There are many reasons why companies decide to outsource qualified activities and this is a common practice among large, small and medium-sized companies; where outsourcing is sometimes the only option to get things done. Some of the top reasons companies outsource skills or products may include:

• The inability to develop the product or obtain the service internally.
• The need to reduce costs.
• The goal of expanding capacity
• The short-term need for staff or product.
• The need for specialized and scarce resources.

Some of the benefits of outsourcing are:

• Cost savings: Outsourcing activities typically reduce costs as there is no need to invest in additional software, hiring costs, and direct costs associated with having employees and their benefits.
• Time saving: By outsourcing tasks, things can be done faster and more efficiently.
• Flexibility: Since the resources are external, you can bring them in based on your specific needs, for as long as you only need them (even for short periods of time)
• Greater efficiency: Outsourcing non-core activities to outside resources allows you to focus on your core business activities.
• Access to scarce talent: Having access to talent that can be scarce or very expensive is an advantage when it comes to outsourcing. For example, for US companies, outsourcing their software development needs is a common practice with multiple benefits, especially when done in a Nearshore model to countries like Costa Rica, which is very close to the US, it works. in a similar time zone they have a strong alignment in terms of company culture and the way they do business, while having the benefit of lower cost for high-talent resources.

How does it work?

Outsourcing is a strategy that companies use to improve their competitiveness, but in many cases, the company knows that it needs help but is not sure what. This is when it is key to clearly define what needs to be done, what are the necessary skills and knowledge, and the specific requirements that the company has for the work to be done (uses of technology, tools, methodology, etc.)

Choosing the right outsourcing partner can be challenging and the best approach is to first define the bottom line and your expectations of the outsourcing relationship.

Before choosing an outsourced partner, ask the following questions.

• Does the selected offshore partner have experience in the particular service you wish to outsource?
• Has your selected outsourcing service provider been able to provide quality services to other companies like yours?
• Does your chosen business partner use the best in technology, software and infrastructure?
• Does your outsourcing provider have experienced, trained and qualified professionals who can handle your projects efficiently?

Asking these questions and validating the answers you receive from multiple potential vendors will help you make the best decision.

Once you have chosen your partner:

As important as choosing the right partner, creating the right business relationship is equally key. Once you’ve made your decision, be sure to work on the following:

1. Establish open communication and a close relationship: Whether in person or via video conferencing tools, it is important that you and your new business partner see and hear each other. Organizing overseas office visits to meet the people you’ve partnered with and the employees who carry out your duties can make a big difference in your results.
2. Define business roles and responsibilities: Review the details of the partnership, such as budget allocations, goals, and other plans going forward. You should also define business roles so that both companies understand the scope of their responsibilities and streamline work processes.
3. Define the success criteria: Make sure all parties involved are on the same page in terms of expectations and how success will be measured and your goals aligned.
4. Create an environment based on trust: Establish a healthy relationship based on trust. You may need to have a balance in which to keep an eye on your partner while providing a healthy distance to give them enough leg room to grow, innovate, and exceed their expectations.