Flexibility that speeds innovation while reducing your risk. Access to top talent, regardless of location or long-term interest. Fit-for-purpose teams that exist for only as long as you need them. Increased control over how your internal resources are used. Money saved across the board on benefits, training, office space, turnover, and downtime. Processes and protocols customized to ensure quality, efficiency, consistency, continuity, transparency, responsiveness, solid results, and fast answers. Increased time to focus on running your business and executing against your strategic imperatives.
If a service can provide all of the above to your business, wouldn’t you engage that service? So why do so many businesses still have cold feet about working with the services that provide this kind of value?
It’s because we’re talking about outsourcing companies. Though the concept has been around since at least 1989, when legendary management consultant, educator, and author Peter Drucker first began promoting the practice, many businesses still feel hesitant about outsourcing.
We’re here to suggest a cure for your cold feet. Because the fact is, outsourcing provides massive savings and powerful results for countless businesses. Highly successful companies as diverse as Google, Ford Motor Company, 3M, Microsoft, GE, Cisco, AT&T, and Skype have all embraced outsourcing as a path to success. These companies have learned that, as Drucker espoused, it’s best to “Do what you do best and outsource the rest.”
So what’s the cure? Well, there are simple solutions you can use to answer each of your questions and concerns about working with outsourcing companies. Each of the solutions brings compelling benefits for your business. For a breakdown of the most common concerns we hear and the solutions and attendant benefits for each, read on.
Concern #1: Cost
With outsourcing, many businesses worry about the potential for increased and hidden costs. Their concerns may include:
- Cost of ramping up, onboarding, and learning: Will it take too much time for the outsourcing company to get to know your people; leadership/reporting structure; systems; technologies; working and communication protocols; company goals, priorities, and vision; and so on?
- Cost of bad processes: What if the outsourcing company uses inefficient processes, isn’t transparent, doesn’t communicate well, or widens scope without prior approval? What if that causes bad development outcomes and costs you may not have incurred internally?
- Cost of failure: What if the outsourcing relationship doesn’t work out? Will you have wasted time and effort that should’ve been invested elsewhere?
Solutions and Benefits
To cure your cold feet about cost, consider these possible solutions and their attendant benefits:
- Define your relationship legally and for the long term:
- Create contracts and statements of work (SOWs) that clearly outline expectations, desired outcomes, projected costs, and protocols for any service or personnel issues
- Consider choosing a primary software development partner to facilitate streamlined communication, long-term relationships, and continuity of institutional knowledge
- Agree upon and document efficient, effective processes:
- Use Agile project management processes to ensure success due to:
- Rapid, incremental iterations and regular testing that keep you headed in the right direction and make it easy to adapt when course changes are needed
- Regular sprint reviews that provide ongoing visibility on level of effort and progress, as well as regular opportunities to provide input and redirect as needed
- Agile focus on delivering value early in the process, not just at the end
- Use workflow tools (e.g., Jira) to streamline process and improve transparency, expediting workflow and reviews and making sure nothing falls through the cracks
- Agree upon scope management protocols (e.g., advance planning/budgeting, starting with an MVP) that hold parties responsible for actively managing scope
- Use Agile project management processes to ensure success due to:
Outsourcing’s cost-focused solutions come with even more benefits than those listed above. They include:
- Flexibility that reduces your risk: You can scale your outsourced team up and down as needed to fit the changing needs of your business. Specifically:
- You can engage talent for only the timing and duration you require. There’s no need to pay the hefty salaries required to keep expert professionals on staff year-round.
- You can reallocate budget that would’ve been spent filling a permanent role.
- You can flex your budget to fit your evolving priorities, goals, and strategic objectives.
- Money saved in the long run: The costs saved far outweigh the costs incurred. For example:
- You save money you would’ve spent providing training, benefits, and office space for internal employees. As the Harvard Business Review sums up, “Full-time employees are the most expensive and least flexible source of labor.”
- You reduce costs related to internal employee turnover.
- You only pay outsourced professionals for actual hours worked. That means you’re saving money by not paying for the downtime of salaried internal employees.
- An easy way out: You always have recourse to ask for improvements or personnel changes — or to discontinue the relationship altogether — if your expectations aren’t being met. Removing an internal employee, on the other hand, is never an easy prospect.
Concern #2: Cultural Fit
How can you be sure you and your outsourced resources will work well together? That’s why many businesses worry about cultural fit, including concerns such as:
- Resources who don’t fit in: Will you be saddled with outsourced resources who aren’t integrated into your corporate culture/community, or who don’t work well with your people?
- Weak relationships: Will your people be able to establish and maintain strong, collegial relationships with your outsourced resources?
- Lack of investment: Will outsourced resources fail to feel invested in your business due to a lack of “belonging,” causing their work quality to suffer?
Solutions and Benefits
To cure your cold feet about cultural fit, consider these possible solutions and their attendant benefits:
- Embed protocols that build relationships and encourage engagement:
- Request long-term resource assignments with specific, dedicated resources you enjoy working with
- Regularly use in-person or video meetings to put faces and personalities with names, helping you build genuine relationships and avoid miscommunication
- Involve outsourced resources in your company culture via appropriate participation in meetings, activities (e.g., happy hours), and communication channels (e.g., Slack)
- Agree upon processes that ensure and encourage team fit:
- Hold formal onboarding (onsite if feasible) as early as possible to help outsourced resources efficiently learn about your company, people, working style/protocols, and culture (outsourcers may also have processes that streamline onboarding — we do!)
- Establish regular performance review processes that let you offer constructive feedback or request a personnel change if needed
- Gain outsourcing company commitment to ensuring experience and personality fit, increasing likelihood of strong team chemistry and positive outcomes
These solutions also come with additional benefits for your business, including the following:
- Access to top talent: Outsourcing expands your talent pipeline a thousandfold, opening up access to top professionals and experts, regardless of their location or long-term interest.
- Perspectives that help you innovate and stay competitive:
- Dynamic team makeup stimulates ongoing innovation.
- Diverse and outside perspectives improve any product or process.
- Reduced risk of a bad fit: If someone’s not working out, you can request a personnel change at any time. If an internal resource isn’t working out, it’s much more difficult to fix the situation.
Concern #3: Communication and Coordination
Some businesses are concerned that outsourced resources won’t be aligned with the way they work or communicate, slowing progress and causing errors. Their concerns may include:
- Lack of availability: Will your outsourced resources be there for you when you need them?
- Time zone mismatch: If they work in different time zones, will their responses be slower?
- Language barriers: Will you face communication issues by working with non-native speakers?
- Miscommunication that leads to mistakes: Will resources from different backgrounds and educations — resources who may be used to different communication tools and protocols — increase your risk for possible miscommunication and negative outcomes?
Solutions and Benefits
To cure your cold feet about communication and coordination, consider these possible solutions and their attendant benefits:
- Set up effective communication/collaboration processes and protocols:
- Establish clear point-of-contact relationships so you always know who to call for what (e.g., ready access to project manager and/or outsourcing company leadership)
- Perform advance planning about protocols and tools, setting clear expectations on both sides so that everyone is in agreement about who, what, why, and when
- Inquire about your primary POCs’ English-speaking skills and establish protocols for remedying any issues
- Use Agile processes that ensure your ongoing involvement (e.g., timely review and feedback), quality checks, and optimum transparency
- Agree upon reporting formats so you get the exact level of detail you want/need
- Make effective use of communication/collaboration tools, including:
- Tools you already use, integrating outsourced resources into your preferred tools
- Workflow tools (e.g., Jira) that help you avoid duplication of effort and let you jump in any time to review work or post questions and updates
- Communication tools (e.g., Slack) that support timely communication of issues, questions, and updates between in-house and outsourced resources
Working with outsourced companies can also bring coordination- or communication-related benefits you may not have anticipated, including:
- Faster results and faster answers: If you work with an outsourced company with resources in several time zones (as we have at Distillery):
- You often have dedicated resources available to you around the clock. That means someone’s always available for your question or concern.
- Frequently, work happens while you sleep. Ask for something today and it may be done by morning.
- Finely honed communication and coordination skills: Communication and coordination skills are innate to how outsourcing companies work. They have to get good at it or they won’t stay in business. In other words, they may genuinely be BETTER at it than your internal team.
Concern #4: Control
Many businesses’ concerns about working with outsourcing companies come down to lack or loss of control. In fact, many of the concerns outlined above also boil down to control — control of cost, cultural fit, and communication/coordination. While we don’t need to reiterate those concerns, we will cover a few more, including:
- Lack of team continuity: Will you continue to have access to the same team members? How will you ensure knowledge continuity and approach consistency?
- Lack of access: Will you have access to the resources you need exactly when you need them? What can go wrong when you’re dealing with emergencies or other issues?
- Mistakes: What if they get things wrong due to lack of experience or familiarity?
- Brand risk and liability: How can you ensure the privacy and security of data and intellectual property? How can you protect your brand and reputation?
Solutions and Benefits
To cure your cold feet about control, consider these possible solutions and their attendant benefits:
- Do your homework about the company:
- Ask for and interview references, who can help you understand how the outsourcing company serves their clients over time
- Request case studies about similar clients and ask probing follow-up questions
- Ask to meet specific outsourced resources who’ll be assigned to you,
- Use processes and protocols that enable access, quality, and security:
- Use established points of contact (POCs), Agile process, and workflow/communication tools to ensure ongoing access, visibility, transparency, and consistency of approach
- Use communication/integration and onboarding processes that increase familiarity and strengthen outsourced resources’ sense of investment and ownership
- Follow product and process quality review and testing protocols that help ensure the privacy and security of your data, IP, brand, and reputation
- Relay clear expectations and getting commitment in writing, including:
- Use initial meetings to co-develop and gain commitment on working, communication, and performance review protocols, as well as guarantees about service team continuity and protocols for any desired personnel changes
- Get agreements in writing in contracts and SOWs, including:
- Adding clause establishing at-will employment (dismissal without just cause)
- Embedding verbiage related to ensuring privacy and security of your data, IP, brand, and reputation
Working with outsourced companies can also bring additional control-related benefits, including:
- Increased control of how your internal resources are being used:
- Your time — and your internal team’s time — is freed up. Your internal team stays focused on running your business and executing against your strategic imperatives.
- You can obtain the results you seek without making a long-term salary commitment.
- Increased control of budget allotment to fit changing needs: You can create fit-for-purpose teams, using them for only as long as you need them, while you stay lean and agile.
We get it. You care deeply about your business. You want to make the smartest choices you can about who you work with and how you spend your money.
At Distillery, we genuinely care as much about our clients’ businesses as they do. As a full-service software design and development company, Distillery serves as an outsourcing partner for many highly satisfied clients in the Los Angeles area and worldwide, including clients like Tala and Syncplicity. We’re proud of our ability to help our clients set up and formalize processes, protocols, and expectations that ensure cost control, cultural fit, smooth communication and coordination, access to top talent, continuity, and risk reduction for their businesses and brands.
We also care deeply about sharing insight with other businesses who may need a little help finding a path that supports sustainable growth. Even if Distillery isn’t the right answer for your unique needs, we encourage you to consider the benefits of outsourcing. Those benefits are far bigger than you may have thought. What’s holding you back?
Curious whether Distillery may be the right fit for your software design and development outsourcing needs? Let us know!
Anar Babaev is Distillery’s Managing Director. He has wide-ranging experience on the client side and the business side, having worked in account and project management, sales, and client relations at various international software and IT organizations. Anar is passionate about creating a better client experience through proactive issue identification and problem solving. In his free time, he loves spending time with his family, listening to music, and reading. He has a massive collection of baseball caps, rarely leaving the house without a hat.