Outsourcing
Outsourcing refers to getting things done from out-house instead of getting them done in-house. History of outsourcing is as old as the history of mankind. Since the individual started to form groups, small communities, and societies, the outsourcing began. The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of worldwide labor, capital, technology and resources. Though often used interchangeably, outsourcing differs from offshoring in that outsourcing is relative to the restructuring of the firm while offshoring is relative to the nation (see below), though the two are not mutually exclusive, especially under conditions of globalization. Fundamentally and historically, outsourcing is a term relative to the organization of labor within and between societies.
Outsourcing FAQ
Q: How to select a reliable offshore outsourcing partner?
A: Contracting to an outsourcing service provider is the quickest way to go offshore, because you don't have to hire and train workers or rent an office and set up your own infrastructure. Selecting the right partner is a complex work. A comprehensive Request for Proposal will help your company to create competition between the potential vendors and, consequently, find the best match. Contact at least one client of each potential vendor for the information on the quality and customer satisfaction of the service rendered.
Compare the information on your potential outsource service providers against the criterias that have been established. Making a final comparison, take into consideration a combination of factors, not only the one that provides the cheapest price. Evaluate the development methodology or ability of your vendor to adapt to your internal business workflows. Ask your service provider/developer to submit their methodology and project plan. In outsourcing development offshore, communication is one of the most critical success criteria. You need to spend some time establishing clear and known to both parties communication ways. Make sure that the scope of the project is well defined. Often, there are conflicts leading to project failure.
Evaluate your development partner to see if they understand your business approach. A typical offshore development company sees the same processes from a different view. Its value can go beyond just basic cost saving. Clear documentations and real-time ongoing communication must be established to outsource successfully.
Q: Why outsource IT project offshore?
A: IT outsourcing, application development and maintenance some of the most common types of activities that companies outsource now. It's effective when company has budget and constrains. Reducing software development cost and avoiding to hire more contractors to develop projects that can be outsourced allow your company to concentrate on the main business goals without worrying about IT .
Q: What type of projects is usually outsourced offshore?
A: Theoretically it's possible to outsource almost any type of project (e.g., application development, database design, Web development, ecommerce solutions, system development, etc.). In practice, businesses usually prefer to keep network and database administration in house and to outsource such projects that would allow them to concentrate on their core activities. This is true for outsourcing both to domestic and offshore vendors. A middle-sized technology solutions development company or a startup might outsource virtually each project, especially if the company has established reliable partnership relations with the vendor.
Q: What are the challenges involved in outsourcing? How do I manage outsourcing relationships?
A: Surveys and studies have shown that more than 90% of Fortune 500 companies outsource some part of their operations. In the face of such clear indicators, why would some organizations hesitate to outsource? The answer could lie in the bad experiences with previous outsourcing attempts. There are many issues that need to be addressed before choosing an outsourcing partner. Moreover, once the developer or service provider is selected, it is not enough to just sit on one's heels and assume that the outsourced projects would just work fine. Understanding outsourcing relationships is primary to the success of a project.
Q: Are there any communication issues that is helpful to know in advance?
Even communication with your parents can be difficult when you don't pay attention your attention. If you believe that nothing can substitute face-to-face meeting, you might want to look for an offshore OSP that has the head office in your area. Otherwise, telephone conversations, e-mail, and instant messangers can cover almost all communication needs. Sometimes telephone conversations aren't useful because of the language and cultural barriers, so email and instant messaging can help at this case.
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