77% clients of IT outsourcing claim to be overcharged. How to be among the happy 23%?

Security software developer Lieberman software released an interesting research on IT outsourcing company’s client’s satisfaction. It’s not a secret that the main motive for delegating some part or even all IT tasks to an outsourcer is economy of resources, and especially – opportunities for cost reduction. And the survey showed that a surprising 77% of respondents believe that their outsourcers have made up work to earn extra money.

Only 38% respondents claimed that outsourcers had met the cost-saving projections mapped out in contracts. 27%  said the deals cost “significantly more than planned,” compared to 11% who said outsourcing actually saved more money than their companies expected. But the huge 77% distrust is really surprising.

Why could this happen?

Outsourcing business always aims to build long-term relationship with customers. In light of this any form of cheating is not just ethically unacceptable, it can simply destroy business. As usual, there is the second side of medal – high complexity of IT products and the difficulties of adequate estimation of the product’s cost at the beginning of development cycle.

Creating core functionality does not equal to creating a product. Compatibility with different environments, scalability, changes in functional requirements as well as necessity of testing are just a few common reasons that can make an IT product more expensive.

The only way to differentiate “inventing” from the real business needs is establishing normal dialogue between IT outsourcers and their customers. What we want to do is to give some useful advice to everyone who considers to start up with IT outsourcing or already uses this type of services.

  1. Create a prototype. It’s fast and inexpensive (compared to real product’s price), and what’s the most important – it allows to model user interaction and make all the necessary corrections in functional requirements before starting the coding of major product.
  2. Choose vendors that use Agile methodologies. The outcome of each iteration is clear and allows to make corrections in the most flexible manner. As a result, less time is spent and no overcharging occurs.
  3. Don’t ignore unit tests – they ensure that you get high-quality code with less bugs.
  4. Be clear that changing requirements may result in long corrections. Behind any feature or function there is code, and when the product is almost ready it may be very difficult and time consuming to bring in some changes.

IT outsourcers don’t like overcharging as well as their cleints. We can state that the main reason of boosting costs lies in the field of project management. We can hardly belive that on highly competitive IT outsourcing market it can be someone’s corporate policy.

Want to know how to be among the lucky 23%? Pay attention to project management and especially – to making final list of requirements before the programmers start to work. Track the changes and prioritize if you want to keep up with schedule. Create test strategy and test plan together with the plans for developers – and your chances to become one of the lucky 23% will be higher.

About the Lieberman software survey. It was conducted at RSA Conference 2011 in Las Vegas and InfoSec Europe 2011 in London. Nearly 500 IT professionals were queried, most of them invloved in security companies. 55% worked at companies with more than 1,000 employees – the class of user company that makes up the bulk of outsourcing deals. 43% said their companies had outsourced a significant amount of their IT.

Source: softheme

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