The Top 5 Challenges in IT Sourcing


July, 2023

The Top 5 Challenges in IT Sourcing

topic IT Recruiting visibility1677 views

Your company needs to upgrade its IT systems or build some new software, but you just don’t have the internal resources or expertise to get it done. IT sourcing seems like the perfect solution, but you’ve heard the horror stories of projects gone wrong. Don’t worry, with some smart planning you can navigate the challenges of IT sourcing and find a great partner to get your project done.

Finding the Right IT Talent

Finding top tech talent is one of the biggest headaches for companies these days. With demand far outpacing supply, IT sourcing has become quite the challenge. Here are a few tips to help you navigate the search and snag the best candidates:

  • Cast a wide net. Don't limit yourself to job boards - leverage social media, employee referrals, recruiting agencies, and even cold calling recent tech program grads. The more places you search, the better your odds of finding a great candidate.
  • Focus on skills, not degrees. Some of the best developers are self-taught. Look for relevant skills, experience, a passion for learning, and a solid work portfolio. Degrees can be a bonus, but skills are what really matter.
  • Offer competitive pay and perks. You're competing with the biggest tech companies out there, so make sure your compensation and benefits package is attractive. Things like flexible work hours, paid time off, healthcare, retirement plans, and opportunities for growth can help seal the deal.
  • Highlight company culture. Many candidates today want more than just a paycheck - they're looking to join a company with a positive culture that values work-life balance, collaboration, and employee wellbeing. Promote the aspects of your culture that would appeal to tech talent.
  • Be willing to train. Don't expect to find a candidate that checks every box or has years of experience with a specific language or framework. Look for a solid foundation and a desire to learn, then provide on-the-job training to help round out their skills.

With the right search strategies and an appealing package for candidates, you can overcome the challenges of finding specialized IT talent. While it may take time, the investment in sourcing the best people will pay off in the long run.

Delays and Cost Overruns

Delays and cost overruns are two of the biggest headaches in IT sourcing. When timelines slip and budgets balloon, it can damage relationships and erode the benefits of outsourcing. The good news is, with the right approach, you can avoid these sourcing speed bumps.

First, make sure expectations are clear from the start. Lay out timetables, budgets, and key milestones in the contract and get sign-off from both sides. Be specific about what constitutes a delay or cost increase so there are no surprises down the road. Review these details regularly and revise as needed.

Also, choose a partner with a proven track record of delivering on time and on budget. Check their references and look for a history of honoring contracts. If they have sophisticated project management practices, that's even better. They'll be well-equipped to spot and address issues early.

It's also important to maintain open lines of communication at all stages of the project. Encourage your IT sourcing partner to flag any potential delays, risks or overages right away so you can work through solutions together. And have regular meetings to monitor progress, spending, and team productivity.

Finally, build some buffer into timelines and budgets in case of unforeseen obstacles. While you want to avoid unnecessary padding, including some contingency will give you flexibility to adapt without derailing the whole project or incurring major added costs.
With the right planning and partnership, IT sourcing delays and budget overages become much more manageable. And when roadblocks do arise, you'll have the processes in place to steer everything back on track.

Lack of Control and Governance

When outsourcing IT, one of the biggest challenges companies face is a lack of control and governance over vendors and projects. Without oversight and accountability, costs can spiral out of control and deadlines get missed. Here are some tips to help avoid these issues:

Define Clear Expectations

  • Lay out specific requirements, timelines, budgets upfront. Get everything in writing to avoid confusion later on.
  • Assign an internal project manager to oversee the work and be the main point of contact. They should monitor progress and performance regularly.
  • Conduct frequent status meetings or calls to check in on the vendor, ask questions and address any blockers right away.

Monitor Budgets and Timelines Closely

  • Review invoices line by line to ensure you’re only paying for work that was agreed upon. Question any discrepancies immediately.
  • Revisit initial timelines and budgets frequently. Make adjustments as needed to account for changes in scope or unforeseen challenges.
  • Consider including penalties in contracts for missed deadlines or cost overruns to keep vendors accountable. But be reasonable with timeframes and willing to renegotiate if needed.

Review Work Quality and Results

  • Check work at each milestone or delivery to ensure high quality and that requirements are being met before continuing further. It’s easier to course correct early on.
  • Consider doing spot checks on work to audit quality. See if the results and outcomes match what you’re paying for.
  • Be very clear in your feedback and expectations. Explain exactly what needs improvement and why to avoid confusion.

Maintaining control and governance over your IT sourcing projects does require effort and oversight. But putting in the work upfront to select the right vendors, set clear expectations, and monitor progress closely will help ensure you get the results you want without costly surprises. With the proper management, outsourcing IT can absolutely be a win-win.

Communication and Cultural Challenges

Communication across cultures can be challenging, especially when outsourcing IT functions. Different languages and norms can lead to misunderstandings that hamper productivity or damage working relationships. Tackling these communication and cultural challenges head-on will help ensure a successful partnership with your outsourcing provider.

Language Barriers

If English is not the primary language for either party, extra effort must be made to communicate clearly. Consider providing key documents, training, and meetings in both languages. Work with translators and interpreters, especially when negotiating the contract and service level agreements (SLAs). Make sure all communications, written or verbal, are simple, concise, and avoid idioms that may not translate well.

Cultural Differences

Do some research on the cultural norms and business etiquette in the country or region of your outsourcing provider. Things like greetings, decision making processes, and conflict resolution styles can differ across cultures. Try to be understanding of different perspectives and sensitive to potential issues. Provide cross-cultural training for both parties to build mutual understanding.

Clarify Expectations

Take time to clearly define goals, priorities, responsibilities, and key performance indicators (KPIs). Discuss each party’s expectations around things like response times, reporting, and quality standards. Put everything in writing to avoid confusion, and review regularly to make sure all parties are satisfied.

  • Hold frequent calls or video conferences to strengthen the working relationship.
  • Consider having employees from each company do short-term exchanges to build empathy.
  • Look for a outsourcing provider with experience working across cultures. They will have more insight into overcoming these challenges.

With open communication, cultural awareness, and clearly set expectations, you can develop a successful partnership with an outsourcing provider from any region in the world. Investing in overcoming language and cultural barriers will lead to better IT outcomes and a long-lasting, mutually beneficial relationship.

Security and Compliance Risks

When outsourcing IT functions, security and compliance risks are major concerns. It’s critical to consider these factors to avoid data breaches, privacy issues or regulatory violations.

Vetting Providers

Do your due diligence when selecting an IT sourcing partner. Ask potential providers about:

  • Their security certifications and audits. Look for ISO 27001, SOC 2, or PCI DSS certifications which show strong controls and compliance.
  • Their policies and procedures. Review their data security, privacy, and compliance policies to ensure robustness.
  • Their track record. Check references from other clients to determine the provider’s competence and reliability.

Data Security

Your data is only as secure as the weakest link in the chain. When outsourcing:

  • Encrypt sensitive data both in transit and at rest. Use strong encryption standards like AES-256 bit or higher.
  • Limit data access to only authorized individuals. Use role-based access controls and strong passwords.
  • Educate staff. Conduct regular security awareness training for both your internal teams and outsourcing provider’s staff.
  • Monitor continuously. Use data loss prevention tools, firewalls, antivirus software and perform frequent audits to detect issues early.

Regulatory Compliance

Staying compliant with regulations like GDPR, HIPAA or PCI DSS is vital. Some tips:

  • Understand your regulatory requirements. Know what laws and standards apply to your data.
  • Pass responsibility to your provider. Make sure your outsourcing agreement specifies that the provider is responsible for regulatory compliance regarding your data and systems.
  • Review reports and audits. Examine reports from the provider proving their compliance and ability to comply on an ongoing basis.

By choosing providers carefully, safeguarding data rigorously, and maintaining compliance, you can overcome the security and privacy risks in IT sourcing. With the proper safeguards and oversight, outsourcing IT does not have to mean compromising data or breaking the rules.

Mastering the Art of IT Sourcing

So there you have it, the top five challenges in IT sourcing and how to solve them. If you can get past the obstacles of cost and control, find the right cultural and strategic fit, build effective communication, and maintain flexibility, you'll be in a great position to leverage the benefits of IT sourcing. It may not be easy, but with the right planning and mindset, you can overcome these common challenges. Stay focused on the end goal, learn from others who have been there before you, and don't be afraid to step outside your comfort zone. The rewards of successful IT sourcing are well worth the effort. Now go out there, find the right partner, and start reaping the rewards! You've got this.

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