Develop An Effective IT Outsourcing Strategy

IT Outsourcing has been internationally recognized as a viable solution for the puzzle of how to implement digital transformation. In the light of the fast-paced development of the global IT market, many businesses are rushing into hiring an external team to take care of their technical matters, but few of them report positive outcomes. To effectively harness the potential of IT outsourcing, it is a must for you and your business to develop an IT outsourcing strategy. Let’s take a look at this action plan from Lotus QA to know where to start with IT Outsourcing.

1. Know the objectives for IT outsourcing

There are many benefits for your business when it comes to IT Outsourcing. If done right, IT Outsourcing can help you reduce the overall cost for the IT department, shorten the timeframe for faster product release, access to the international talent pool, etc.

Your business should always consider the cost factor first when starting your IT outsourcing project. According to a survey from Deloitte, the recent years have witnessed a sharp increase in the number of organizations giving priority to cost reduction, while in 2018, the key objectives of outsourcing were to enable speed to market, scale faster, enhance user experience and achieve competitive advantage.

IT outsourcing strategy – project objective

With a clear vision and focus on the cost, you can then dig deeper into the specific parameters such as cost to achieve, rate cards, investments, ROI, etc. when considering the vendors.

On the other hand, under the uncertain economic climate as it is today, businesses also need to stand out in the crowd, so it is advisable that you go look for providers that can also elevate the way you do your business, enable you to be more flexible and help you implement the latest technology. With the edge to be ahead in the technology competition, you can easily manage to be the ground-breaking name in the market.

So, what is the ultimate decision-making factor that you want to focus on your next IT outsourcing project? Deciding this will help you shape in mind the requirements for the vendors, hence completing the first step to get a strategic scheme for IT outsourcing.

2. Decide what part of IT functions you want to outsource

Not every IT function can be outsourced. For security concerns and the matter of authority, many businesses have said that they have to consider many factors to decide which part of their technology operations can be outsourced to an external party.

Let’s take this example from HBR. In a business, there are many IT operations, and if we divide it according to the “Strategy vs. Commodity” approach, we can clearly see which operation makes you stand out in the market (the strategy), and which operation does not differentiate the business from its competitors (the commodity). For business owners, it happens to be a common case that for the strategy, you keep it in-house, and for the commodity, you outsource it.

IT Outsourcing Strategy – IT functions

However, the current situation of the IT market shows a different approach. The strategic IT operations now require thorough knowledge and experience that an in-house team can barely have (except for the team from big corporates), hence the only possible way is to outsource them. Therefore, the question of “what IT functions to be outsourced” will be answered if you know what part of the business you are capable of and what part needs the help of experts.

Another approach for IT Outsourcing is that you can outsource the minor part of your operation first. By doing this, you can have a litmus test for how well you can perform and the possible outcomes from outsourcing. Even in the case of failing, the important parts of your business will remain uninfluenced

3. Choose the outsourcing models for you

It is very important that you know the IT outsourcing model for you. By knowing your outsourcing models, you can know the basics of how you will run your outsourcing projects and the model that fits your financial situations and your plans the most.

IT Outsourcing Strategy – Outsourcing models

You should look into these IT outsourcing pricing models before signing any contract with an international technology outsourcing company. By knowing how you are going to collaborate, you will have better plans streamlining your visions and your goals. At Lotus QA, we implement the four IT outsourcing pricing models, including:

Project-based (for businesses that have clear objectives and fixed budget)
Time & Material (for businesses that want flexibility)
Dedicated Team (for businesses that want total control of who will work on their projects)
Staff Augmentation (for businesses that want highly skilled staff to work on their short-term projects)

Find out more about IT Outsourcing Models: Choose the Right Approach

4. Define detailed requirements and tasks to be outsourced

When you’re done with the planning part of the outsourced project, the task now is more simplified, as you only need to go over the technical details of the requirements. There are plenty of kinds of IT outsourcing projects, but it all comes down to the following list:

Project’s stakeholders (who’s taking part in this project and their responsibilities)
Scope statements
Tools and programming languages (if any)
Testing specifications (if any)
Security requirements (what measures, what tools, etc.)
Management requirements (reporting platform, leave request, meeting request platform, etc.)
Maintenance requirements
Data storage and information management requirements
Platform management
Communication requirements

IT Outsourcing Strategy – How to delegate tasks

With the detailed requirements broken down to smaller different criteria as above, you can then define which tasks should be outsourced. Follow this process of requirement analysis, system study, code development, testing, implementation, deployment and maintenance/support.

5. Develop work process and work management

When working with an external party, how can you make sure that every process and operation from both parties go hand in hand? How do you streamline the project’s objectives to your business objectives without any hiccup?

IT Outsourcing Strategy – Work process

The answer to these questions is the work process and work management. With a properly developed work process, every activity of your project is turned into a cognitive part of the whole project, making the whole operation a well-oiled “machine” that everyone can follow. For each phase of definition, execution and termination, each specific action is well-designed and noted so that even the most complicated task can be effectively managed.

For work management, how you control the tasks and the people working on those tasks are also very important. The approach you have on work management will directly affect how you chop down the task, review and possibly redo it. With a proper work management system in hand, your business can keep track of every little detail of what is going on in your project.

6. Develop risk management measures for IT outsourcing

IT Outsourcing brings not only great benefits but also major threats such as theft of intellectual property, unethical conduct, data breaches, etc. With a proper risk management plan and necessary measures, your business can stay unharmed of the already-existing risks of outsourcing. It not only helps you be well-prepared for the worst-case scenarios with the service providers but also iteratively improves your immunity to potential risks in the future.

Risk management plan and measures include:
Security measures
Ownership for each potential risk
Contingency plans
Risk management training

7. Conclusion

IT Outsourcing offers great benefits but also brings many threats to your firm. To avoid these risks, you need to develop an IT Outsourcing strategy successfully by following these guides:

Know the objectives for IT outsourcing
Decide what part of IT functions you want to outsource
Choose the outsourcing models for you
Define detailed requirements and tasks to be outsourced
Develop work process and work management
Develop risk management measures for IT outsourcing

With the details listed in our article, Lotus QA hopes you can find the best approach to implement the newest technologies in your business. If you have any questions or concerns, you can contact us via our contact page.

8. Consult IT outsourcing Strategy with Lotus QA

Lotus QA has the expertise and experience with automation testing services in many domains such as detail, food and beverage, healthcare, etc., making us one trustworthy and professional service provider for businesses wanting to implement automation testing. When working with us, you will get access to:

High Security: LQA not only follows stringent procedures of ISO 27000:01 for optimal security and international standardized process but also flexibly adapts to clients’ requirements
Quality Human Resource: we ensure staff competency through strict rounds of interviews, on-job orientations, continuous learning & development for the most suitable QA staff.
Flexibility: We provide different working models to allow clients to choose or change the plan at any time.