5 Myths About IT Outsourcing Industry— Decoded With Factual Answers
A myth or misconception in any scenario could cause damage if not explained with facts. Most of the times they get stronger when the false opinions are generated frequently. If you are the man behind your business, you would have come across this scenario often get confused by the biased beliefs. Outsourcing is a common business method that faces the backslashes of rumors.
Outsourcing is a good practice for many of the industries. But the unexplained myths and misconceptions direct the business to fear the benefits offered. We are decoding the myths with factual answers and proven examples
First things first,
Outsourcing is a procedure where a business hires a third-party vendor to service to them on any of their domains. In layman terms, a team from a different firm will work for you in the area you want them to. Since a third party is involved, it is natural for skepticism. Business owners can gain confidence over the skeptical doubts by the thorough understanding of the outsourcing process and procedure.
Here are the top 5 myths about the outsourcing industry and the factual answers behind them
Low cost provides poor quality results
Cost is an important factor but core purpose is to add value to the business
Outsourcing and cost-cutting go hand in hand like bread and butter. Outsourcing gained popularity because it was cheap, not anymore but. The manufacturing industry found resources in Asian countries like China, Thailand, Vietnam, etc., to be comparatively cheaper than that of in the Western countries. Asian countries have a population higher than other parts of the world—makes the wage per scale to decrease, and that is how manufacturers found the cost leadership success through outsourcing.
But outsourcing is not cheap anymore, it is cost effective. The new outsourcing trends in 2019 made the business owners to look for IT vendors who are adding value to their business outcomes. The industrial growth in the outsourcing hubs like India, China, Ukraine also made the IT service providers to take equal responsibility in their client’s business. The quality doesn’t cut for the price. It is all about business-effective solutions at cost-effective rates.
Lack of business knowledge in the offshore team
India’s market share in the global services sourcing industry stands at 56%, the highest in the world
The statement is absurd. A team that doesn’t have business knowledge cannot survive in the industry at all. Hiring freelancers may sometimes cause this trouble, but look at their portfolio, ask relevant questions about their experience to clear the incredulity.
Let us look at the numbers
Indian IT industry overview for the year 2018. Indian IT industry has set an inspirational target to touch USD 350 Billion in revenue by 2025 from the present USD 150+Billion. Until recently India’s Information Technology and Business Process Management (IT & BPM) sector have continued to record double-digit growth despite static growth in global tech spending.
An important growth driver, it contributed 7-8% to India’s GDP. Indian IT industry is known for its cost competitiveness and high-quality services across the world and has helped to transform the perception of India in the global economy. This reflects in India’s high market share in the global services sourcing industry which stands at 56%, the highest in the world.
Outsourcing unlocks the fastest way to reach talented IT specialists across the world. The topmost answer for the question, “Why UK, USA, and middle east country should outsource?” is gaining access to well-rounded individuals. Roughly 8% of the Indian population speaks good English, that puts them in the spotlight to communicate quickly and distinctly. This also ensures them to understand the company culture, adapt to the overseas market standards and remain in sync with the client’s strategy towards the goal.
It is only limited to big businesses
Outsourcing is flexible to provide service to any size of business
Okay, this one needs a real quick example. An entrepreneur opened an online e-commerce fashion store with a mobile app for his customers. The e-commerce industry is competitive. To succeed in the industry, he/she needs a good app, defined marketing strategy, constant customer retention and acquiring new customers at a consistent rate. Either he/she can hire an in-house IT team, train them and pay them on days even when they aren’t working and spend on all the HR expenses and finally launch the product after a year or more. Now again you have to work on the marketing plans, reaching to sponsors, establishing branding and many more to do for the real success of the business.
There is a peak pressure for the small or medium scale business to generate revenue as soon as they roll out. When they outsource their product development, they cut down the labor costs, and focus on the tasks that really matter to bring in the ROI. Small firms can reap more values if they have found the right IT service provider and built a long-term relationship with them.
Loss of privacy of the company
Harmonious relationship with the IT service provider aids in establishing high IT security to your company
Some businesses are protective of their financial information and are unwilling to share confidential matters outside the company. But creating the right relationship with your outsourcing provider eases this concern.
When conducting due diligence, you can ensure the security policies your IT vendor is following to protect the data. This is the core policy of all IT vendors. Also, ensuring SLA contains counterpart actions to be taken on violation of any confidentiality will save both the parties from any severe damage.
To avoid this pointless tension, you can also build a harmonious relationship with your IT service provider. With best practices of outsourcing, anybody can outsource like a pro
Outsourcing Makes You Lose Control of Your Business
Outsourcing lets you gain control over your core business functions.
Before outsourcing identify what is your value-added process and non-value-added process. Example, if you are running a firm is into real-estate business,
A core process will be
- Showing the property to your leads
- Putting up the properties for sale
- Hiring the property agents and training them
- Making more sales out of the properties
- Meeting clients, increasing the site visits
- Promoting the properties to the right audience
A non-core process will be
- Payroll to your agents and other office employees
- Accounting your finances
- Logistics or other warehouse needs (if your firm provides any special service to clients)
If you are outsourcing your non-core process, you are saving up the time and effort. It creates more room for you to gain more properties, more customers, more sales and more ROI. Unless and otherwise if your focus doesn’t shift from the non-core process or the non-value-added process, you cannot move on for betterment.
We hope that now with the clarity about the outsourcing, business owners can break the wheel on the vague beliefs. We encourage the business owners to ask questions to clear any doubts in their outsourcing process before binding the contract.
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