6 benefits that Outsourcing brings to your business
July 7, 2020
The outsourcing industry has been rapidly increasing and gaining more and more popularity over the past 15 years. As a business leader, you have likely come across information about custom software development. Or maybe you have participated in business discussions whether taking the route of outsourcing is the right way forward for your company.
More and more international companies take this approach to technological innovation and whole regions are benefitting from this trend. Countries in South-Eastern Europe have proved to be some of the top places for outsourcing not only for the sake of cost-efficiency, but mainly for the advanced technological skills that are displayed by local professionals. Especially coupled with their long years of experience and the increasing innovation capacity in this industry.
In this blog post, I would like to layout several benefits of outsourcing that would help your business become more competitive.
Benefit 1: Added product value
It is very hard to rank the benefits as they all fit together like lego pieces for a successful partnership. Yet, I would like to start with the one benefit which drives shareholders value up and business growth, namely Product Value.
Every company’s goal is to create a unique product which is highly competitive and scalable that also has the potential to gain a large market share in the specific industry. Technology has been the number one tool in achieving this. Customers nowadays are looking for an intuitive, modern, fast and reliable product and all of that is possible via technology.
Outsourcing enables the delivery of product value in various ways. The most crucial one is the experience in building and maintaining successful products. As IT is a leading industry in countries like Bulgaria there is an extensive pool of knowledge and experience utilized in projects.
Having a reliable team which drives innovation through the right technology and infrastructure is key. When customers come and ask for technological advice we give them concrete answers and ideas on how to achieve their vision. Over the years companies like Financial Times, ProSirben, VMWare, Daimler and DowJones have chosen Bulgaria as a place to develop their products. This has increased the innovation capacity of the whole ecosystem and put a lot of focus on creativity and delivery of high impact products.
Benefit 2: Focus on core functions:
When a business is growing all the efforts and attention of the shareholders and managers is directed towards increased sales and relationship building. And that is absolutely understandable. When you have a software product that needs to scale to the next level of service companies have to balance their core objectives and technological decisions.
A great benefit of outsourcing is that when you have a dedicated IT partner they will focus on the technological change and senior management can focus on improving marketing, sales and strategic relationships. In this arrangement everyone is focusing on their strongest capabilities which can bring the maximum return on investment and time spent.
Keeping your core employees is not done by giving them more responsibilities to handle projects which are not in their area of expertise such as technological ones. But rather, when you give them the freedom and tools to expand and build upon their core competencies.
Benefit 3: Faster time to market
When you have an existing IT department which has an already a complete pipeline for months in advance but the clients are expecting quickly from you a new module or new functionality of a product this causes a lot of internal pressure.
Many companies are or have been in situations like these and it is not easy to prioritise tasks or to find a way to remove tasks from the pipeline. Also when you are working with multiple clients they all have different expectations and sometimes you will have to work on several projects simultaneously.
The first choice is to hire additional force to join the in-house team but this model has proven not to be so successful. The reason for that being the time for onboarding and alignment with the rest of the team (not to mention that it can take up to 6 months to find the right candidates).
What Outsourcing is providing is a quick ramp-up of highly qualified developers who can focus entirely on upgrading the product and ensuring that the client’s needs and expectations are met in a quick and efficient way. Having a reliable IT partner, which is 100% focused on scaling the product, gives clients the confidence that if a new module or whole products needs to be delivered quickly, it will be done.
When you have built a good relationship with your IT partner you can also rely on their technological capacity to help you win prospect customers. One of our long term clients came to us with a request to build, very quickly, a POC for one of their potential clients. We were able to react momentarily and build a POC as requested by their prospect. In the end, due to the quick reaction from us and the effectiveness of the team, the prospect was won and the business of our partner increased significantly.
Benefit 4: Access to international talent
Finding the right talent that would move forward your product is not an easy task. Every company spends thousands of dollars to get the right recruiters, implement the most attractive HR policies and benefits and still struggle to find and retain employees. This is especially valid for countries like the US, UK, Switzerland, Ireland, where big companies like Amazon and Google are top employers and attract the top talent. Others are left with the option to compromise with their budget or with the quality of people they hire.
Another advantage is that there is a growing trend of Bulgarians coming back to their home country. During the past 15 years, companies like VMWare, Financial Times, Bosch, VistaOn opened big offices and attracted many Bulgarian engineers living abroad to come home. This is also positively affecting the whole IT ecosystem as the level of expertise is increasing and the grounds for the newer generation of engineers is more stable than ever.
Countries who have proven to be outsourcing centres invest heavily in the continuity of expertise. The technical knowledge brings with it business ideas and very rich innovation capacity at a cost-efficient price.
Benefit 5: Cost
Another very strong point for choosing to outsource your IT operations and product development is the fact that you have access to an international talent pool at a very low cost. Imagine if you have a company in Ireland and you have to compete with Google for talents. You will definitely need a very big recruitment budget, which is not applicable to many companies. And there is no need to have such a salary competition because outsourcing enables you to spend several times less for engineers and receive stellar performance.
You also don’t have to pay overhead costs such as: cost for onboarding the employee, office space, utilities, training and seminars. All of that is taken care of by the IT partner and at the end of the day you receive outstanding value for your investment and know that the people you work with are top talents and up to date with the latest technologies.
IT companies, especially in Bulgaria, know the value of staying up to date with the latest technologies and invest heavily in workshops, training programmes, conferences so that they can be the reliable partner who would bring clients technological proposition to the next level.
Benefit 6: Proven processes and best practices.
For companies that are just starting to digitalise and to create software products as a service, it is very time-consuming to implement the right structure and the right processes. The specifics come from the nature of the product and the constantly changing requirements and mediation of risk involved.
If there is not a specific long-term technical expertise in product development, the more cost and time effective approach is to dedicate this work to someone who is experienced. There is no need for management consulting companies to perform “blueprint projects” and for companies pending thousands of dollars writing out RFPs when this is all included in the expertise and way of work of the IT companies.
IT companies also have a dedicated process manager/certified Agile coach who spends the first two months implementing the right processes and organizes the team so that it mirrors the existing in house processes and tailored them to the appropriate product development methodology. There is always a local Product Owner assigned to help define the functional and non-functional requirements. In Bulgaria, particularly, there is a very strong and concentrated community of product owners, who have experience in various product development projects.
While most benefits have been fairly consistent over the last couple of years, we do have to take into account recent events. The global COVID-19 pandemic demands adjustment to business so it can continue to function. Here are some of the ways that Outsourcing can help businesses grow.
- Remote working is becoming the new normal, due to social distancing, and it is no longer a disadvantage of IT outsourcing. There are even more and more requests from employees to work in a different country than their HQ office. Nonetheless, due to the pandemic situation it is not 100% clear when people will return to their offices and will start to travel frequently. Outsourcing allows for the best professionals to get together and work on your projects from anywhere in the world.
- “Getting things done” attitude. Outsourcing companies strive for efficiency and follow methodologies which allow faster time to market. The culture is also focused on delivering quality products quickly, which are prepared to enter the market right away. There is no “hierarchical structure” in the company that is delaying decisions or differing responsibilities. Everyone is working very responsibly and “striving for mastery” is a key part of the culture.
- High retention rates. More and more companies which are focusing on product development have a very high retention rate of talent, which is a product of good culture, motivation and quality of colleagues. It is always a great feeling when you are starting a new international project which will bring tangible value to your customer. IT Companies are investing heavily in providing a great working environment to their employees and also nurture them to further excel in their technical and business knowledge.
- Benefitting from a well developed IT ecosystem. When you work with an IT outsourcing partner you also benefit from the environment that they are in and the large talent pool. Even if you need a specific expert, the IT partner has a “getting things done” attitude and will find the right expertise quickly. Especially in the Bulgarian ecosystem, Dreamix was one of the first IT companies and has 14 years of history behind. We regularly organize events such as the Bulgarian “Hack the Crisis” hackathon and the first online Java conference.
If you are thinking of outsourcing your IT department or have an idea to develop a product, please reach out to us and we will be happy to assist you and share our advice with you. We believe in transparency and knowledge sharing so we will be glad to do so.