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5 Things Companies Get Wrong About Global IT Outsourcing

Nacho De Marco
Nacho De Marco

These are the five big misconceptions preventing companies from outsourcing.

Software outsourcing is no longer just for giant corporations. What started as a novel practice of U.S. companies sending IT jobs to India in the 1990s has now become a $88.9 billion industry that connects businesses with IT experts worldwide, from Belarus to Argentina. Companies of all sizes make use of this service to cut down on costs, bring innovation into the business and open up more time to focus on core operations.

Although IT outsourcing is more than a passing trend, many business owners still shy away from hiring an outside team to help with their work. Here are some of the incorrect assumptions businesses make about software outsourcing.

1. Outsourcing means lower-quality work.

Many business owners or project managers might assume that developers educated outside of the U.S. or Europe are less skilled than those at home. This assumption could not be further from the truth. The U.S. comes in 26th in the world for IT talent, with top outsourcing countries like Brazil, Belarus and Ukraine making the top 20.

According to Deloitte, 78 percent of companies that use outsourcing services are satisfied with the quality of the work. Not only can outsourcing lower costs, but it can also bring talent to your company that sees problems with new eyes and provides innovative solutions.

2. Outsourcing is only an option for giant corporations.

Articles about outsourcing used to speak exclusively of million-dollar contracts with companies that had $1 billion or more per year in revenue. While these companies still make up most of the deals, small businesses and startups can make use of outsourcing services as well. Smaller companies might even benefit more than bigger corporations from the cost differential.

According to the Deloitte survey, 59 percent of companies use software outsourcing as a tool to cut costs while still developing revolutionary technology. Some entrepreneurs even suggest that outsourcing the early development of your prototype and MVP can help startups get products to market faster without sacrificing equity to a technical founder.

3. Outsourced teams cannot communicate fluently in English.

Anyone who has worked with a remote team knows the importance of good communication. Naturally, you might expect anyone doing business with your company to speak the international language of business. There are endless horror stories of companies contracting outsourcing services before realizing their IT team knows only a basic level of English, making it practically impossible to communicate challenging business ideas.

These stories often occur in Asia or Eastern Europe, where the general population has relatively low English proficiency. One of the main reasons for the aggressive expansion of Latin American outsourcing is due to its bilingualism, with Argentina leading the ranking. Due to its proximity to the United States, English has been a mandatory language in schools and universities there for decades now.

4. Only tech companies can make use of outsourcing.

When we talk about IT outsourcing, many businesses assume that only tech companies could benefit from outsourcing, since tech functions are not impacted by distance or borders. However, 29 percent of companies that use outsourcing are in the consumer products industry, while 11 perent work in the healthcare industry, according to Deloitte. Just 9 percent of companies that use outsourcing are actually in the tech and media industry.

As outsourcing has become more mainstream, companies continue to invent new ways to use outsourced services. Business process, legal, real estate and human resources outsourcing are all ways companies can make use of a remote team without necessarily working in tech. Even startups are starting to outsource their IT departments as the cost of developers and tech experts in the U.S. skyrockets.

5. Remote outsourced teams are harder to manage.

Organizing video conferences across borders might seem like a headache when you are considering hiring an outsourced team. However, outsourcing companies are used to working remotely and generally respond quickly to messages and calls when they are needed. Since their whole business is built on a long-distance work methodology, they apply efficient communication and the best task-management tools to ensure an efficient flow of information. If you are concerned about external team members not being as familiar with your product, imagine the possibility that they might come up with something innovative you haven't considered. Deloitte reports that 35 percent of companies seek innovation from their outsourcing companies directly through the contract.

Software and IT outsourcing are common global practices, but they are still shrouded in mystery for a lot of companies. However, as outsourcing has gone mainstream, services have improved and diversified, meaning that businesses of all sizes can benefit from outsourcing part of their work to outside teams. Whether for cost-cutting or innovation, software outsourcing is a simple way to augment your company's capacity and grow on a global scale.

Image Credit: Gorodenkoff/Shutterstock
Nacho De Marco
Nacho De Marco Member
I am the Founder and Chief Executive Officer at BairesDev. I am responsible for implementing and ensuring the successful management of the business and setting future strategies aimed at positioning my company as the #1 software company in the region. I hold a Bachelor’s Degree in Systems Engineering as well as a Master of Business Administration. I was born and raised in Argentina and I am an eager traveler who has visited over 50 countries. I speak 4 languages and I'm currently a resident of San Francisco, CA.