What You Need To Know About A Successful Outsourcing Partnership

Hieu Nguyen | 03/11/2022

What You Need To Know About A Successful Outsourcing Partnership

A leap of faith - that is what many think of an outsourcing partnership. After all, you choose to trust people outside of your organization. You may think you have little control or insight into what your partner is doing.

It is normal to think that way. An outsourcing partnership is a serious investment; therefore, it is important to first learn what makes an outsourcing partnership attractive. This article delves into some aspects of an outsourcing partnership to help you decide whether this would enable your next phase of growth.

What Is An Outsourcing Partnership?

Outsourcing refers to the process of having another business provide services or produce goods for you.

A partnership is a formal agreement between two or more parties to run a business and split the profits.

An outsourcing partner handles tasks and projects handed over by its partner. An outsourcing partner tailors the service to your changing business needs and goals, rather than coming in to tackle a specific issue directly. They are an extension of your business. Often, a partnership involves a lot of communication along with shared risks and rewards.

Outsourcing Partner Versus Outsourcing Vendor: What’s The Difference?

Vendors are paid to provide specific goods or services. They address certain pain points with products or services offered at fixed prices and within clear boundaries. If ordered in large volumes, they may offer discounts. However, vendors do not add any value to your business and are not as invested in your clients as a partner.

The largest difference between a vendor and a partner is the level of commitment. Simply put:

Relationships with vendors are simple - they only address specific pain points. They offer you a services, goods, or materials based on requirements. There is no further involvement with your workflow or clients.
A partner is an extension of your own business. They are willing to invest in a long-term relationship. They focus on creating impact and adding value. They share the same risks and rewards as your company does.

This article does not aim to dismiss the need of a vendor, but rather focuses on why a partner is capable of helping you win in your industry in three main ways:

1. They want to have a meaningful impact on your business. They are willing to seriously invest in essential resources to implement optimal strategies.

2. An experienced partner has gone through a fair amount of wins and losses in a variety of projects. These valuable experiences can provide you with unique insights.

3. Partners are not only experts in what they do, but they are also familiar with navigating time zones and cultural difference.

All these details play a major role in establishing a strong outsourcing partnership.

Why Consider An Outsourcing Partnership?

Understanding the difference between a vendor and a partner might make it easier for you to decide what your company truly needs. By this point, if you and your team are confident that you want to establish a sound and successful outsourcing partnership, then let’s dive in a little bit deeper.

First, let’s start by understanding what an outsourcing partnership can do for you and your business.

Gain a competitive edge and say yes to challenge

In today’s ultra-competitive market, companies are constantly looking for ways to scale up and seize every possible business opportunity.

A strategic outsourcing partner makes sure that you not only have access to a large pool of talent and the newest technology, but that your team also stay at the top of your game. A successful outsourcing partnership allows you to plan ahead and get prepared for new developments in the market.

The last thing a scaling business can afford is to miss a business opportunity. This would not happen with the support of a successful outsourcing partnership. You no longer need to feel as if you were stretching your in-house resources thin to meet established goals or customer deadlines. After all, you have an entire organization behind you to handle new contracts and take on new challenges.

Enhance efficiency

An outsourcing partner acts as an extension of your business while accepting the same benefits and risks as you do. Hence, they will look for ways to enhance efficiency in their area of expertise. For example, outsourcing companies are well known for the ability to hire highly qualified staff. By having a team of experts readily available, the time to market is shortened, as you no longer have to go through the lengthy process of recruiting, training, and maintaining the team.

All in all, an outsourcing partnership has the capabilities and resources to boost your productivity. 

Better focus on core business activities

Your outsourcing partner should be an expert in what they are doing. They should provide you with the services per agreement, and help you better understand how they fit into your overall operation. They add value like the rear engine that enables your business to continuously churn out new and better results.

Therefore, you and your team have the time and energy to focus on the core business activities and the critical client relationships that drive value. The salvaged time and energy clear space for you to draw up important objectives, or scale up the business, instead of scrambling around to hire experts or figuring out ways to best perform a task that is out of your scope of expertise.

Lower overheads

Often, outsourcing means that you are paying only for what you need. This means you are not paying to recruit a whole team, training, and their benefits; neither do you pay for equipment or hardware. If you are outsourcing nearshore or offshore, the hourly rates of outsourced staff are often lower.

Scalability and growth

Scalability one of the most critical strengths in today’s turbulent conditions - and some even consider it to be even more important than profitability. With an in-house team, though, it can be challenging trying to scale up or down in a short amount of time.

Let’s take a software outsourcing partnership as an example. Your in-house IT team have been doing quite well for some time, handling small to medium-scale projects. However, as your reputation grows, your clients are now looking to collaborate with you on bigger projects. As much as you want to take on these valuable opportunities, you simply do not have the resource to do so. Hence, your competitor gets the project.

An outsourcing partnership is your backup plan. Instead of taking months, a team of experts know what they are doing, and they may only take a few weeks. This is important, allowing your team to sustain growth and prevent a temporary pause.

With a software outsourcing partner, you no longer need to worry over the fact that there is insufficient resource to scale up. Being able to handle bigger, more important projects earns your company a good reputation and fosters long-term growth.

Tips On Choosing a Suitable Outsourcing Partner

Deciding upon the right partnership is the first step towards the growth you are gearing up for.

Clarify your requirements

Before approaching an outsourcing partner, audit your in-house resources and needs. Make a rough estimate on the resources and advantages necessary for an upcoming expansion. These could be skilled workers, infrastructure, market presence and insights.

Clarify your expectations with specific metrics to measure the success of a future partnership, such as the expected market share, the number of customers, upon joining hands with a partner.

If your company is unsure about the requirements, take your time to figure it out. Vague requirements provide poor guidance in moving forward. No partner should be expected to read your mind and deliver wonderful results.

Look for industry experts

A credible partner should bring insights, experiences, and connections that add value to what you already possess. They understand how partnership works, and willing to make reasonable compromises for a win-win arrangement.

When comparing a shortlist of outsourcing partnership, consider:

Technical expertise and industry experience
Available tech stack
Commitment to your project
How they deal with complications and obstacles

Be mindful when matching the partner’s technical expertise to your needs - both sides should want to, and are able to, grow at the same pace. If they are excellent in handling a narrow range of technologies, but you are aiming for wide-ranging digital transformation, this may not be a good fit for you.

Check for past clients’ reviews

How is your partner’s reputation? Look for testimonials or reviews from online platforms like Clutch to get a better idea of who you would share the spotlight with. Ask around for referrences from your industry contacts. After all, choosing to trust someone outside of your organization is not an easy decision. No one would want to work with a team that is late to meetings, forgets deadlines, or unresponsive to urgent demands.

Good Practice For a Successful Outsourcing Partnership

Here are some tips for maintaining a long-lasting, successful outsourcing partnership.

Communication is key

During the first few months of your outsourcing partnership, emphasize communication. Communication is one of the key factors to build mutual understanding and a strong relationship. So how should you go about it? Below are some practical tips to help you out.

Set out goals. These goals can be monthly, weekly, or daily goals. Draw up a plan to work towards them: what is the priority? What should be focused on? What are the best practices? Take notes and make sure everyone is looped in on the process and status of the partnership. Do check and reflect often to see if the expectations are met.

Schedule regular updates between your in-house team and outsourcing team. Reach a consensus on the milestones where both teams touch base on how the projects are going.

Align your business styles

It goes a long way to understand your outsourcing partner’s work culture and values. Consider these questions:

How like-minded are you in reaching the same goals?
Where do you stand in mutual business issues?
What qualities are you looking for in a team? Would you want a team that is more casual and upbeat, or would you prefer a more formal work style with respected hierarchy?
How does the cultural particularities of the outsourcing partner affect your collaboration?

Make use of the trial period to test your alignment, as it allows time for both partners to adjust. There will be some incompatibilities, but they can be overcome by establishing a satisfying degree of mutual understanding early on. Outsourcing companies are generally well aware of different business cultures, and they strive to adapt to the standards and work culture that you can reasonably expect.

Set clear expectations, but be flexible when needed

The Service Level Agreement (SLA) sets out the fundamental aspects of an outsourcing partnership, such as ground rules, expectations, and scope of responsibilities for each side.

However, it is normal for unexpected developments to arise in an IT project, in which case, your outsourcing partner may have a different approach to yours. It is worthwhile to consider your partner’s suggestions and feedback. Be flexible when needed. Your final product might turn out even better than initially expected. After all, both sides in an outsourcing partnership share the same risks and rewards.

Final Thoughts

Good Practice For a Successful Outsourcing Partnership

A successful outsourcing partnership brings to the table numerous benefits. They allow you to gain a competitive edge, save time and money, boost productivity, and gain scalability.

It is easy to establish and engage in a new outsourcing partnership. The real challenge is how to maintain it. The key is to communicate. Be transparent and set out clear business goals, expectations, and ground rules. The first few months, or the “trial period” is a time for you and your partner to test and adjust to see if it is possible to work together in the long run. Make sure you make good use of it.

Topics: Software Outsourcing Company