·Outsourcing being a variable cost releases your capital for investment directly into revenue-producing activities. ·It increases efficiency as it lets you focus on your core business. ·It makes wide-ranging technology competencies available to you letting you start quickly instead of taking longer to build and set up the team in-house.
·Quality not as Expected- This is another area where you will see surprises like messy code without any documentation and your entire cost saving will go for a toss. Establishing code quality expectations before kick-off and intermittent code review will help reduce this risk.
·Lack of domain experience- Outsourcing company should have relevant experience in your business otherwise you end up transferring them business knowledge and processes because without that they cannot translate your business requirement into a quality code and solution. Lack of domain knowledge means a longer learning curve for your vendor as well as a risk that result will not meet your expectation.
However, the most established and matured outsourcing practice is seen in Software services, Software Product Engineering and modernization with new technologies and features, Cyber Audit and Security, Digital Marketing, Call Centers, Accounting and Payroll, IT staff augmentation services, monthly retainer ships. Information Technology services are the highest contributor to the outsourcing industry.
It forms the basis for controlling and managing the engagement therefore clearly mention all terms associated such as agreement validity and services to be provided along with detailed Scope of Work and Service Level Agreement as annexures to the agreement, commercial terms and attach detailed price proposal and other commercial terms, define clauses for IPR, Confidentiality, Breach, Termination, Disputes clearly.
General practice for multiple outsourcing projects is to sign a master agreement and release individual work orders for separate projects under that. This saves from the hassle of signing legal agreement every time for each project.
It sets clear expectation and transparency for both the teams to evaluate deliverables. Service standard should cover the accountability and responsibility of all members from both the parties.
It should lay down key milestones and deliverables, due dates, meeting format and schedules to be followed for review, reporting system and KPIs such as technical quality, security, defect rates, system availability, a working arrangement like onsite-remote, collaboration tools that will be used, defining what is issue, bug or change request and expected response and resolution time, escalation procedure, penalties and remedies in case agreed-upon service standard is not met.
It helps them find the right outsourcing partner quickly.
It offers them multiple options to choose a partner.
They can assess the credibility of these partners based on the reviews.
The investment is safe when they route transactions through these associations.
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