Business Process Outsourcing in IT

Major technological advances of early 2000s signified the emergence of IT-BPO (Information Technologies Business Process Outsourcing). The initial intention of IT-BPO, like any other type of outsourcing was in increasing business flexibility, which became crucial for efficient cost management. Changes in the industry, the increase of business’ online presence, and common global trends lead to the substitution of a commodity-based contracts to more of a service-based approach.

IT-BPO Prehistory

The first indication of outsourcing could be attributed to the 18th century manufacture of textiles in Europe, where the core operation of a textile enterprise that involved management handed off the technical part to a number of smaller craftsmen, then collected fractions of a product, and then assembled and sold the commodity. The core operation thus, could concentrate of managerial tasks without getting caught in the whirlwind of bureaucracy and insignificant shenanigans.

However, as technological progress kept growing, the production that had been spread all over the place, shrunk to cut the costs and management issues caused by delayed communication and challenges in quality control.

Later, in the 20th century, the story took a new twist by going back to the expansion policy due to the cheaper labor and resources discovered globally. The trend kept going pretty much in that direction ever since, occupying more and more industries along the way. Ultimately, the IT industry became affected by outsourcing and the Silicon Valley technologies, operation models, and culture spread worldwide. The emergence of IT-BPO industry was a matter of time and now it occupies a huge portion of IT market.

Why Outsource Software Development

Outsourcing wouldn’t have been a widely accepted approach if it wasn’t somehow natural. Obviously, it gives a number of benefits which makes it worthwhile dealing with problems with timezones, indirect communication, cultural difference, and all sorts of hassle that is often attributed to remote collaboration.

What has started as a manufacturing outsourcing has spread throughout the white collar industry as well early in the 21st century. Digital market requires high level of technological development which leads to overall quality of life improvements, and thus, bigger costs. However, some places of the world display a striking contrast between tech profoundness and living standards that are yet to be perfected. At the same time, quality education is available in most of the major technologically advanced countries which creates an enormous poll of technical professionals to choose from. By paying only a fraction of the US minimum wage, companies can count on a dedicated team of professionals willing to succeed in their every endeavor.

Financial benefits remain the core of outsourcing due to the flexibility that it provides with fixed to variable costs transformation.

Image credit: Brightbolts

Optimizing total costs by attributing employee to variable costs offers tremendous opportunities for revenue growth and development. Sustaining a development team that only concentrates on the actual technical tasks, designers that specifically create UI/UX and front-end specialists focusing on putting it all to life is the workflow that has shown its efficiency in multiple super successful enterprises. Along with that, having a sharp management team committed to performing core tasks with no restrains, can significantly improve business results.

This model has been adopted by all major IT companies that turned them into global corporations and at the same time, some firms transformed into software outsourcing companies operating exclusively under the remote scheme. This helps them minimize fixed costs and leverage the advantages of variability.

KMPG have been studying outsourcing for years and the detailed analysis they release every year has all the data and dynamic trends explained in detail.

Why “NOT” Outsource Software Development

It wouldn’t have been reality if outsourcing as a solution was not coming with a number of risks. But risks are not myths and can be dealt with if addressed right. Myths, on the other hand are the ultimate blockers that appear somewhere and are referred to in 3rd person, meaning little to none actual experience and a lot of generalization.

Let’s bust some myths:

“Remote developers are mediocre”
If all the major technologies and IT-related projects had been created or developed in the US, it makes sense that the people behind the technology are as prominent and concentrated in the Silicon Valley. A recent study, however, has shown that the US developers are ranked as #28 of the global rating… Here’s the top 3:

1. China

2. Russia

3. Poland

The research was done by hackerrank.com which is a platform that ranks engineers based on their coding skills and helps companies discover talent faster. And their conclusion is the following:

According to our data, China and Russia score as the most talented developers. Chinese programmers outscore all other countries in mathematics, functional programming, and data structures challenges, while Russians dominate in algorithms, the most popular and most competitive arena.

The location can definitely play a factor in the sheer amount of opportunities a young developer can find, but in terms of dedication, passion, and hours of work put in, there is no go-to place in the world.

“Remote developers are not fully involved” 
Chances are you can hire a remote worker that won’t be honest in their representation of progress and time spent. This can’t be attributed to the remote and outsourced environment though. If you are hot hiring the right people, you will face sandbagging regardless of the location of your dev workshop.

The pursuit of a smaller payroll can ultimately leave you with a bunch of contractors that slack on performance and perseverance and there is no universal way to fix their attitude once it has been established.

“The opposite of love isn’t hate; it’s indifference”
― Steven Pressfield,
The War of Art: Break Through the Blocks & Win Your Inner Creative Battles

Building a strong foundation of remote management team that feels like a part of the bigger entity is the guarantee of their success as your supervisors. Like any other important decision, team selection has to be performed with maximum effort and care, from the side of project owner in the first place.

“Time zones and cultural gaps are critical”
As for the time zones, different people have different productive hours. I’ve had meetings at 7 AM while for the team on the other end it was almost at night. Even though you could think we were on different tracks energywise, I feel like we had a steady and continuous workflow almost with no stoppage! If it’s important to stay online for all the remote teams, adjusting the timeline couple hours doesn’t seem to be much of a problem in most cases.

As for the cultural gaps, I don’t even think this question is relevant in 2017. Before the Internet — yes, people were detached and much more isolated culturally but as of now, good luck trying to find a millennial and surprise them with anything. In fact, global companies build their own culture within their enterprises. And they do it for the purpose of bonding all their employees with positive attitude.

Outstaffing as an HR policy must have cultural training ingrained into it, as there can be no happy and engaged employee collaboration if productivity is not fostered culturally from within.

Simple ways to bond:

  • Manifest. This is the statement of your company’s core beliefs and values that you expect all the employees to share.
  • Have an internal social portal, or an app like the we’ve made for OMGene.
  • Personalize information. This includes having actual photos and names of team members so that there are no “John Does” and grey silhouettes.
  • Exhort transparency. Your remote team must not feel like they are the last to know, or least important. Address your entire team and don’t neglect minor events happening around your business

It takes time to establish tradition but once it has been settled, it stays for years and works for you. Your leadership in cultural development is a crucial factor that everything builds around.

“Remote developers flee”
This actually has a point. We’ve had remote a developer disappear mid-project to go hitchhiking. In that case hiring a person like that is always a gamble regardless of the recruitment type. He could have walked away from the office just the same way he did his house.

Perhaps it’s easier for people to quit in a remote environment because there is need to settle things in person? Anyway, like any other solid relationship, trust and confidence takes time to build and can only be built with the right people. The skill of finding and recognizing such people is the key to establishing an awesome remote development team.

Remote Development Management Tools

We’ll leave the obvious communication tools and concentrate on business process enhancement.

Time & Progress Tracking

As a web design and development agency providing outsourced services, we are enthusiastic about an effective, precise and simple solutions to track our time and effort ratio. We’ve played around with some tools and ended up choosing the Jira plus Time Doctor combo.

Jira is one of the leading project management solutions capable of assigning tasks, setting priorities, and covering all the stages of product development. Time doctor is an intuitive desktop tool to indicate the task you are working on. It gives a clear perspective of the progress timewise and by providing screenshots as a proof, so you can always estimate the resource and leverage specific tasks.

Often times we work with clients that might not be familiar with any type of remote productivity tools, so it’s extremely important that the tools we suggest are simple and do not require a lot of time to comprehend, at the same time they must be trustworthy and neutral.

Collaboration Tools

Remote collaboration is a different animal. As opposed to tracking progress of technical tasks, there should be a highly productive solution that allows successful joint effort in terms of the entire project.

Think of it as a video game map of the world, where you can zoom in to concentrate on your specifics or zoom out to get the grasp of the entire scene. Add to that the ability to make changes in real time, smooth transitions, and embedding options and you get a complicated list of requirements that not a lot of solutions can stand to. We made our choice and sided with RealtimeBoard.

RealtimeBoard is where we found the functionality that provides the big picture options as well as the specifics handling options on all the levels of production. As a web design agency we thrive in versioning and iterations that ultimately lead to a polished and thought-out user experience. In terms of project management, having a clear understanding of where the project stands, adding tweaks that come into play as we go, and dealing with a constant flow of changes are the most backbreaking responsibilities. The quality of the end product relies tremendously on the initial architecture and performance pathways established in the core of the project.

Cubebrush project UI/UX development board

As a design hand-off tool you’d want to use an easily editable and visually informative platform with perceptive navigation available to everyone. This aids the speed of task to implementation to feedback process leaving no space for ambiguity and slip-ups.

Rapid Remote Application Development

All of the benefits that RTB brings to the table make it a great solution for rapid application development, aka RAD. The definition of RAD concept was created out of the frustration from the waterfall software development approach that had proven itself multiple times as an inefficient. Mix in a remote team and you’ll get a constantly delayed and dated product ever.

The RAD approach offers the utilization of certain strategies that lead to faster development, better quality, and overall advantages of the RAD approach. Some of the strategies are the following:

  • Extensive requirements study
  • Design iterations through multiple tests
  • Reusable components (not only in development, but RAD design as well)
  • Casual communication

Interesting fact — all these strategies can be applied to a remote development model, business process outsourcing, and extended team model. So if RAD and remote collaboration use the same methods of increasing productivity, then the remote method is the most productive one and the fastest!

On top of that, RAD approach adopts object-oriented programming tools like C#, Java, and Ruby that are highly exploited by the remote and extended development communities.

Bottom Line

Aspiration for improvement is a natural phenomena and as the world develops, it becomes a matter of survival that we adopt and the matter of success that we evolve. Global outsourcing is the evolution of local outsourcing and a management expertise. It does involve certain risks but those are not exclusive for remote work, outstaffing and extended teams. Strong corporate culture, transparent and fair management aided by the latest technologies are the means that help build a close-to-perfect team regardless of the recruitment model and distance.

Some development methodologies like RAD thrive in a remote environment, cutting all the unnecessary things and focusing on the end product delivered on time and with maximum impact.

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