Outsourcing a project or business processes is not a novelty in today’s world. You can’t build a business without help from the outside. Sooner or later, you’ll start thinking about outsourcing and here’s why:
- To reduce costs
- To achieve higher efficiency
- To get an access to a more skilled talent pool
Outsourcing lets companies reduce overhead and focus on the growth and core business sociality. Global outsourcing survey 2016 by Deloitte indicates that 35% of companies are looking for outsourcing providers that are innovation centers at the same time. According to the survey, the market for outsourced services will continue to expand.
However, outsourcing is not calling a vendor with a task “Build me a spaceship” and writing a fat check. Managing an outsourced project is a more complicated process that requires preparation to achieve good results. Here are a few tips that will help you get the most value from outsourcing.
Plan Accordingly – Prepare the Requirements
Before outsourcing any project, define for yourself what results you want to achieve. What are your expectations? What value would it bring to your or your customers? What time and budget constraints do you have? The project can’t be delivered successfully if you don’t know what you’re building.
If you don’t have the resources to prepare the specifications in-house, split it into two phases. During the first phase collect the requirements by outsourcing or hiring a Business Analyst that will help you elicit the requirements. During the second phase, put the requirements for a bid and select the vendor. You can perform these two steps with the same service provider.
This doesn’t mean you have to prepare the full specification for every tiny feature in advance. You can’t know all the tiny details. The first phase is about setting clear objectives and specifying the main features. The exact details (ex: text for “Terms & Conditions” page at your website) that don’t influence timeline and budget can be figured out later.
Don’t agree on the fixed price without clear requirements. This will most likely end in not what you wanted or will go over time and budget (or both).
At this stage, make an explicit decision to outsource. Outsourcing has its benefits, but there are also risks and potential problems. Outsourcing still involves managing the project correctly. You’ll have to adjust your communication style; create a schedule; understand that something will not go according to your plan; identify what deadlines can be postponed, and so on. Outsourcing is not a silver bullet, so don’t cultivate too high expectations.
Hire the Right Team
Now that you have the requirements, it’s time to carefully hire the team. This step usually entails creating a request for proposal, sending it to potential service providers and selecting among the received proposals.
A good request for proposal should have a Software Requirements Specifications, your demands regarding managing the changes to the requirements, expected output, rough cost, and schedule estimates that you expect.
Of course, you’ll try to select the best vendors. You’ll review the proposals, check their websites, projects, expertise, testimonials, etc. However, when working with outsourced service providers, it always matters who are the exact people that will be working on your project. Because the outcome of the project and your client experience will be defined mostly by that team. Review the team members that will work on your project, talk to them. Request the right to reject the team members that don’t perform good or don’t suit your project needs.
Some contractors can also play a nasty game of presenting you the experienced members during the negotiation and switching them to inexperienced when the contract is signed. Don’t allow replacing project team members arbitrarily without the reason by the service provider (although the replacement would need to happen at some point).
To choose the right proposal it’s good to have specific evaluation criteria, so that you’ll be able to make an objective side-by-side comparison. Sending these evaluation criteria to the vendors will make sure they provide the info you need.
Note: Don’t look only at the project cost in the proposal. Your goal is not to select the lowest bid, but to chose the service provider that will deliver the best value for you. It means to do the best job for the least money as judged by objective reviewing the proposals and the vendors. Evaluate everything: the proposal itself, the communication, how good the provider understood your objectives, your overall experience. The details matter. And the lowest bid (as well as the highest) aren’t usually good options.
Sign a Contract
Signed contracts that convey the project agreement need to be put in place before starting the work. Write clearly the expectations and deliverables in the contract, the deadlines, the costs, terms of payment, how changes will be managed, and any other important details.
Have your contract reviewed by the legal party before signing it, otherwise, it can be a worthless piece of paper. Also, prepare and sign Non-Disclosure Agreement (NDA) with the service provider, to make sure sensitive information doesn’t leaks. Usually, part of the project cost is paid upfront, the rest — on accepting the deliverables.
With remote teams, tools like HelloSign, DocuSign or PandaDoc can help make this process easy and robust.
Manage and Monitor
Once you sign the contract and hand the requirements to the service provider, your work does not end. Outsourcing the project does not free you from managing it. This is one of the most common mistakes with outsourced projects. Make sure there’s someone from your side who is constantly monitoring the project, responds to all the questions promptly and manages the vendor. Monitoring the project continuously also helps you make sure the vendor carries the vision of the project, that you’re staying on the same page.
Practices that help you keep control of the project are: regular status reports (weekly/biweekly), frequent releases of the new functionality, updates on the changes and risks. Here are some good project management tools that will help you manage an outsourced project:
- Chats: Slack, Skype
- Video calls: Zoom.us, Appear.in, Google Hangouts, Slack, Skype
- Collaboration tools: Trello, JIRA, Basecamp, Google Docs/Drive, Notion
Another aspect of managing the project right is to treat the vendor’s team as your own. Sync up with them regularly. Meet at least once in person, prefer video chat over an audio call, share important info with them, involve them in the decision making. Make them feel like they’re valuable. This helps to smooth out the communication. And good communication is vital for the outsourced project. These people define the success of your project, so don’t neglect building good relationships with the team. You’ll benefit from it significantly over time.
The steps above are not easy and fast at all. However, without these investments, you risk killing the project with unreliable inexperienced service providers, buggy functionality or cost, and schedule overruns. The success of an outsourced project starts with your good preparation and understanding how to outsource the right way. Following these tips, you increase the probability of success of your outsourced project significantly.
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