The Dos and Don’ts for Successful IT Project Outsourcing

IT project outsourcing can allow your company to access a talented tech team to build and deliver IT-enabled business processes, application services, or infrastructure solutions.

The best part? Outsourcing IT projects can save a company both money and time. You can complete all or part of a project without the expense and time investment of building an in-house team. But still, it’s essential to acknowledge the potential risks involved. Inadequate management of outsourcing efforts may result in cost reduction not being realized or the desired outcomes not being achieved.

Benefits and Risks of Outsourcing IT Projects

According to Statista, the combined IT outsourcing industry generated a combined revenue of $400 billion in 2022 in the U.S. alone. Businesses are under pressure to keep up with consumer tech expectations, and IT skills are specialized and continually evolving. There are several potential benefits to outsourcing IT projects, including:

• Access to experienced developers with the exact skills you need
• Reduced overhead costs when compared to an in-house team
• Utilization of an on-demand model
• Faster project timelines

But there are potential risks of outsourcing IT projects, too:

• Hidden additional costs in the contract
• Challenged communication or unresponsive teams
• Biased software decisions made by people outside of your company
• Decreased security

To maximize the benefits and mitigate the risks, it’s crucial to follow these eight dos and don’ts of successful IT project outsourcing.

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1. Do Begin by Answering the Following Questions

• Who will staff a project manager?
• Regardless of day-to-day project management, who will be the key person acting as the project owner?
• Who will be the primary contact to answer the development team’s questions as they arise during the project? This may or may not be the project owner.
• What individual or team has the decision-making power and necessary expertise to approve milestones?

2. Don’t Start With Your Biggest and Most Complex Projects

Your team will get more skilled at outsourcing IT projects with experience. If you are new to outsourcing, don’t try to tackle your most extensive and complex project first. Instead, start small. You can break down a large project and start with one component, but give your team time to test the process and the outsourced collaborators.

3. Do Follow a Defined Project Management Methodology

The IT outsourcing company should have an established project management methodology such as Waterfall, Agile, or Scrum. How often should you expect to engage? Ensure your team understands the tool sets being used and is up to speed with them.

4. Don’t Outsource Core Business Competencies

Especially when you are newly outsourcing IT projects, you do not want to put your company in a position where essential proprietary services or software are compromised. Once a security leak happens, it’s hard to recover fully.

Maintain your competitive advantage by keeping core business competencies in-house. This remains true even when you trust your outsourcing partner because the potential risks are too high.

5. Do Establish Consistent and Accessible Communication Channels

Giving and receiving feedback throughout the project development process makes the process more efficient and smoother. It also delivers better results. Create accessible communication channels for developers, project managers, testing engineers, product owners, and anyone essential to the project. Before starting the project, connect with your outsourcing partner and find out the most effective way for them to communicate and receive feedback.

Setting up regular meeting times and determining who will attend is also essential. Will you meet weekly, bi-monthly, or more often? Which team members are critical to the meetings at each stage of development?

6. Don’t Just Pick the First or the Cheapest Option

One of your goals with outsourcing is to save money. Even so, choosing your provider too quickly or basing your choice solely on price can result in more expenses later when you face delays or must rework some of the projects.

Instead of the overall price, consider the provider’s cost rate. Dive into the details of the services and the fees proposed before deciding if it meets your needs and budget. Some projects require high levels of expertise, time, or resources and may be costly even when you outsource them.

7. Do Measure Development Progress

With regular team check-ins, status updates, and predefined milestones, you know when the project is progressing as expected and when it’s off track. Even if the project manager is with the provider and not your team, track the established milestones and the project’s overall progress. If you aren’t sure if the team is on target, ask. Your attention and concern will help keep everything on schedule.

8. Don’t Assume Your Provider Knows What You Want

One mistake some companies make in outsourcing is assuming the provider knows what they want. You are hiring the team because they have the skills to execute your vision, but to get what you want requires clearly communicating it. Set clear and measurable expectations. Provide more information about your desired outcome than you think they need.

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Outsourcing is Here to Stay

With digital communication tools, remote teams are easier to manage. While it depends on your unique needs, outsourcing IT projects can be efficient and cost-effective with the right care and oversight.

Still, there will always be projects you need to keep in-house and in the hands of people who intimately know your business. Whether you want to build an in-house IT team capable of handling any project or find the right IT manager to oversee your outsourced projects, our vast job seeker database and team of experienced staffing agents can help.