In a global economy where productivity is rising in many segments and production costs are shaping innovative strategies,
In a global economy where productivity is rising in many segments and production costs are shaping innovative strategies, looking for a strategic IT partner it has become crucial to any organization’s success. Many are addressing these growing concerns by reformulating their business plans, shipping their in-house software development needs to emerging markets’ outsourcing companies.
In these new scenarios, where off-shore outsourcing services are growing exponentially in the world, some myths surrounding this matter are raising as well. Progressively, public opinion and media coverage are more uneasy about it and many companies everywhere recognize that a lot is at stake for their business. In this blog post I will attempt to tackle some of these myths.
- Myth 1 – Outsourcing is harmful to the local economy
This is a mistaken belief which many people hold to. There are a lot of benefits for a country’s economy in subcontracting a service provider. The main one is higher productivity.
As the labor cost drops, companies can transfer savings to consumers and at the same time, maximize profits for the shareholders. This will in turn result in capital to invest in more innovation and hencethe creation of new local jobs.
Nowadays, many companies around the globe are cracking down the increasing competitive environment by transforming themselves into a slimmer and more efficient organization. They focus their energies mostly in the core business
- Myth 2 – Subcontracting can result in higher costs
An in-depth analysis shows that when companies have a larger labor force, they consequently increase fixed costs, while undermining profits and resulting in a burning strategy for some small and medium-sized business. When companies decide to outsource they can take control of their variable cost which in turn has a positive impact on IT budget. Furthermore, their production cost will decrease too due to a cheaper labor cost.
- Myth 3 – Efficiency and quality will decrease
These are critical points at the time of choosing a partner. When buyers shop for a service company they have to take into consideration the provider´s Industry specific experience and the maturity in their processes and methodologies. Additionally, standard international certifications are of great importance.
The communication barrier is often mentioned as an inefficiency factor while hiring outsourcing companies. This can be resolved by partnering with companies that have delivery centers in compatible time-zones, where cultural affinity is similar enough and their personnel bilingual skills are superior.
Nothing says more about a company’s quality than its past achievements.