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Reduce cost with IT outsourcing

Reduce costs through IT Outsourcing

IT Outsourcing is often mentioned along with reducing costs. But when do you actually reduce costs with IT Outsourcing? This depends entirely on the way you apply it. The difference lies in the short-term or long-term strategy of IT Outsourcing.

Reduce costs through IT Outsourcing

How are you going to use IT Outsourcing for your organization? Are you going to use it for the short term, also known as ‘throwing a project over the fence’? Or are you going to use it as a long-term strategy for the growth of your company?

Short term: throw a project over the fence

You know the stories: “We wanted the app to be developed across the border, but nothing useful was returned.” or “we are working together with two IT outsourcing developers but this morning suddenly there were new faces.” These are classic examples of why IT outsourcing is not interesting in the short term and it will ultimately cost you more instead of saving.

Example 1 shows the outsourcing of a project to an organization that has no experience with your product. An app is developed by people who have no dedication or integration with your organization. If you then try to develop something together, communication is difficult because people are not familiar with your platform or product. This provides many extra hours, which results in higher costs. There is also no passion for your product as the developers have no identity within your company.

Example 2 shows how unpredictable short-term outsourcing can be. The programmers do not work for you but for the outsourcing provider. Given that you have paid an hourly rate, you will be left in the dark regarding their financial satisfaction and you will not be aware of their personal development goals. Someone can get a better project somewhere else or earn better and hop they are gone. The person taking over now has to get to know your platform again and the current status of the project. It’s easy to see how many more hours will be added.

Both examples show that saving costs with IT outsourcing by means of a low hourly rate is certainly not a guarantee. Throw a project over the fence can be just as well to throw your money over the fence.

Long term: investing in a remote team for the growth of your organization

Reducing costs with outsourcing is more realistic if you start working with programmers abroad in the long term. Imagine starting a department of your organization in an Eastern European country, there you hire – together with a suitable party – your programmers who will work dedicated for you. You’ll talk openly about the salaries with the developers and the fee with the provider. This brings a much more transparent model that is a win-win for all parties involved.

Your own department abroad

When you select the programmers yourself and have them occasionally work for a week at your office, you ensure a commitment between your company and the programmer. You know what their goals are. What do they want to achieve in the professional field? They have been working on your product or platform for a long time and know it through and through. You know if their estimated hours for the work are correct given the past you have with them within the collaboration.

Reduce costs with IT outsourcing
Reducing costs with IT outsourcing is realistic when you use it for a long-term strategy. It also addresses the problem of shortages in the IT labor market. This is perhaps the most important reason to start outsourcing!

If you want to know more about the possibilities for your organization, please contact us.

Kevin is a personal outsourcing consultant of Personal Programmer. With more than 10 years experience, he knows what's needed for a successful way of outsourcing. He writes about it in this outsourcing-blog.

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