Scaling Your Tech Business with Strategic Outsourcing: Tips and Tricks

Whether you are a fintech software development company, you offer IT support, or anything in between, one thing is certain: you want to scale your tech business. The answer lies in strategic outsourcing.

But what are some of the outsourcing best practices you need to follow? After all, you’ll be entrusting third-parties with your processes and know-how. You need to make a sound decision.

In this article, we share some industry-leading tips and tricks with you to ensure you are on the path to success with your outsourcing endeavors. Let’s begin.

Tech business expansion tips through strategic outsourcing

Strategic IT outsourcing can be broken down into a three-phase process: the steps you need to take before choosing an outsourcing partner, during the deliberation phase, and post-project evaluation. Let’s explore what each one entails in more detail below.

Before choosing an outsourcing partner

When looking for outsourcing solutions, start with the research process and let it guide your efforts. You may want to consider the following aspects as you get started.

  • Define your priorities: Have clear goals and objectives in place, in terms of quality and final output. Determine what your capabilities are and what those of your prospective vendor are, too. Write a list of performance metrics you wish them to meet.
  • Choose the type of outsourcing model you’ll use: For example, there is nearshoring and offshoring, with pros and cons associated with each one. This deliberation will guide you onto the next step.
  • Carry out research on different providers: Start the research process by writing a list of your potential partners. Write pros and cons of each one based on experience, client reviews, and cultural fit. Work your way through the list and narrow down your options. Send formal requests to the shortlisted contenders. Evaluate their plan for your project and select a small number to continue with. After this, interview them to determine what their communication styles are and if there is a cultural compatibility.
  • Consider value over cost: Your business may be cash-strapped but you need to ensure a fair budget for your outsourcing for growth needs. For this reason, you need to ensure you consider value added alongside the expected cost. Sometimes, going with the cheapest partner may seem like a worthwhile solution in the short-run but could end up quite costly in the long run. In fact, it could be more costly than choosing a provider who offered you a higher price with greater value. Also make sure you set clear pricing per milestone reached.
  • Global and local regulations: Look at the legal and regulatory landscape you and your potential partner will be working within. Which country’s laws will govern your Service Level Agreement (SLA)? What is the standard procedure in the event of disputes? How will you ensure that confidentiality and security are maintained? What exit strategy will you have in place in case you need to terminate the relationship prematurely?

During the deliberation phase

There are also important sub-steps in the deliberation phase. A few of these are the following:

  • Determine what strategic insight values they offer: Assess your partner for their industry insights, problem-solving capabilities, and potentially innovative ideas.
  • Assess technical expertise and track records of success: To do this, ask if they’ve successfully handled similar projects, what challenges they encountered, and how they dealt with them for the project’s final success. Make sure you know what technical frameworks they use and what domain experience they have, and what post-project support they can provide. Also look for knowledge management processes and risk-management frameworks that are in place.
  • Ensure cultural and linguistic alignment: Make sure you choose a business language of communication. Also important is to ensure that there is alignment with your company’s culture, values, work ethic, and attitudes.
  • Look for flexibility: Choose a partner that can adapt and scale their services based on your project’s evolving needs. This may mean hardware, software, or talent resources.
  • Evaluate communication channels: Since communication is key but it will also probably be carried out online, determine what communication tools and channels your vendor uses, determine compatibility with yours, and ensure alignment and stick to one or two channels at most to avoid diluting the communication process.
  • Verify their performance: Akin to performing a background check, speak to their past and current clients to determine their levels of consistency, reliability, and professionalism.
  • Establish clear expectations: Make sure there is clarity in how you communicate your expectations and the expectations themselves. This may include the frequency with which you’d like to receive reports and what type of work you need to be performed within certain time frames.
  • Negotiate the partnership: Tech company development will not be complete without having your legal team draw up a detailed contract with quantifiable metrics. It should also contain details about transparency around operations and pricing. It is essential to clearly establish mutual expectations.
  • Create a troubleshooting manual: You may need to offer training and support in terms of your processes. You therefore should consider creating a troubleshooting manual in cases where things go wrong and how they should be handled. Any company-specific preferences should also be expressed in this manual. This can also help with quality control processes and procedures that you may want your partner to follow.
  • Set small milestones: Although many companies often look at the big picture, it’s also essential to look at the steps that it takes to get there. As such, set small milestones which performance can be measured against.
  • Assign a person from your team to manage the project and communication: Make sure you choose a reliable team member that can manage the project on both sides of the equation and who can steer communication in a productive way. Too many people involved in the communication process can lead to confusion and misunderstandings.
  • Start with a pilot project: To evaluate their real capacity and capability, consider starting by giving your vendor a pilot or trial project to work on. This will help you determine if any details need to be ironed out going forward or whether you’d like to continue working with them in the future.

Post-project evaluation

Tech business scaling after a trial or pilot project also includes post-project evaluation. As part of this phase, consider these aspects:

  • Evaluate against KPIs: Evaluate the vendor’s performance based on the predetermined key performance indicators (KPIs) you set out at the beginning of the process. This will help you learn from any mistakes and improve your processes for the future of your work with the vendor.
  • Ask for post-development support: See if your outsourced partner is able to offer you additional support after the project, for example, by managing its implementation and take-off. You may also want to have a support clause or a warranty in the event you require continued support after the project is completed.

Conclusion

Ready to scale your tech business to new heights? Join our community to unlock powerful tips and tricks for strategic tech startup outsourcing. Learn from industry experts how to effectively leverage outsourcing for your business growth. Contact us today!

Published: March 4, 2024

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StorsenDigital is a leading company that specializes in sourcing the best outsourcing talents in Europe. With the rise of remote work and digital transformation, skilled professionals are in high demand, and StorsenDigital is at the forefront of managing the supply and demand of these talents.
StorsenDigital is a leading company that specializes in sourcing the best outsourcing talents in Europe. With the rise of remote work and digital transformation, skilled professionals are in high demand, and StorsenDigital is at the forefront of managing the supply and demand of these talents.