LTS QA

When choosing the IT outsourcing vendor for your business, you are spoilt for the choices of thousands of IT service providers from all over the world. With each of the vendors claiming to be the best choice for you, there are many IT outsourcing vendor selection criteria that you have to put into consideration.

Let’s check out our article on How to choose the most suitable IT outsourcing vendor for your business.

1. Technology expertise & focused domains

For most of the time, the main reason for one business to resort to the help of a third party is the lack of technical knowledge and domain expertise. For example, an industrial manufacturing company wanting to implement digital transformation doesn’t have what it takes to build an ERP system, so they outsource the function to a renowned vendor who knows the technology and the industry. This helps save a lot of effort in building and maintaining an in-house tech team.

Concerning the technical matters, you should consider the technical expertise and the focused domains that you will work on.

Technology expertise

Technology expertise means the programming languages, the frameworks, tools, etc. that will be applied in your application. Not only that, but you will also need to identify the level of experience you want your employees to have.

For a non-tech company, identifying these matters is no easy job, but it can be easily done with the help of a technical consultant to give the most objective view of what you would need. Then, when you’ve already known the technical requirements, you can produce a job description featuring all the technical requirements and select the most suitable IT outsourcing vendor.

Focused domains

Besides the universal knowledge that every of your tech team needs to have, you should also aim for those IT vendors who understand your industry. With this being done, the outsourced team wouldn’t have to spend much time on the project requirements just to understand some terms in the field.

If they have the domain knowledge they claim to have, the time spent on getting to know the system will be shortened, hence saving your business a lot of resources and time.

2. Reference from clients, case studies, and testimonials

For the IT outsourcing industry, it is very common that some vendors are economical with the truth. They tend to paint the perfect picture of what technologies they can use, how well they can do with complicated projects, etc., making you the “easy target” for fraudulent acts.

To prevent this, you should take references from clients, actual case studies and testimonials. Of course, the vendors will always want to direct you to their website so that you will see what they want you to see. Even though it’s good to know what they can put on the table, but it is also a must for you to go to a review website to see the vendor’s real work.

For example, you can go to Clutch – a website that interviews real clients, collects data, and compares competitors. On this website, when a vendor wants to publish a review from their client, their client will have to log in and leave detailed information about the project, including the position that the client holds, the project, the ratings they want to give for different criteria namely cost, flexibility, etc.

Besides, you can also ask for the case studies of the IT outsourcing vendor for that one particular part you want to outsource. Ask for the details of the projects, what challenges and how they overcame them. With all of these, you can now grasp a sense of how they deal with potential problems and their solutions.

3. Reasonable hourly rate

According to a survey from Deloitte, recent years have witnessed a sharp increase in the number of organizations giving priority to cost reduction. With a clear vision and focus on the cost, it is vital that you consider the vendors that have a reasonable hourly rate.

With IT Outsourcing, many businesses have to choose between hiring a domestic vendor and a foreign vendor. While the domestic vendor can offer closer proximity, better managerial presence and better communication, the foreign one’s biggest advantage lies in the cost. Therefore, to optimize spending, it is advisable that you consider offshore/nearshore vendors. For example, you’re a business in the US, so you can consider vendors from India, Ukraine, and Vietnam.

Take a look at the average wage for IT workers in these countries to see how much you can save when choosing them:

Countries	Rates
Ukraine, Romania, Poland, Bulgaria, Hungary, Czech Republic, Slovakia, Belarus	$25-$50
Argentina, Brazil, Mexico, Colombia, Peru, Chile	$30-$50
South Africa, Morocco, Kenya, Nigeria, Egypt	$20-$40
India, China, Indonesia, Philippines, Vietnam, Pakistan, Malaysia, Bangladesh	$18-$40

Choosing vendors with reasonable hourly rates does not simply mean choosing the ones that offer the lowest rates. You also have to consider many other factors, such as budget coherence, their prestige, their commitment, employee competency to decide.

Related posts: 

Top 8 IT Outsourcing Countries

Top outsourcing companies in Vietnam

4. Favorable service policy

Another important factor for you to consider is the service policy that the vendor is willing to offer. This can be shown through their flexibility and cost-sharing policies.

Flexibility

It is very common that your process or your requirements don’t match the service offering that the vendors follow. If that’s the case, you should go for the vendors that can adjust themselves to align with your operations. By working with a vendor that is willing to do this, you will not have to spend a lot of time adapting.

Flexibility is also shown in how the vendors offer the engagement model. Each vendor will have its main models, but only some of them are ready to change their way of working to meet your needs. Stick to these vendors because their willingness to adhere to you shows how important you are to them.

Cost-sharing policies

When working with an external party, it is often the case that you are hindered by numerous hidden costs. For example, an embedded testing center has to import these specific electronic devices from a foreign country to carry out testing. The cost to transport and move the devices from one country to another can be very costly, and many vendors will charge you more for this.

However, with those vendors that have cost-sharing policies, they will be responsible for the transport fee in their countries, all you have to take care of is the fee for delivering them to the vendor’s place. Please be noted that not every vendor can offer you these cost-sharing policies. Therefore, you have to look very carefully and ask for the details of how much they can help you save.

5. Location, time zone & culture

The location of the outsourcing service providers can affect greatly how the project will operate in the future. When it comes to IT Outsourcing, you can either hire a local team or the remote team (which can be offshore). With different choices, you will have different approaches and management methods.

For example, in case of emergencies that require close-up management and direct check-up from the vendor, a closer vendor would save up the time and travel costs.

In terms of time zone, you should choose those IT vendors that can easily set up meetings and provide answers quickly. Any problems or issues can be addressed immediately without any delay. Choosing the countries with opposite time zone is not very ideal, unless you can save a lot of money with them.

Culture is another feature that you need to take into consideration, as it can immensely affect team morale and possibly team performance. Cultural differences lead to crashes in how the team works and communicates with each other. If an issue cannot get delivered and handled with cultural awareness, it is very much likely to fail, leading to a derailed project.

6. Strict process

A strict process can help you make sure that every operation and function from both parties go hand in hand. As a result, you can also streamline the project’s objectives, hence achieving the desired results.

Choose the right IT outsourcing vendors that can strictly adhere to the agreed work process. With this being done, every activity of your project will be turned into a cognitive part of the well-oiled machine in which any problems will have a protocol to deal with.

Besides the working process, you also need to find those that can produce a detailed security process. This security process is considered a blueprint of what to do and why it is necessary to achieve robust security. A security process makes the employees from both the clients and vendors comply with certain steps and rules, which will eventually ensure that everything is carried out as scheduled.

Lotus QA as a trusted IT Outsourcing vendor

Lotus QA has the expertise and experience with IT services in many domains such as retail, food and beverage, healthcare, etc., making us one trustworthy and professional service provider for businesses wanting to implement IT outsourcing. 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, and 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.

Contact us for more support with IT outsourcing vendor:

• Website: https://www.lotus-qa.com/
• Tel: (+84) 24-6660-7474
• Fanpage: https://www.facebook.com/LotusQualityAssurance

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.

 

 

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.

 

 

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

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?

 

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.

Contact us for more support with automation testing services:

• Website: https://www.lotus-qa.com/
• Tel: (+84) 24-6660-7474
• Fanpage: https://www.facebook.com/LotusQualityAssurance

IT Outsourcing is widely recognized as a viable solution for companies that want to implement digital transformation thanks to the cost reduction and large talent pool. But to efficiently apply IT outsourcing, you need to make one important decision whether you should choose Nearshore vs. Offshore Software Outsourcing.

In this article, we will help you have an in-depth look into these two IT Outsourcing types, what they are, their differences to get the best solution for your business.

 

1. What is Nearshore Software Outsourcing?

Nearshore Software Outsourcing is a form of IT Outsourcing in which the clients hire a team of IT workers from neighboring countries. As a result, the vendors and the clients will be in similar time zones and have closer proximity.

 

 

With these features, a nearshore outsourcing center can provide you with a large talent pool but with a relatively low labor cost and effective communication.

Let’s take Vietnam and Japan as an example. Many businesses in Japan have hired nearshore software outsourcing centers in Vietnam to do the IT work. In terms of time zones, Vietnam is only two hours behind Japan, and in terms of distances, it would only take you two hours to travel.

Find out more about this: Why is Nearshore Software Outsourcing the Perfect Solution

 

2. What is Offshore Software Outsourcing?

Offshore Software Outsourcing is the most popular delivery approach of IT Outsourcing. This term refers to a software outsourcing center based in a far-away country, often from developed countries to developing countries.
Normally, offshore software outsourcing gains its popularity as it can help save a great deal of money thanks to favorable labor costs, tax policies, government policies, etc. The hourly rate of one IT worker in an offshore center ranges from 15 to 30 dollars, which is 60% lower than that of an onshore center.

 

 

For example, a business in the United States would have an offshore software outsourcing team in India, Ukraine or Vietnam. Imagine if you want to hire a software engineer in the US for a year, it would cost your business approximately $157,570 including taxes. But for a software engineer in Vietnam, it would only cost you about $50,000 a year, which is much lower than in the US (According to First Alliances). This huge gap in hiring cost is the main driving force for many businesses to choose offshore software outsourcing services.

 

Read more: Vietnam Software Outsourcing: Why is Vietnam your next destination?

 

3. A complete comparison of Nearshore vs. Offshore Software Outsourcing

Nearshore vs. Offshore Software Outsourcing seems to be only different in their locations. But this difference can lead to many other distinct features that may affect your decision of what delivery approach you would choose for your business.

The differences between nearshore vs. offshore software outsourcing can be classified into the following categories:

• Overall cost
• Communication
• Cultural Difference

 

Factor	Nearshore software outsourcing	Offshore software outsourcing
Overall cost	Medium	Low
Communication	Easy	Difficult
Cultural Differences	Small	Big

 

a. Overall cost

Cost is one of the most important features for business leaders to consider when it comes to choosing a suitable delivery approach. With IT Outsourcing, cost reduction has always been one of the reasons why you should choose it. But among the delivery approaches of nearshore vs. offshore software outsourcing, there will be some different features in terms of cost.

 

– Nearshore software outsourcing

With countries in the same region, the IT outsourcing’s cost gap is not big. Therefore, the costs saved with nearshore software outsourcing will not be as much as you expect.

Nearshore software outsourcing is often deemed the more cost-efficient way of IT outsourcing as it also emphasizes communication and cultural traits, which are the two important factors that can affect the outcome of the project.

Moreover, nearshore software outsourcing companies are often located in emerging countries in the technology market such as Vietnam or Costa Rica. Since this is a newly tapped market of talents, the talent pools are still very resourceful, making it easier and less costly to outsource.

 

– Offshore software outsourcing

Offshore software outsourcing is the cheapest delivery approach there is. It maximizes the cost advantages with low labor cost and low infra cost, giving the clients the cheapest services possible.

Offshore software outsourcing’s core focus is how to reduce spending. But sometimes, you will have to compromise the ability to communicate continuously.

 

b. Communication

 

– Nearshore software outsourcing

In terms of proximity, the clients and the vendors are closer. Therefore, in case of emergencies that require close-up management and direct check-up from the vendor, this would save up the time and traveling cost.

In terms of time zones, the clients and the vendors will be in similar time zones, which is normally just two to three hours apart. As a result, they will have similar working hours. Any feedback will receive instant reply and hence the speed of the project is fastened. Also, thanks to the similar time zones, the client can have some sort of virtual existence to manage and control the work of the outsourced team.

Nearshore software outsourcing allows both the vendors and clients to communicate continuously without any inconvenience, they can apply the Agile methodology and scrum to deliver products as quickly as possible.

 

 

– Offshore software outsourcing

Since the offshore software centers are often located in far-away countries, it would take much effort to travel. If there’s an emergency that needs direct management, it would still take 10 to 16 hours to travel.

The clients and the vendors work in opposite time zones, so one’s working hours will be the other’s resting time. Any case of emergency will have to wait, and this could lead to severe consequences for the user experience.

The work management is not as effective as expected, since the project manager can’t present while the team is working. The power he/she has over the team is not as strong as with nearshore software outsourcing.

 

You might wanna know: Ultimate Guide for Managing IT Outsourcing Projects

 

c. Cultural Difference

 

– Nearshore software outsourcing

The countries in the same region often share the same cultural background. With this cultural affinity, relationships and partnerships are of higher chance to develop. Moreover, people tend to cooperate better if they have a similar cultural background.

 

 

– Offshore software outsourcing

Countries with far proximity have different cultural traits, if not opposite. With offshore software outsourcing, cultural norms can make it harder to meet goals and deadlines.

On a final note, Nearshore software outsourcing is often deemed the more cost-efficient way of IT outsourcing as it also emphasizes communication and cultural traits, which are the two important factors that can affect the outcome of the project. On the other hand, Offshore software outsourcing’s core focus is how to reduce spending but sometimes, you will have to compromise the ability to communicate continuously.

From our comparison as above, nearshore seems to show great potential and less so with offshoring. But offshore software outsourcing can solve your biggest problem, which is the cost-cutting puzzle. If you spend more time on finding out how to choose an IT outsourcing provider, all of the risks, either nearshore or offshore, will be mitigated.

 

4. What Lotus QA can provide you

Lotus QA provides IT Outsourcing services, both nearshore software outsourcing and offshore software outsourcing.

For nearshore software outsourcing, we have experience working with Japan, China, Korea, Singapore, etc. We’re only two to three hours behind these countries, hence the communication, work management and cost efficiency are maximized. We also share the same oriental cultural background, and we understand the work cultures of each different country to optimize our working processes.

For offshore software outsourcing, Lotus QA has established a partnership with countries across the globe like the US and European countries. With these countries, we minimize the risk of opposite time zones and poor communication with a stringent communication and quality process. We also apply multiple communication methods to ensure seamless interaction between the clients and our team.

 

 

 

If you want to hear more about how we can provide you with the best services with both nearshore vs. offshore software outsourcing, contact our experts:

• Website: https://www.lotus-qa.com/
• Tel: (+84) 24-6660-7474
• Fanpage: https://www.facebook.com/LotusQualityAssurance

IT is among the top 4 outsourcing industries by Deloitte 2021 Global Survey. Business owners choose IT outsourcing services to handle new technologies and functions without spending a lot on training or hiring. Still, many IT outsourcing working models that meet different criteria may confuse you with choosing the most suitable outsourcing model for your business. 

In this article, let’s dig deeper into the most common types of IT Outsourcing based on how you pay and involve with the process, their pros and cons, and what to consider to choose the right IT outsourcing working model for your company.

1. Quick Review On IT Outsourcing Models

Three IT Outsourcing Types

• Onshoring – Domestic vendors.
• Nearshoring – Neighboring vendors.
• Offshoring – Overseas vendors.

Four IT Outsourcing Pricing Models

• Project-based – Pay per project.
• Time and material – Pay per time and effort.
• Dedicated team – Pay monthly salary.
• Staff augmentation – Pay monthly salary.

Also read: What to do when choosing an IT outsourcing provider?

2. Types Of IT Outsourcing

The simplest way to categorize the IT Outsourcing models is to divide them by geological locations. Here are 3 major IT outsourcing types widely adopted by IT companies worldwide.

• Onshoring IT outsourcing: You will delegate your IT operations to an outsourced company located in your country. You won’t face language or timezone barriers but you won’t be able to utilize the advantage of geological pricing. Since a major feature why people want to outsource is to reduce cost, onshoring is not the most favorable IT outsourcing model.   
• Nearshoring IT outsourcing: You will outsource your IT services to a partner in a neighboring country, such as a company in Singapore outsourcing their work in software development and software testing to a vendor in Vietnam. This is an ideal solution to achieve cost-effectiveness while maintaining communication in remote work.
• Offshoring IT outsourcing: You will hand over your IT services to an overseas software development company. This is the most popular IT outsourcing model as you have more chances to utilize high-skilled labor at lower prices. Still, it requires more effort to have effective communication with vendors with large timezone barriers. 

Just with these simple definitions of IT outsourcing models, you can easily their pros and cons. Perhaps you have already found a suitable model for your business.

All in all, regarding communication, onshoring is seemingly the most effective, as both parties of vendors and clients share many features, including the language and the time. With onshoring, any feedback and reviews will receive equivalent feedback right away. In case of emergencies, the clients can contact the vendors via phone numbers, which are accessible anywhere, anytime.

However, in terms of cost-cutting, nearshoring and offshoring are favored more. Due to geological pricing, one can save up to 90% of the overall cost when working with nearshoring and offshoring vendors.

People often say that the price comes with quality, but in the case of nearshoring and offshoring, you can get the equivalent high-quality work at a much more reasonable price. Perhaps the only obstacle here is how to communicate effectively.

The reason why people prefer offshoring and nearshoring IT outsourcing models is that they prioritize cost-effectiveness more than anything. If your utmost priority is to reduce the cost to the lowest, you can consider an offshore development center in Vietnam.

 

3. The four IT outsourcing pricing models

With IT outsourcing pricing models, you will know the basics of how you can run your outsourcing projects and what models fit your financial situations and plan the most. 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 for streamlining your visions and your goals.

Project-based IT outsourcing model

The project-based IT outsourcing model means delegating the entire process to a third-party IT firm. The projects have crystal-clear requirements of what the outputs are. Tailor-made for projects with fixed budgets, project-based outsourcing model is the most suitable when you already know what to expect from this project.

Project-based models work with an individual project, and these projects, quite often, are short-term. Operating in such a short time frame, project-based IT outsourcing model is suitable for businesses looking for vendors to work for new features of a project, or something that has a predefined goal.

 

In regards to the financial matter, you will have to pay a fixed amount of money for what you want. Knowing how much you have to pay for the work, you can have better control of your budget and spending plan.
But what if you want something out of the original work scope? Project-based works if you are following the waterfall method but not the agile method.

To conclude, the project-based model is for clients who know exactly what they want and how they want it. To come up with this final information, business might have to go through multiple steps of business analysis and market research. With the firm information on what the market needs and predefined routes, project-based is the best IT outsourcing model.

Pros:

• Fixed-budget.
• Minimal engagement and management efforts required.
• Clients take minimal responsibility for failures and risks.

Cons:

• You will lack flexibility and be hard to change any aspects if the market changes. 
• Your company and your IT team won’t get much experience in handling and managing these kinds of projects.

Suitable for:

• One-time projects and short-term projects.
• Small-size or mid-size projects.
• Predefined projects.
• Projects with stable market conditions and customers’ needs.

Time & Material IT outsourcing model

In Time & Material (or T&M), you pay for the hourly wage and material costs of your project. While project-based is a pay-upfront model, in Time and Material, you pay for what you get from the vendors. Time & Material contract is another popular IT Outsourcing model that is being applied in many companies and projects in the world.

The T&M is one of the most common models of IT outsourcing if you prefer an agile method. The business company can adjust the process on the way according to the market changes or customers’ reviews. Hence, this is the best IT outsourcing model if you are on a long-term project without precise requirements, a fixed timeline and some aspects may be subject to change.

 

 

Time & Material is the opposite of what a project-based outsourcing model can offer you. With T&M, you focus on the value and productivity of the whole process. Time & Material are deemed the viable solution for businesses that are working on complicated and not predefined requirements. However, there are periodic orders and frequent schedules.

Usually, Time & material contract model often goes with businesses working in rather new fields of the IT world. New markets and new experiences require changes by the minute, and only Time and Material can offer the flexibility that you need to thrive in a new sector.

Pros:

• Cost transparency and worthy.
• Lots of flexibility to handle changes and create user-approved products.
• Best for new technologies or changeable fields in the IT industry that are hard to predict.

Cons:

• Difficulty in tracking time and materials costs.
• Overboard the expected budget if initial estimates go wrong.
• Resource-consuming to work with your vendor.

Suitable for:

• Long-term projects.
• Agile, flexibility-preferred projects.
• Projects with unclear paths or requirements.

Dedicated Team IT outsourcing contract

A dedicated team has a similar way of operation as Time and Material, but the difference lies in how the recruitment goes. Normally, for project-based and T&M projects, the clients only clarify the outputs of the project. The matter of who does it and their skillsets is minor in their focus.

The team-based model is when you deeply care about who does the task and their skills. Your IT outsourcing partner will suggest a pool of engineers alongside their talents and you will choose specific specialists to form a team.

In terms of payment, the pricing system is quite transparent, the clients will pay monthly in accordance with the team size. The pay includes members’ salaries, service providers’ fees and any other additional fees that have been agreed upon before.

The scope of a dedicated team is quite big, and they will work on projects that are not strictly predefined, with requirements that can change over time. Since they are technically vendor’s employees, the vendors can give them multiple tasks of multiple projects. This feature can be further addressed in the contract between the vendors and the clients.

Pros:

• Your outsource team can work as your in-house IT team.
• Lots of flexibility during the development process to handle changes.
• You’re able to choose the best specialists for your projects.
• You’re in control of the project development process.

Cons:

• You need to understand the project’s field to choose the right engineers with the right skills.
• Resource-consuming to manage the outsourced team.

Suitable for:

• High-standard projects.
• Flexibility-preferred projects.

Staff Augmentation

Staff Augmentation is a dedicated team but in a smaller scope. Staff augmentation is basically hiring tech engineers from vendors and having them work as your full-time employees. Payments for staff augmentation are the same as in dedicated team IT outsourcing models, meaning that the staff should be paid monthly.

The highest risk of staff augmentation is that the employees working for you might not want to work for that project anymore, you might have to do the hiring process again, including the onboarding and training phase. The sustainability plan for staff augmentation is not very ideal. But for a short-term and mid-length project, staff augmentation is the perfect answer, even better if you are only looking for one or two employees.

 

Pros:

• Easy to scale up and down the team according to business changes.
• Cost-effective as you don’t need to hire a big team.
• Your IT team may learn some skills from outsourced engineers.

Cons:

• Resource-consuming to onboard and manage outsourced professionals.
• Conflicts and communication gaps may be created when merging outsourced professionals with your in-house team.

Suitable for:

• Short-team and mid-length projects.
• New or advanced skills and technologies.

4. How to choose the most suitable IT outsourcing models

Now you understand different types of IT outsourcing working models. The next step should be understanding your needs and circumstances, right? 

There are a lot of factors to consider to find out the suitable IT outsourcing model that fits your business. Consider the following factors:

• The goal of your project, whether it is clear or still in the fog.
• The frequency of the project: Is this project one-time or repeatedly?
• The scope of your project. From the goals of the whole project, you can estimate how much labor will it cost you to complete the goal.
• Your preferred project management methodology. For example, if you want to follow the Agile or Scrum methodology, project-based is definitely not your ideal way to go.
• How do you expect the scalability from your outsourcing team?
• What technical skills and level of experience do you expect from your team members.

5. On the final note

Now you know all the IT outsourcing working models, their pros and cons, and your requirements. Simply go to any vendors and discuss your “order” to find the best team to work for you.

With an IT outsourcing model in your mind, you can determine how you can manage your team and how to allocate budgets during your project. The aforementioned models all have their pros and cons, and their use is just for some particular kinds of projects. One must know how they want the project to be carried out and the expected output (or at least what trajectory they are trying to pursue) of the outsourcing process to effectively work with vendors. If the requirements are not clear enough or the feelings of urgency make them rush into hasty decisions, they might fall into many outsourcing pitfalls instead of cutting costs and improving competencies.

About Lotus QA

At Lotus QA, we have a flexible approach for our clients to get the most suited IT Outsourcing model. As each of the models has its own traits and features, Lotus QA can customize them upon request, as long as it can help our clients successfully achieve their final goal. Flexible as it is, Lotus QA still complies with international processes and standards in how we provide you with our technology services.

Struggling with finding the best engagement model for you? Get free consultancy from our experts of Lotus QA. We will give you 24/7 support to find the perfect solution for you. Contact us:

• Website: https://www.lotus-qa.com/
• Tel: (+84) 24-6660-7474
• Fanpage: https://www.facebook.com/LotusQualityAssurance

The riddle of how to nurture, recruit and retain IT talents is the universal problem that HR departments face every day. As in the IT industry, 80% of the candidates are passive candidates, meaning that they’re already occupied. The process of planting the seed of job switching to attracting those candidates to apply to your company is a long and demanding journey. In this journey, for every step of nurturing, recruiting and retaining poses different challenges; fortunately, these can be easily tackled, thanks to the following solutions:

1. Build a strong employer brand
2. Employee referral program
3. Competitive benefit and compensation program (what motives your staff?)
4. Broaden your recruitment sources (institution)
5. Proper investment in HR Campaign
6. Remote Staffing
7. IT Outsourcing

 

1. Build a strong employer brand

72% of recruiting leaders worldwide agreed that employer brand has a significant impact on hiring, and 75% of those who are looking for a job often take employer brand into consideration. Also, 49% of LinkedIn users following official social media accounts of tech firms to watch our for job openings.

Building a strong employer brand is not something that you can do overnight but a long-term investment, both for business development and recruitment attraction. Still, it is important for one to “imprint” a good impression of your brand. These impressions would range from modern workplace, young and dynamic work culture, transparent policies, etc. Especially in the IT industry, candidates have a wider range of choices, hence they always go for the company with outstanding features of flexibility, scalability, etc.

 

 

The real question here is that “How does your employer brand stand out?” The most popular and common channel is social media. By leveraging your image on platforms such as LinkedIn, Facebook, Instagram, you’ve already highlighted the robust work culture and friendly environment. The choice of what image you want to put on to attract candidates lies in your hands. It could be young and dynamic, or friendly, or professional, it’s up to you.

To deliver the image of your employer brand as an IT recruitment solution, you can go with media sharing, company events, job development opportunities, etc. Through these, potential candidates will first capture the essence of the workplace and then engage more in the activities of your company.

In terms of career development, it’s best that you set up and organize technical events such as host meetups, workshops, and hackathons to revamp competition within the business.

Also read: Top 7 challenges in IT recruitment

 

2. Employee Referral Program

Employee Referral Program has long been an effective IT recruitment strategy exploited by many businesses. In this program, employers encourage their employees to refer qualified candidates with rewards.

 

 

This strategy has proven its effectiveness through multiple analyses indicating that employee-referred staff tends to outperform the nonemployee-referred ones. Alongside these performance-related metrics, an employee referral program also helps businesses hire talents with suitable backgrounds and avoid any unwanted characteristics. Plus, as the information about the job openings is shared through the employees’ network, more candidates can get access to the information at a quicker pace, hence boosting the recruitment process.

With a reasonable reward, an employee referral program is considered a cost-effective way to tap into a large and qualified talent pool of passive job seekers.

 

3. Competitive benefit and compensation program

Each job position in different companies offers different pros and cons, and there is no one-size-fits-all vacancy that can meet all the requirements of the candidates. As a result, you should research the factors that motivate them, in which benefit and compensation are two factors contributing to a successful IT hiring process.

The most common priority recently is the remote working conditions. The candidates also put an emphasis on how they can balance out their work life and personal interests. You can also understand this as they are willing to move out of the suburban areas if they can work remotely.

 

 

Another fraction is the reference for internal development, meaning more training, technical courses and on-job guide, etc.

Concerning the finance factors, although the salary and other financial compensation policies might sound very compelling, the social and mental benefits top at the priority of what tech engineers look for in their jobs.

Due to the shortage of IT talents, tech engineers are spoilt for choices of the company they can work for. To make your business stand out in this very competitive environment, businesses are compelled to produce an impressive benefit and compensation program.

 

4. Use different platforms and sources for acquiring talents

Recruiting is not just about posting to job and waiting for candidates to flock to you. This is never an effective way for you to find the best candidates. Indeed, it requires one to employ multi-platform recruitment to search for as many applications as possible.

As it is shown with the following statistics, although job listing and social business platform is quite popular within recruitment community, more than 71% of the talents come from employee referrals and internal hiring, 65% are from LinkedIn and 56% are from Indeed.

These sources of applications and candidates have proven its success with quite prominent numbers, but the outlook for the IT recruitment process can be even better if you employ some of the following methods:

• Hackathons/coding competitions: By organizing these “playgrounds” for developers/testers, you expose your employer brand to a small society of IT worker community, hence raising the chance of being considered when they have a plan for changing jobs. Through these competitions, you also get access to the personal contact address of the candidates, which can be used for later candidate nurturing.
• IT training institutions: Partnership with universities and colleges with IT majoring can give you early access to a large and dynamic talent pool. This can ensure high-quality candidates thanks to the systematic and intensive training during their tertiary education.
• Certificate providing institutions: organizers for IT certificate provision have contact points of the qualified IT candidates in different fields that can assist the mass recruitment process.

Talent acquisition does not always mean the recruitment from direct sources of candidates who will later on work as in-house staff. Instead, many international tech giants have switched their approach to staff augmentation or third-party recruitment services. With this rather new approach, your company would benefit from a bigger talent pool with candidates specialized and expertise in one particular domain or technology.

5. Proper investment in HR Campaign

As talent shortage becoming an alarming problem in the IT industry with 69% of companies globally report talent shortages, tech enterprises now place heavy emphasis on Human Resources and IT Recruitment. HR department now holds greater responsibilities and priorities amid the pandemic, requiring decision-makers to take more measures to improve recruitment campaigns. As the competition among tech companies gets more and more serious, it is urgent to employ a proper investment in HR campaigns to stand out in the market.

 

Here are some critical channels to improve HR campaign’s performance:

– Signing Bonus. This can be the leveraging factor that can boost the recruitment process. One-month salary bonus or even more is exactly what one might expect to receive from their employers. This is not only a welcoming gift for the staff but also a promoting point for the company’s image.

– Advertising on multiple recruitment platforms. With a reasonable budget allocation, HR leaders can arrange ads to attract more candidates. Each recruitment platform has its pros and cons, which requires decision makers to do their research and try them out before sticking to any particular platform.

– Linkedin Talent Premium. With this all-encompassing hiring platform for talent professionals, a recruiter can find, connect with, and manage the people you want to be on your team. With a small cost, you can work efficiently and get access to a large talent pool with tech engineers from all over the world.

– Recruitment landing page. A well-designed recruitment landing page is crucial in creating a good impression towards IT talents. With subsequent information about opening jobs, plus nice content and picture layouts, the candidate can sense the professionalism of your business.

6. Remote Staffing

Remote staffing is an trending solution for IT recruitment. For some enterprises, the burden for IT recruitment takes up too much of their resources, not to mention the following additional cost of onboard employees. One way to approach these issues is to implement remote staffing and hybrid work.

With remote staffing, every operation and activity is executed on online platforms, which can eventually save up operational and infrastructure costs.

For the recruitment process, remote staffing can refer to the online operation of the recruitment team. Every step of the process is done virtually with a variety of platforms, including LinkedIn, Facebook, etc.

7. IT Outsourcing

IT Outsourcing is a service that has long been on the market with a relatively steady growth rate. As in the IT Services Outsourcing Market Size, Industry Report, 2020-2027 of Grand View Research, the global IT services outsourcing market is projected to grow at USD 520.74 billion in 2019. The annual growth rate (CAGR) from the phase from 2020 to 2027 is expected to be 7.7%.

IT Outsourcing is not a new approach in IT recruitment. In fact, its development over the years has proven its capability to thrive as an independent sector.
With IT Outsourcing, you can:

• Cut back costs by approximately 50%
• Halt employee turnover
• Hire experienced experts from BPO
• Have a low rate of burnout

The burden of IT recruitment can’t be solved overnight. Instead, it requires careful observation to decide on the optimal solution for a business to adopt. These 7 above strategies are popular Solutions for IT Recruitment but they are not the one-size-fits-all solution for all companies. One should consider their situations to find the best way out for them.

 

About Lotus QA

Lotus QA, as part of Lotus Group, is an emerging global IT firm specializing in providing the best technology services to the world. We have a comprehensive talent pool of top-notch IT engineers to offer you the most cost-effective HR solutions. We can ramp up a team for you in just 2 to 3 weeks and conduct interviews for you to choose your own team members. We provide a flexible approach for any of your requests.

If you’re looking for the Solutions for IT Recruitment, contact LQA for the 24/7 consultation of the HR market. We can help with this problem in no time.

• Website: https://www.lotus-qa.com/
• Tel: (+84) 24-6660-7474
• Fanpage: https://www.facebook.com/LotusQualityAssurance

IT Outsourcing is the answer for cost reduction and domain expertise for some particular industries, which can facilitate consistent application of your requirements.

The benefits of IT outsourcing are pivotal to the development and digital transformation of one business, but to choose a capable IT Outsourcing provider with a strategy and development plan tailored to your requirements is no easy task. You have to follow these steps to find yourself the best-suited vendors:

Define objectives, goals, scope for your IT Outsourcing project

There is no one-size-fits-all approach for business in IT Outsourcing, no matter what sector you’re working in. Even for businesses in the same industry, the approach for IT Outsourcing varies, depending on the scope, objectives and goals of different companies.

To successfully manage the outsourced project, the first and foremost thing to do is to define what your business wants to achieve when outsourcing. A checklist of the project structure, features to develop, functions to be outsourced and evaluation criteria should be made.

Once these are identified, your business can both know the expected outcomes for the outsourced project (for internal evaluation) and the criteria for the project’s effectiveness.

With the detailed specifications of what to be outsourced and whatnot, your business can further devise the agenda and HR allocation for the next step of the outsourcing project. A set of roles and responsibilities within and without your business is also a metric for better management.

For the best outcome, businesses are advised to work with the providers with the same goals or have experience working with the companies in the domain.

Clarify how you want to outsource

The clarification of how you want to outsource should be addressed based on what you want to outsource. The goals of your IT Outsourcing project should also be considered in this step to choose the right IT outsourcing vendor.

There are many engagement models for businesses to work in IT Outsourcing, and you can take a look at the three main ones as follows:

Time & Material 

The Time & Material model only requires general and basic requirements of the project. The IT Outsourcing provider will form a dedicated team just to work on this project. Specifically, this engagement model is perfect if you’re doing a project with complicated or non-predefined requirements. Throughout the process, you might want to add more features for the Outsourcing team to work on, hence generating more costs during the process. This model is designed for long-term projects with frequent updates to be carried out. 

Project-based

The project-based model is the engagement model tailor-made for small and mid-size projects which have solid requirements. Every feature is noted for the outsourcing team to work on. Since the features are unchanged during the process, the budget is fixed. In case of any changes, the whole project will be re-estimated with a new contract. The project-based is usually for short-term projects.

BOT

BOD, or Build, Operate and Transfer, is a popular engagement model, in which the IT Outsourcing Provider carries out all tasks, and the outsourcer’s in charge of giving requirements. After a while, based on the team’s performance, the business will decide whether they want to take over the whole project. 

When outsourcing, businesses should also consider the strategic approach and the transitional approach. With the strategic approach, a long-term relationship in which both parties invest to develop partnership. With transitional one, IT outsourcing is applied for an IT infrastructure upgrade. While the Outsourcing team manages the system, the in-house team takes care of the new technology.

Evaluate the quality of the IT outsourcing provider

Once you’ve decided what you want and how you want things to be done, it’s time to find the right partner for your business. Regarding the quality of the IT outsourcing provider, you should put into mind the following:

• Talent quality of the IT Outsourcing provider: For different IT projects, it requires different skill sets of programming language, management tools, etc. This is the reason why you should identify which skill sets are necessary to find the best-suited service provider.
• Infrastructure quality of the IT Outsourcing provider: The infrastructure includes physical infrastructure, device lab (for software testing service), wi-fi, the internet, etc. 
• Work process: The work process varies for different IT outsourcing providers, but it should comply with the international standard and adapt to the clients’ requirements.

• Data security and confidentiality documentation: Intellectual Property Rights and Patents should be clarified. It would be best to ask about the physical layers of security (with or without biometric scanner and lock), staff confidentiality, legal documentation, etc.
• Experience in the field: It’s not about the general experience. It should be the experience in your domain.
• Language competency for communication is a must for project efficiency.

Set up a team of tech leaders for management

Even your business’s focus is not the technology itself, you should always have an in-house team of 2-3 personnel to manage all IT operations. 

This team takes full responsibility for the project, hence being in charge of the communication with the IT Outsourcing provider. The project’s outcome lies in their hands. To do this, your business should allocate HR for at least a project manager/product owner. He/she will take matters into their hands by writing a handbook of terms, specifications and notes for the whole project. This is the shared documentation/a standard point on which every operation is based upon.

Also, during this project, weekly/monthly reports are issued for those who are involved. The project manager should pay much attention to this. 

With this checklist, you can find the basic information for your business to consider when it comes to choosing an IT Outsourcing provider.

If you don’t know what to start in this, LQA can help you. Contact us for more information:

• Website: https://www.lotus-qa.com/
• Tel: (+84) 24-6660-7474
• Fanpage: https://www.facebook.com/LotusQualityAssurance

IT Outsourcing for startups – Entrepreneurship can either be as sweet as ripe fruits or as bitter as a cud. Especially under the overwhelming effects of the Covid-19 Pandemic, startups are struggling to beat the odds stacked against them. 

Deprived of a regular and dull nine-to-five job, entrepreneurs have to work around-the-clock to keep the business running. However, this does not ensure success. The essence of one startup to stand out starts from how it is operated. And sometimes, sticking to the regular methods is not exactly the answer.

In other words, it requires entrepreneurs to always think outside of the box alternative solutions to critically solve the root problems, hence boosting the business.

One such solution that is being applied worldwide might be outsourcing, which ironically some startups hesitate to engage in due to the foreseeable additional costs. 

 

 

To comprehensively calculate and estimate the profit margin here, these costs should be seen in the big picture in which the operational costs and HR costs are spiking. For an in-house IT staff, necessary human resources costs or costs for business processes pose a huge overall cost for the company, making it impossible for startups to gain profit.

Instead of in-house staff, more and more startups are leaning towards the idea of outsourcing. This implementation has proven its efficiency, but it can break loose at any time. The point for choosing which to follow lies upon the questions of “Do I want this done in-house or offshore?”, “Which of these options allows for greater growth?”

 

From in-house to IT Outsourcing for Startups 

Shifting from in-house to offshore/outsourcing requires multifaceted consideration. First, startups need to get rid of the knee-jerk reactions toward IT Outsourcing for startups. Lack of experience working through business process outsourcing sometimes leads to the belief that outsourcing, and this should be avoided. 

Typically, Startup owners often think of BPO as something that only large and well-established companies can implement. Facts have proven the other way round. Indeed, companies of all sizes and backgrounds can benefit from this emerging phenomenon. 

A survey from Clutch in 2018 shows that 37% of small businesses outsourced a minimum of one important business process, whereas 52% reported planning to do so the next year. 

While some major players in the field such as GitHub, Google, Microsoft, etc. employ a huge number of outsourced workers, some other companies which started as Startups such as Slack, Skype, Opera, etc. also achieved a lot through BPO.

 

Why outsourcing?

Outsourcing is often deemed as the solution for only large enterprises, in which it can help reduce costs and save time on trivial tasks. Nevertheless, the case of startups can apply the same approach as many are now expanding their businesses, heightening the need for outsourcing many tasks. What exactly can outsourcing do to urge entrepreneurs to go for it?

 

Cut back costs

The most dramatic change BPO companies can pull off is the reduction of operating costs. With costs of insurance, healthcare, travel expenses, rent of facility, etc. unburdened, business leaders now can leave financial resources available to expand and focus on the core business activities. 

 

 

With this being done, the cost reduction can be a part of the strategic growth plan of the business. Besides the common services to be outsourced such as customer support, accounting, HR, IT outsourcing for startups stands out with the highest growth rate due to the ever-expanding scale of the IT industry in general. The services to be outsourced include software testing services, software development services, etc.

 

Halt employee turnover

The puzzle of employee turnover is a chronic problem that has long been in the industry of information technology. A high turnover rate can result in high training costs and low efficiency. To have an outsourcing team taking care of all the training and operating costs for you can really ease out this headache, especially with the competitive prices from different regions. 

 

Experience and expertise from BPO

Startups often step in the game with high confidence, but it should be put within their expertise only. Instead of blindly following something you are not sure of, going for IT outsourcing for startups with specialized individuals and experts in the field is a better option. Hence, the chance of failing by wrongly estimating how well we can do all of the work ourselves is lowered.

Moreover, BPO is experienced in whatever field they are offering you. This also includes certifications, quality assurance, information security, stringent processes, all of which are the things that startups lack.

 

Low rate of burnout

Startups often require high volatility and a fast working pace with huge workloads, which can subsequently lead to burned-out employees. Outsourcing can solve this problem.

IT Outsourcing for startups might be attractive as it is, but please be noted that this is not a one-size-fits-all solution. Before rushing into anything, one must carefully evaluate the pros and cons of IT outsourcing for startups to avoid any kind of miscommunication or misoperation. 

Time zone differences, trustworthiness and credentials are the things you would want to consider when working with BPO. Start small, evaluate everything, and increase IT Outsourcing scale gradually.

 

Are you a startup and want to unburden some costs? Contact us now for full support from experts.

• Website: https://www.lotus-qa.com/
• Tel: (+84) 24-6660-7474
• Fanpage: https://www.facebook.com/LotusQualityAssurance

The world has witnessed unprecedented growth in the information technology market and IT outsourcing trend, which can be seen in almost every aspect of our daily lives. With its share in the “market pie” remaining with a steady rate prior to the Covid-19 pandemic, the year of 2022 will mark a new milestone in the IT field in general and in IT Outsourcing in particular.

Why IT Outsourcing Trend?

IT Outsourcing is a service that has long been on the market with a relatively steady growth rate. As in the IT Services Outsourcing Market Size, Industry Report, 2020-2027 of Grand View Research, the global IT services outsourcing market is projected to grow at USD 520.74 billion in 2019. The annual growth rate (CAGR) from the phase from 2020 to 2027 is expected to be 7.7%.

Taking advantage of the shifting market

For a minor field in Information Technology, IT Outsourcing Service shows potential, but this growth rate was not that dramatic for us to call IT Outsourcing a flagship point.

However, with the world’s economy brought into a sudden and screeching halt due to the pandemic, many giants in business have shifted their focus to virtual/digital engagement with their clients. 

Surging from the uncharted waters, these businesses have proven the viability and possibility of how digital transformation can save a fortune, or perhaps even bring their names to the top of the chain.

Learning from the big names on the market, many other businesses, from big fish to local store owners, all want to apply the technology advances in their operations. To these businesses, digital transformation is the crossing bridge to bring customers and their services closer, especially under the influence of the pandemic in which people prefer virtual interactions.

Take Amazon and Shopify as examples, we can see that the application of e-commerce platforms was spiking in the first half of 2020. These platforms, of course, aim at selling, while their approach is through applications and software. Amazon, or Shopify, has its own in-house development and QA team. But for mid-sized or small-sized companies, they just can’t afford the HR and operation costs. Under this circumstance, the industry is anticipated to witness substantial demand for IT operations so as to allow companies to focus on their core tasks and reduce operating costs.

Parallel to the core tasks, the marginalized tasks also play an increasingly important role in businesses that are planning to foster digital transformation. 

Since the businesses wanting to employ digital transformation have no foundation or background knowledge over information technology, the IT Outsourcing market is progressing owing to the ever-increasing demand for consultancy.

The talking numbers

As the pandemic continues to put a strain on the global economy, many businesses plan to transition to remote work and online customer engagement and order fulfilment. In order to cope with this new approach, they increase spending on clouds, especially software as a service.

Financial cuts in the circumstance of the pandemic are a must, but the reduction in IT Outsourcing has eased from $83 billion in the spring to $31 billion at the end of 2020, signaling the growth in the global IT spending.

Worldwide IT spending is projected to total $4.5 trillion in 2022, according to Gartner’s forecast, growing by 3% compared to 2021, despite that people tend to cutback spending on PCs, tablets and printers by consumers 

As in the first phases of the pandemic in 2020, every aspect of the IT service was declining, but it began to take the initial steps for a huge growth in the years coming. For example, after contracting 4.6% in 2020 to $490 billion, worldwide IT spending on consulting and implementation services are predicted to experience a 4.5% CAGR through 2024. While worldwide spending on IT-centric managed services, infrastructure, and application support, which decreased 1.1% in 2020 to $475 billion, will see a CAGR of 5.3% through 2024. 

What companies want from their IT outsourcing providers

Pre-pandemic, the main focus for IT outsourcing providers was narrowly on specific services such as helpdesk, infrastructure, storage, network monitoring and network management. 

Post-pandemic, with the preferred solutions for digital transformation stay on top in almost every business, the IT outsourcing services are demanded to leverage and innovate to cope with the urgent needs for a wider range of requirements.

Subsequently, the expected outcome for this whole IT outsourcing service is cost avoidance. To achieve this, IT outsourcing providers are to fulfil the needs for:

1. AI and Automation

The employment of 4.0 Technology is developing with the pace that we’ve never seen before, leading to an upsurge in the need for human resources and infrastructure. Thousands of applications pilot every day, each with many features that require timid, tedious work of coding, testing and maintenance.

To this point, businesses who want to be ahead of the curve have to take advantage of being the pioneer, meaning they have to be the fastest and the most productive. Instead of the traditional way of expanding the team with experts in the field (which can be quite costly), many of the business owners decide to go for a cost-effective approach, AI and automation.

The fascinating idea of AI – a non-human machine that can interact with people is on the rise. But the real benefit of this is to reduce HR and operational costs. For example, before assigning a customer to a human customer service officer, the system has a chatbot to answer and interact with them. Only when the bot cannot figure out the requirement and how to fulfil it do they transfer the customer to a CS. With the bot work regardless of time, the business can save a fortune on the cost for a CS team.

2. Growth of the Cloud Services

On-premise storage for data management has shown weakness and limitations, hence the IT outsourcing trend in shifting to cloud services. 

Alongside the current worth of cloud computing reaching the hallmark of $180 billion worldwide is the market growth by 24% of PaaS, SaaS, and IaaS sections. In two years’ time, cloud computing service is predicted to soar to over $623.3 billion. 

One of the reasons why cloud computing is on the rise is the better protection of data. Moreover, it also ensures faster data operations and the ability to modernize business processes.

3. 5G

5G wireless technology is meant to deliver higher multi-Gbps peak data speeds, ultra low latency, more reliability, massive network capacity, increased availability, and a more uniform user experience to more users. Higher performance and improved efficiency empower new user experiences and connect new industries. – Qualcomm

With the employment of 5G in almost every aspect of the IT world, it speeds up the adoption of reliability, low latency and larger network capacity. Alongside its emerging deployment in major aspects such as medtech or Internet of Things, 5G also plays an important role in the development of AI implementation.

For example, as the Covid-19 pandemic took its toll on the world, some 5G-based applications have already made their way into medtech, especially in the adoption of telehealth and remote monitoring. All of the wireless technology, powered by 5G, have benefited the healthcare staff with utmost convenience.

For the part of AI implementation, 5G is pervasive in domains such as autonomous driving, virtual reality and augmented reality. With higher connection density and the ability to handle an immense number of connected devices at the same time, 5G comes to the forefront as the pioneering factor for both cost avoidance and service enhancement.

4. Cybersecurity

There’s no denying that information technology advances are developing with upsoar rate, resulting in the ever-growing number of service end-users. Larger number of users equals larger threat of cybersecurity. 

To have a screw loose in the cybersecurity is to bring threats to the system, but to recruit a full-stack IT security engineer is no easy task. Instead of having an in-house staff who works full-time, businesses are leaning towards IT outsourcing. They often need:

• Monitor your environment 24/7
• Thorough security staff training
• Security strategy
• Security architecture

One report from Allied Market Research estimates the market to reach nearly $41 billion by 2022, based on a 16.6% compound annual growth rate between 2016 and 2022.

5. Remote Work Statistics

According to Weforum, “The number of days US employees spend working from home increased from 1.58 per week in January 2021 to 2.37 in June 2022”, as the result of Covid-19. The IT sector, among many other sectors, has witnessed the dramatic shift to remote work, marking a new IT Outsourcing trend in the IT outsourcing market.

Working remotely is not new, especially under the specific traits of how IT staff can work. However, the rate is increasing with soaring popularity.

A report by Avasant shows that middle-sized tech companies have been the largest contributors to the growth of the IT outsourcing industry in 2020.

It’s also declared that the average outsourcing for midsize companies went from 9.1% to 11.8%. So while some tech businesses increased their IT budgets on the brink of the pandemic, the rest continued to work with their nearshore and offshore IT outsourcing partners to reduce development costs.

Delve deeper into other technology trends and industry movement.

Find what you’ve been looking for? LQA to provides 24/7 consultancy for your support. Contact us now!

Do you want to take advantages of the current IT Outsourcing trend? Come and contact LQA for further details:

• Website: https://www.lotus-qa.com/
• Tel: (+84) 24-6660-7474
• Fanpage: https://www.facebook.com/LotusQualityAssurance