Outsourcing offers major benefits from lower costs to helping organizations remain competitive and strengthen their position in the market through increased efficiency and experienced resources. However, global delivery models can also bring along challenges such in changing your ways of working, language barriers, and cultural differences. For these reasons, nearshore outsourcing has been continually gaining traction as a popular option for IT departments to expand their teams. Many companies are looking to nearshore IT outsourcing because of the closer proximity to their headquarters (usually within or close to the same time zone), reduced labor rates, and in most cases less cultural barriers. Still, just as like any business relationship, nearshore outsourcing partnerships shouldn’t be done without proper preparation and without important considerations. On the blog we are discussing some of the key ways to avoid pitfalls that commonly arise when entering into a nearshore outsourcing relationship to ensure your arrangement allows to lay the groundwork for a partnership that can last for many years to come.
Common Pitfalls in Nearshore Outsourcing & How to Avoid Them
1) Not clearly defining your business case for outsourcing. Don’t leave success of failure to subjective interpretation, make sure you have a defined business case for your outsourcing initiative, including financial outcomes and incentives. You won’t have any fear of losing control or around the complexity of your project and ability for it to be accomplished through a nearshore team if you have clearly defined a strategy including goals and objectives.
2) Define your outsourcing expectation. Are you looking for nearshore outsourcing for specific projects, roles, aide in processes or services? Clearly define and set the scope and limitations of your outsourcing partnership. Make a high level operating model, business case and governance model which has your leaderships approval.
3) Manage cultural gaps and align before work begins. Cultural change should be addressed before outsourcing begins. In most cases, nearshore outsourcing aligns culturally with United States headquartered organizations, but make sure you have a well-planned transition phase agreed upon with clearly defined outcomes and financial targets before launching any initiatives. Who is doing the work from where will ultimately not be as important to what, how and the ability to measure the outcome. Also, prepare your internal teams for change and develop a transition plan (see #5 below).
4) Handle threat perceptions in a structured fashion. Make sure you plan your communication regarding organization shifts from local consultants to nearshore outsourcing consultants with precise detail- down to the timing and levels of whom to tell, when. You can risk raising apprehension if you communicate to early or too late runs the risk of information trickling down from other sources. This will make the move of “fear of the unknown” to “embracing change” much more supported and understood.
5) Don’t underestimate the initial transition. This is generally the most sensitive period in your engagement, especially in this is a new outsourcing partnership. Make sure it has full commitment from senior management and enough resources and time allocated. Have established KPI’s for the transition and steady state. You might consider holding a workshop at first and then periodically to make for a smoother transition, bridge any cultural gaps and improve mutual understanding among all parties involved. If this is your first engagement, consider starting smaller and then building on capabilities as well as building trust in the partnership.
Outsourcing is increasingly a complex market between regulatory changes and financial challenges, largely due to legislation around services constantly changing. Organizations can easily fail to realize the benefits of nearshore outsourcing unless they rigorously follow steps to avoid common pitfalls. This is often times why a company will choose to partner with an agency that covers the full life cycle of outsourcing, from strategy creation to transitioning phases and has strong outsourcing relationships already in place. Such a partnership means they will manage the markets increasingly sophisticated and complex advances and make sure you are better equipped with the competence, processes and tools to realize the true benefits to your nearshore outsourcing arrangement.
At Instinctive IT, we use our established outsourcing relationships and expertise to help organizations navigate all their options and make the right decisions when it comes to outsourcing. Our background and long standing outsourcing partnerships allow us to deliver outsourcing service contracts consistently, simply, and successfully to minimize risks and make the most out of the benefits.
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Understanding Nearshore IT Outsourcing
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