IT outsourcing is booming! The revenue in the application outsourcing sector is expected to skyrocket to the $100 million mark in 2021. That growth galvanized many companies to strategically seize opportunities, but has also created some misconceptions about certain “disadvantages” of outsourcing IT development.
To add some clarity and set the story straight, Computools has gathered the top 5 IT outsourcing myths.
Slow Or Poor Communication
Communication is the essence of all things in IT outsourcing. There’s a lot more than affirmative nods, general discussions, and other routine tasks. If you invest in building out a solution or starting one from scratch, you expect clear communication and a full understanding of what’s going on. One of the main priorities of our work is to be on the same page with our clients.
Many US-based businesses are looking to EU-based IT outsourcing companies. Why? Developers in this region demonstrate good English. However, since outsourcing is all about cost savings, partnering with European IT development teams might not be the best route because they usually cost quite more.
But there are better options. An appealing market for US and Isreali businesses is the former Soviet Union, especially Eastern Europe. In as early as 2015 it was reported that 40% of Ukrainian developers speak English fluently. Since English is a necessary skill for a career in IT development, Ukraine has seen that as of 2021, 80% of Ukrainian developers have an upper-intermediate English speaking level.
A major reason for this percentage growth is because English is taught in schools and one of the main hiring factors during job interviews. Besides, most IT development companies are offering English courses with native speakers to their Ukrainian staff.
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Mediocre Quality And Results
The quality of engineers in individual countries depends greatly on education and staff training. Universities in Central Europe can boast highly qualified faculties in computer sciences. This gives students useful knowledge and practical skills. In Germany alone, there are more than 700,000 students in Informatics. In Switzerland, almost 70,000 people study a technical profession. Some countries in Eastern Europe, such as Ukraine, have universities that specialize in training IT professionals.
As for the staff training, education and qualifications of in-house engineers is of prime importance in Europe-based companies because of huge investments. IT services in Eastern European countries are a priority export product, which makes the government invest in the education of IT specialists even more.
Since the IT industry is strongly represented in Ukraine, advanced training is supported by the government. In 2019, the Ukrainian Cabinet of Ministers created the IT Creative Fund, which supports the creation of new courses and finances scholarships and grants for students.
Here’s a great report from Statista that demonstrates the 2020 rankings of CEE regions in terms of skills in security engineering, computer networking, software engineering, etc.
As you can see, IT outsourcing service providers are experts in their field. What that means is that on average, they execute tasks better than in-house employees. You no longer need to invest in hiring and training expensive professionals to cover areas that are not part of your company’s actual core business.
IT outsourcing offers virtually every type of work that needs to be done by trained professionals. This saves money and allows access to expertise, especially if it’s rarely used. Different regions also have different sets of experts, which is another advantage of outsourcing. Here are some statistics with the percentage of developers in different countries.
Delays In Communication Due To Time Zone Differences
Of course, if you’re 10-14 hours behind your outsourcing company, real-time communication could be severely hampered. However, as practice shows, for efficient daily scrums, a 1-5 hour time gap is a very suitable option.
Study the timezone difference when choosing a partner, if timezone difference is a priority for you.
However, as the practice shows, a small gap in time isn’t an issue for most companies. 1-2 hours difference will not slow down your communication and you can easily assign tasks and set meetings to ask questions regarding the work done.
Besides, many processes are set taking into account the work schedule of different teams in different time zones.
As for the common time zone, many fear that they can be distracted too much since their work schedule overlaps. Nevertheless, most of the companies schedule their meeting thoroughly which means communication issues are reduced to a minimum.
High Budget Spend
According to Statista, most companies resort to IT outsourcing as a cost-cutting option.
Reasons for that can be quite obvious.
Outsourcing companies work with a lot of clients and form an expertise for years. Since they have expertise in a large number of teams working on different projects, they can warn you against wrong decisions, offer a more accurate and cost-effective assessment of your project.
Those teams and companies that focus on a single product don’t have such an option.
Secondly, because of a wide expertise, outsourcing companies have solution kits and templates that allow you to significantly reduce the amount of work, and, as a result, costs.
And last but not the least: Low cost of living in comparison to the other large regions, as well as favorable taxation on IT services significantly reduces the cost of production.
Weaker Data Security And High-risk Storage
Loss of data, service sovereignty, fears of hacking, industrial espionage are yet other redundant myths that circulate IT outsourcing.
However, a survey by ScienceDirect shows that in-house engineers are more likely to allow leaks, while IT outsourcing companies have more at stake in terms of reputation and do more to protect data and information.
Apart from that, most outsourcing companies have dedicated teams for each individual project. The selection is based on the engineers` expertise and experience, which significantly reduces chances for possible data leakage and related security issues.
Internal threats are still more relevant than external ones, something as simple as a disgruntled team member at management can lead to heavy consequences.
When it comes to data protection regulations, if we take a look solely at European IT outsourcing companies, each of them takes great care of data. But even with that being true, it’s important to choose the right IT service provider based on how they approach data protection laws. Most are largely centered on legislation in the European Union, in short, meaning they’re very strict and adhere to GDPR.
Lack Of Project Control
Many companies fear that by outsourcing IT services they’ll lose control of some of their IT systems and their data. It’s not a secret that in-house teams are easier to monitor but IT outsourcing does not mean disorder or chaos.
Besides, if we compare in-house and outsourcing teams, we`ll see that the latter one has avid advantages.
First of all, the client receives information on every hour spent. All developers working on the project provide reports on time spent on the project. In addition, there is always a dedicated project manager involved; he/she ensures maximum transparency of the project by providing necessary reports to the client:
status of the project, the amount of work (in man-hours) and resources available, the speed at which the team completes the work, risks, threats, problems or dependencies on other teams that could lead to failure to meet deadlines, etc.
Reports may vary from company to company but since many clients require transparency, outsourcing companies build the processes in a way that clients can get as much information as possible.
Hope this myth-busting article sheds some light on how to outsource software development the right way.
Despite some loud statements that IT outsourcing is dead, it still offers lucrative options for many companies, be it cost/time savings, rational business development, or flexibility.
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