Iron Triangle for Outsourcing Companies
April 26, 2019
IT outsourcing (as a part of an outsourcing definition) is the use of external service providers to deliver effectively IT-enabled business process, application service and infrastructure solutions for business outcomes.
According to the latest statistics in 2018, the global outsourcing market amounted up to $85.6 billion. The amount is impressive, but in 2014 it was much higher — $104.6 billion.
Why do businesses decide to hire outsourcing companies?
Companies all over the world outsource various business operations. The list of main reasons for the popularity of outsourcing is the following. Outsourcers may help to:
- decrease the cost of product development — 59%;
- free internal resources and focus on the core business — 57%;
- solve capacity issues in cases of irregular overload — 47%;
- enhance a service quality — 31%;
- get access to intellectual capital, especially when there is no need for full-time employment — 28%.
When a business is looking for an outsourcing company, it can get to the Iron Triangle trap.
Have you ever heard about it? Sometimes people call it the Triple Constraint as well. The Iron Triangle presents three essential components of the project’s quality — Scope, Cost, Time. The idea is that the triangle should stay balanced. The change in one of the constraints results in compensating alterations in others. Otherwise, the quality will suffer. As you can see from the statistics above, most of the companies are looking for the cost reduction of product development. However in the case, when you pay a lower rate, the quality goes worse. If you pay the same rate but you ask to reduce the cost you need to reduce the scope too. That is the reality.
Working with an outsourcing company can be complicated. Difficulties are caused by different time zones, mindset, and the level of involvement in the product.
Dashdevs company plays on the market since 2011. We create hi-tech products for businesses from different domains. During this time we have established five rules for successful outsourcing companies.
Business needs come first
Some outsourcers are working hard to write other hundreds of lines of code. A big commit is the most valuable input from such a company. But does business care about the number of lines? Nobody has ever heard the story of the success of a company becoming an industry leader due to 1 billion lines of code. They became leaders because they solve problems of users in the best possible way. Business needs are the essential factors that outsourcing companies must care about. A solution cannot be measured in code lines or time spent on development. From the point of view of a business, development is just a tool.
For our company, we solve this dilemma in the following way. We start the development of a product only if we understand business needs. Despite our experience in creating digital products for different areas, sometimes we get requests for products/markets which require extra-depth knowledge from us. We investigate the market, competitors, and substitute goods. After that, we ask for the workshop with the client. Such an approach helps us understand the product better. In some cases, even if we know the market, we need to catch up some time of a business representative, ask for a meeting or conversation, and clear out the competitive position and goals.
Our recommendation for outsourcing companies is: don’t be afraid to ask questions. Better to ask them at the beginning of the development. The worst case is when you get a thorough understanding only at the project handover.
The responsible person for the project
Sometimes when working with an outsourcing company, you can face the situation when something is done incorrectly, and you can’t find out the reason, or the team doesn’t want to solve it. The most frequent reason is that there is a bug that can be solved on a mobile application level or backend. As a client, you just want to get rid of the bug and make the app work correctly. But developers can make endless holy wars and shift the responsibility to the others, leaving a client to wait for a result hopelessly.
Our approach is different. We have two key responsible persons for every product — a client engagement manager and delivery manager. A client engager is a person who understands the product and combines the roles of a manager, business analyst, and technical writer. A client engager processes all business needs to technical requirements. A delivery manager is a person who has a solid technical background and at least five years of experience in development. This person understands technical issues and challenges, creates architectural solutions, and speaks with the team the same technical language. The responsibility of a delivery manager is to make an application work according to requirements.
Our recommendation for outsourcing companies is: solve the problems with responsibility without bothering the client with your endless internal wars about the ideology of software development.
Lean project management approach for every product
Different companies have precisely different needs. For some companies, it is critical to hire somebody who will do everything according to the request precisely. Another product requires the team which understands global goals and produces creative solutions. Such a squad must be independent and be able to run without day-to-day control.
In our practice, we used pure Scrum and Kanban. We understood, with the time, that we needed our own formula. Something in the middle between Scrum and Kanban. It is an agile approach that depends on the needs of a particular product at a specific moment. We have experience in developing small projects (1 developer only) and an enterprise product (50+ devs). We can suggest a client a convenient scheme of software development and emphasize its advantages. If we see that this approach has no satisfactory outcome, we will change it.
Our recommendation for the outsourcing companies is: use the lean approach as often as you can in project management. Remember that the client does not pay you for the Scrum. You receive money for the results
People management: hirings and firings
First of all, we hire people for Dashdevs company and not for the specific project. That’s why we choose every candidate accurately. Due to this background, we are always prepared that some projects may grow very fast. They may require even more people than the company has at the moment. We solved this issue with our recruiting department. They always search for the best candidates on the market. There are few levels of screening interviews to sift out the candidates. We have strict rules about the quality of performance. If an employee fails on several projects, we can dismiss the person to avoid fails on other products. The dismission process is not that hard if you fight for the quality of the products. Dashdevs shares strong corporative values. They are all about the result-oriented approach. We do not search for people who simply want to have a fixed amount of working hours per day.
Our recommendation for the outsourcing companies is: look for team-mates who want to solve problems, work on interesting projects, and develop their skills.
A book about blue and red oceans was popular a few years ago. Primarily, the book emphasizes the necessity of the cross-domain experience for an outsourcing company. Just think about it. When the company is experienced in loyalty programs, messengers, and cryptocurrencies, it is easy to create a crypto-messaging application. If we work with a specific field, we try to get deeper into users’ behavioral patterns, competitors, specific traits, and market progress. Working in different markets allows us to mix features and approaches from different markets and areas. This approach path implies to reach success. Our strategy is to be neither a mono-client and nor mono-market company. The broad experience in different markets and spheres allows us to develop effective solutions for various business goals.
Our recommendation for the outsourcing companies is: always perform a cross-market analysis. Look for new technologies, try to combine them in your product.
All outsourcing companies are different. The company needs to find an outsourcer that has the same corporate values as your company has. Usually, even a small project can examine the outsourcing company. It helps the ordering company to check if the outsourcer suits its business needs. Take into account that not only companies choose a contractor. For example, we prefer not to work or do not prolong business relationships with some clients mostly because of their corporative values that are opposite to ours. Our intent is a healthy win-win relationship.
Between the jigs and the reels, it is inspiring to operate as an outsourcing company. We always work with interesting products, various projects, and positive clients. It is like being a partner of a life-changing campaign.
Between the jigs and the reels, it is inspiring to operate as an outsourcing company. We always work with interesting products, various projects, and positive clients. It is like being a partner of a life-changing campaign. We are ready to develop the craziest idea if we share this mission.