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Best Practices for Outsourcing Projects

By November 26, 2018 No Comments
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“A clever person either knows how things work or he knows someone who can make it work for him”

Outsourcing has become a crucial part of running a successful business. Organizations consider outsourcing to streamline multiple projects which ultimately result in increased business productivity and profitability.

In 2017, the global outsourcing market amounted to 88.9 billion U.S. dollars.

-Statista.com

But every third-party company has its own level of expertise. Though outsourcing can be cost efficient, it can also result in setbacks and serious business downtime. You rely on a third-party service to complete your project; therefore, you must ensure that its development is continuously aligned with your business objectives. With the following best practices for outsourcing a project, you can ensure timely delivery and mitigate the risks of excessive delays.

Set expectations:

Often, we develop over expectations from the third-party service provider. When outsourcing a project, we believe that the third party will do everything correctly and efficiently. But, most likely, things don’t go as per the plan. This results in disputes between the companies and ultimately delays in the project completion. Therefore, make a list of things that you expect from your outsourced partner. Along with the project-specific expectations, including the following-

  • Cost efficiency in project development
  • Limited iterations for fast delivery
  • Proper version controls so that you can analyze the changes and upgrades
  • Documentation of every newly added feature
  • Your involvement in the majority of the processes
  • Innovations in your existing work practices

Defining your expectations beforehand will save you from the last-minute additions. It will keep you focused and help you develop good long-term relationships with your service providers.

Set Milestones:

Setting milestones is an essential part of outsourcing. Whether you are making a product or a service, you should have milestones to track its completion. A big project can be divided into smaller sub-projects and each one of them should be given its own deadline. If the third party completes them on time, you can ensure that the project is being developed as per the plans. It is also necessary to communicate the decided milestones with the third party. The goals that you set should be achievable. Most of the projects get delayed simply because of over expectations resulting in unachievable deadlines. Therefore, communicate the milestones that you have set with your third-party company so that both of them can agree to them before development.

Provide a rich set of documentation with the scope of your project:

Allow your outsourced partners to familiarize themselves with your project. It is essential for them to understand the scope of your project so that they can develop it with the right set of tools. Many delays happen when doubts about the business application of the product or service arise during the development phase. Prepare a system requirement specification (SRS) document that describes the features and behavior of your project. With a good understanding of your project, an outsourced partner can bring his own innovative ideas for its development and can find new areas of improvements.

Set financial cuts for excessive delays:

Often you will find your projects getting delayed over and over again. Your outsourced team could be behind the schedule and ask for more time. Whether intentional or unintentional, it is you who ultimately bears the loss from the delays. In order to avoid this situation, you should set financial cuts for excessive delays. Have a direct talk with your outsourced team about the financial consequences if they don’t deliver the project on deadlines. Again, this should be done before the development begins so that both the parties can agree on the maximum allowed iterations.

Communicate as much as possible:

Another crucial part of outsourcing is communication. It is highly necessary to convey your thoughts about the progress of the project. If possible, communicate with them daily. Keep this schedule separate from your assessment schedule. Dedicate the assessment schedule for detailed analysis and this one for more informal talks. This is highly necessary to ensure a long-term relationship with the third party company. Have a phonetic conversation or send an email asking the accomplishments and any challenges that they are facing.  Appreciate their good work, don’t criticize. Doing so will not only build a good relationship but will also motivate them to finish your project with pure dedication and ensure a fast delivery.

Develop a strong service level agreement (SLA):

SLA is a formal document that defines the working relationship between the two parties for a service contract. The major terms it highlights are –

  • The negotiated price
  • Delivery schedule
  • Possible financial consequences for delays
  • Support availability
  • Performance metrics

Ask your legal consultant to prepare a strong SLA that includes an agreed accepted level of downtime and penalties for failing to meet a certain level of service.

Make an assessment schedule:

After outsourcing your project, you should check its progress time to time to make sure that everything is going as per the plan. You should analyze the exact time spent on the tasks inside your project and measure the delays. Prepare a schedule that aligns with your business goals. It could be a check in each morning and night with the team. Or, you can ask them to summarize the development for each week. Assess the accomplishments and find the areas of the project which could be improved and also might have taken less time.

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