When does outsourcing become vital to a project?

Ukrainian business treats outsourcing differently, in fact, as do companies’ executives in other countries

IT is among the leaders in outsourcing, for obvious and inexplicable reasons. However, “IT specialists” also turn to specialists from outside. How appropriate is it to involve a contractor in certain IT jobs and when does it become economically unprofitable?

Your own team — “for” and “against”

Among the most common advantages of having your team you can hear the following five:

1) more economically profitable;

2) a person on a salary is always under supervision and will not quit his job halfway, at least for fear of losing a stable income;

3) can be loaded with other (related) tasks for the same salary;

4) the company aims to expand its staff;

5) it is safer.

And now I will give five counterarguments:

1. Well calculate all the costs, including taxes, and a sound assessment of competence (in case of lack of knowledge — in a row) and sick leave, leave, and motivation, and the formation of loyalty to the employer, and workplace equipment, and other costs.

2. Are you sure that a stable income is the strongest motivator?

3. The desire of managers to save on employees — I, as CEO, is quite familiar and understandable. However, savings should not harm efficiency. Otherwise, it is worth thinking, do you really optimize costs and get the desired or expected result ?!

4. Educating your employees and promoting them on the career ladder is the right aspiration, but it does not always achieve the goal. The employee must have a clear understanding that it is crucial to evolve every day, because tomorrow this employee can be replaced by a more productive, ideological, and motivated colleague. But frankly, there are very few employees with such self-awareness in the labor market. If you succeed to find such employees, try to hold them firmly and put effort into their development. In all other cases, the argument in favor of exclusively your team is very shaky.

5. Security, indeed, is a very important aspect. Unfortunately, the leakage of information through your own employees is as likely as in the case of contractors. Here you need to carefully weigh the internal situation in your company and the reputation of a particular outsourcer in the market.

This does not mean that the above is a permanent state of affairs. It is rather a reason to think: is everything so clear in the case of hiring a contractor and / or the maintenance of own employees? And is it true that outsourcing in our country is more often a risky step, in particular, when it comes to IT — not always easy to understand part of the business, on which the business increasingly depends?

“I think owners and top managers of companies should postpone their usual tasks as often as possible and check the quality of their own products.”

Richard Branson, British businessman

Outsourcing is what I need!

Now let’s go from the opposite. For example, you have already decided that you are hiring a third-party company to perform certain IT tasks. Probably, different options have already been considered and among them was “create your own IT department”, but you did not think it is right.

In this situation, it is worth relying on the economic component. If you are contracting a long-term project, the total cost of which is about half of its annual budget (of course, here I mean millions of hryvnia), then it is worth considering the possibility of creating a team within your company.

In other cases, it is more profitable to work with outsourcing, but (!) there is a specificity. Surveys of reputable profile agencies show that in Europe it is not uncommon for the customer to remain dissatisfied with the level of work performed and/or the bill exceeded his expectations. In Ukraine, such situations also occur.

There are a few points here that I will focus on

1. The customer does not always fully understand what he wants to get at the exit.

2. The customer can not always make correct and complete terms of reference.

3. The customer is not oriented in stages and the cost of work does not set control points at different stages of project readiness (or does not know how to do it right).

4. The executor (that is the IT company) does not always have sufficient competence, but the desire to receive the project forces him to hide it from the customer.

5. The contractor overestimates the cost of his work, hoping that the customer does not fully understand the market.

6. The performer is really only a mediator.

7. This list can be continued, based on individual experience. But I think the point is clear — misunderstanding, underestimation, or overestimation may be present in both parties. And here the task of both the customer and the executor is to come to a mutual understanding and at the initial stage to determine how they fit each other.

“Having in mind the unsatisfied state of modern computer programs, software development can still be considered an art, not a scientific discipline.”

Bill Clinton, 42nd President of the United States

Contractors in IT

When hiring a specific contractor to implement your IT project, you need to understand that he may well use subcontracting to perform certain stages. For example, the company may have the following activities:

- system integration;

- consulting on the creation of information systems;

- support and implementation of information systems;

- software development for the customer;

- training and coaching for your employees who will use the implemented software products.

However, it is not necessary that this company perform all these tasks on its own. At certain micro-stages, it may use the services of third-party specialists. Actually, if it does not affect the result, then you can not get into internal affairs.

Pictures on request IT

“Software vendors are constantly trying to make their products more user-friendly. So far, all attempts to do so come down to writing the words user-friendly on the cover of the documentation. “

Bill Gates, American businessman and public figure, philanthropist, co-founder (with Paul Allen) and former major Microsoft shareholder

What if you are not an IT specialist, but you really need him?

Here you will have to spend time investigating the market, the reputation of potential contractors and, ideally, look at the submitted projects. And still rely on a well-composed term of references, corresponding size of the allocated budget and your business intuition, because it has helped you many times, right ?!

“Programmers are constantly competing with the universe: they are trying to create more and more idiotic programs, and the universe is creating more and more perfect idiots. So far, the universe is winning. “

Rick Cook, an American science fiction writer who is known not only for his writings but also for his love of jokes