcing models.
The provider sends qualified professionals to work in your office. Think of it as outsourcing implemented onsite!
Businesses outsource services to providers in the same country but outside the company.
Outsource services to providers in nearby or neighboring countries. Providers share the same time zone with clients.
Simultaneous location-based outsourcing engagements from various providers. Enterprises and corporations use this model to ensure every need is sourced to the best provider.
Relationship-based Types of Outsourcing
These models describe the balance of responsibility and ownership between providers and clients.
Staff Augmentation Model
Businesses handle the bulk of the responsibility. They lease workers from outsourcing partners for internal development projects.
Dedicated Team Model
Clients share responsibility for and ownership of outsourced projects with the provider. Both parties decide upon the responsibilities beforehand.
The outsourcing service provider bears the majority of the responsibility. They handle projects as per your requirements.
3. The Best Outsourcing Location
Know the location of your preferred outsourcing agency. Consider the following factors:
- Practicality of regular meetings for deployment support and knowledge transfer
- Immigration rules
- Ease of communication via video conferencing
- Time zone difference
- Round-the-clock service capability
Depending on your business needs, choose the best outsourcing location from:
There are more than 1 million developers in Eastern Europe. 42 percent are based in Ukraine and Poland. These countries provide highly-skilled professionals. This can be attributed to high-quality education and good English. The cultural affinity with European governments supports business development.
This European country has the fastest growing IT industry. There are more than 105,000 developers. The capital Kyiv is an industrial hub.
Poland offers more than 118,000 tech specialists and has decades of outsourcing experience. Most professionals work in Krakow and Warsaw. Expect great service at a high cost.
Asia and Middle East
These regions offer many outsourcing service providers at low hourly rates. The time difference is significant. Also, communication issues are common. This is due to minimal cultural affinity and low English skill.
India is the biggest country for offshore outsourcing with more than 25 years of experience. There is a huge pool of marketing and tech specialists. Experience ease of business process and cultural compatibility.
China has stepped up its game, both in political and business environments. The region offers decent services and skilled developers.
The most attractive outsourcing destination for US businesses due to geographical proximity and low fees. Latin American providers also encourage collaborative teaming.
Reasonable service costs and a well-educated growing workforce make Mexico a good choice.
The European-influenced culture of the region makes Argentinian professionals easy to work with.
4. Intellectual Property Rights and Patents
Privacy and data security are important for your business. But you must share sensitive information with the outsourcing partner. Without proper management, your data may be mishandled.
Sign a nondisclosure agreement with your preferred agency before sharing sensitive details. Also, hire a vendor who regularly conducts security and network audits in the workspace. Ensure they use the proper tools to safeguard your intellectual property and prevent data leaks.
Never sign contracts prematurely. Check whether they benefit only one party. Also, pay attention to the jurisdiction and governing law applicable. Hire a local lawyer if necessary to protect your business interests.
Consider one of the four approaches for intellectual property in outsourcing:
- Client has all IP rights, agency has license
- Agency has all IP rights, client has license
- Apportion of different rights to both parties
- Joint ownership
Keep in mind joint ownership is considered the least safe option. Be ready to negotiate.
Make sure the agreement defines exit strategies and repercussions for breach or infringement. Dispute resolution clauses like disaster recovery plans and insurance coverage. The agreement must also take into account all improvements and modifications during the relationship.
5. Company Processes and Communication Standards
Outsourcing partners must have a benchmark of quality service. They should support your business’ mission and values. If necessary, ask for their KPIs and quality assurance measures. Assess whether they are sufficient to meet your requirements.
Ensure they understand the scope of your business. Ask questions like:
- What is my business need?
- What can be the best solution?
These will identify the problem you are solving. Decide your business goals and convey the same to your agency. They will decide the best possible solution to achieve your desired goals.
Do not share vague requirements. Always be specific in terms of what you wish to do. After all, communication is the soul of business. Communicate your ideas clearly with the agency and management. Make sure you receive constant updates on projects. Also, ask to be kept in the loop about the tools used for communication.
The right agency will promote clear communication. They will filter your messages and emails to the right people in the agency. They should also communicate seamlessly without language or cultural barriers.
6. Costs and Expenses
59 percent of business leaders do not consider cost the main driver for outsourcing. Their main priority is to focus on core business aspects and solve issues with capacity.
But saving money is still a priority. Nearly 45 percent of businesses outsourcing IT rely on outsourcing to save money. Also, 46 percent claim outsourcing helps them access skill sets not available in-house.
Tech and marketing firms normally benefit from outsourcing due to reduced costs. Work that is outsourced ends up in third-world countries with an education population. Outsourcing professionals charge less than first-world counterparts. Rates are paid hourly or by the task, based on the conditions agreed upon by both parties.
7. Resources and Technology
Many businesses outsource to improve their business model while minimizing capital risk exposure. Outsourcing partners design systems composed of different frameworks and processes.
But ensure your preferred agency has the right tools and equipment to cater to your needs. Avoid hampering your project due to lack of resources.
Technology plays a key role in the success of tech and marketing outsourcing models. Pay attention to the technology used by the company. Ensure it ticks the right boxes:
- Meets latest industry standards
- Easily accessible
It is also a good idea to enquire about the agency’s future technology and resource policy. This will be crucial for your growing business.
In a Nutshell
An experienced outsourcing service provider helps your business make better decisions. They tweak strategies to improve areas where your business practices are ineffective and outdated.
Aside from the points mentioned above, there are various other factors that help you select the right outsourcing service provider. Pay attention to industry knowledge, quality assurance practices, and project planning and management. Remember parameters may vary based on the location of the outsourcing company.
So, never take spontaneous decisions. Give yourself sufficient time to consider every possible factor before choosing the right outsourcing agency.