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The instances of outsourced IT projects starting off well but not matching the expectations of the outset later are far too many. Yet, these incidents haven’t made outsourcing a failed concept; in fact, measures have been identified to streamline the process to ensure realistic expectations are designed. We list a few reasons that are the probable cause of failure.
– Cost saving assumptions
On the onset, it is essential to ensure the goals for outsourcing are clearly defined and the hidden costs are ascertained. The operating models of different vendors differ, so it is important to ascertain what costs will be incurred to understand how much savings will be made. Most organisations, on an average save 15-25% in the first year and only by the third year they save close to 40%. The logical explanation for these figures is the upward movement on the learning curve for both parties and the alignment of client’s internal model with his/her outsourced partner’s business model.
-Inadequate documentation on processes
Documentation is a highly neglected activity because it is time-consuming and prosaic. It is observed that only 30% processes are documented while ideally, it should be around 90%. Documentation must map current process, transition strategy, risk evaluation methods and contingency plan. An evaluation made on the basis of the documentation can help identify if outsourcing will be suitable or not.
-Failure to bridge works culture gap
The work culture varies between different organizations and in the case of offshore outsourcing, the cultural differences are greater. The in-house staff must be acquainted with the cultural nuances of the vendor organisation to avoid conflicts arising due to different work styles. A mutual visit to each other’s office will be helpful in understanding work styles and develop a rapport with collaborating teams.
-Failure to ensure quality control
As important as cost saving is, it must not come at the price of quality. Poor service quality will not only jeopardize the project but also the company’s reputation among customers. Regular monitoring of the output will save considerable reworks and curb follow-up costs from the project inception.
Outsourcing IT project opens new growth avenues and at Solution Analysts, we have benefited greatly from the opportunities presented by such projects. To know more about the projects we take up and discuss a project, please contact us.
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