Which Industries are More Inclined to Outsourcing?There are some industries that are well known to outsource their activities. Outsourcing is very typical for:
- Banks, Insurance and Financial Sector – 35% of the activities are being outsourced;
- Telecommunication and Information Technology (IT)* – 25%;
- Manufacturing Industry – 15%;
- Retail industry – 7%;
- Transport and Sport – 5%;
- Miscellaneous – 13%;
*Please, note that in 2013 the global software testing market was around 30 billion US dollars and is expected to grow to 50 billion US dollars till 2020.
What can be identified as a major benefit of the outsourcing in general is that the right outsourcing provider can introduce successful products/services, different approaches, higher revenues, unparalleled experience and streamlined operations. However, the process of identifying a partner like this is definitely not an easy task. It requires a comprehensive and objective assessment of the provider’s outsourcing potential.
Why Companies Choose to Outsource?By outsourcing your day-to-day activities, you can achieve:
Risks Associated with OutsourcingWhatever the reasons to outsource are, this is not a decision to be made easily. When you outsource, you also share your confidential information and your expertise with the vendor. Of course, the vendor will need some of this business critical information to complete the project and, at least in the beginning, you might always be concerned if the vendor will use this critical information for its purposes and handle it with good care. That means, a mutual trust must be built. There are some common risks which every company considering outsourcing should be aware of:
- Sensitive data exposure – to lower the risks of accidental or intended data exposure, companies sign a Non-Disclosure Agreement (NDA) through which the parties agree not to reveal confidential information predefined in the document.
- The hidden costs – the threat of hidden costs can be easily prevented by a clear and transparent outsourcing contract. Both parties should thoroughly cross-check the document since it is a prerequisite for successful cooperation.
- Management control loss – while selecting an outsourcing engagement model, companies decide whether to leave management control of outsourced processes in – house or pass it to the vendor.
Still, Having in Mind All the Risks, Why Do IT Companies Outsource?There are numerous reasons, the main are:
Or, also summarized and compared with the software testing budget growth as expected in the end of 2015:
5 Things to Consider When you OutsourceBefore making the decision to outsource or not, you must consider the obstacles that you might face. What quickly comes to mind is:
Of course, each company makes the decision to outsource based on its objectives and due to different reasons. Sometimes, the factors that influence the decision to outsource the most are just cost savings and nothing more. Other times, it is the desire of the company to gain additional knowledge and make sure that the product it delivers is of great quality.
Now that you know how to decide whether to outsource or not, you’ll find the best place to do it in the next article, expected in the middle of March.
Quality House Team