Outsourcing IT Projects – Pros and Cons

As the director of a small internet and development consulting firm, I have been both the outsourcee and outsourcer in my career. Seeing both ends of the environment certainly helps me to make better decisions when it comes to outsourcing web development and marketing work. This article offers a few key points for companies looking to outsource some or all of their IT requirements.

Low cost does not necessarily mean low quality

Though it can often be the case, hiring a cheap worker from your domestic or international market can sometimes bring you a higher calibre of worker than their higher paid counter parts. The hardest part in finding the cheap but quality worker is to know what is needed upfront.

The blind hiring the blind

When hiring for a web programmer, for example, a company’s HR department will likely not be able to tell the difference between someone capable for the position and someone who will be ill-suited, simply by comparing resumes and / or doing an interview. While some specific skill-sets may be a requirement for the position and eliminate some candidates based on their resumes, the final interview should be given by the relevant IT leader in the company. If a company does not have an IT department but are considering outsourcing some IT work, I recommend they hire an IT consultant to manage their projects for them. This can save them valuable time and potentially a lot of misspent money, had they mistakenly hired the wrong person for the job.

Hiring from abroad

In my career, I have outsourced various projects and tasks from web applications systems development and data entry to graphic design and voice-acting. My outsourcees have been citizens of China, Argentina, Philippines, Vietnam, Russia and even first-world countries like Japan and the United States. Again, there is not one flat-rate per country for certain professions abroad which will guarantee you to find cheap quality labor, but generally, the average wage in developing countries means you have a higher chance of finding a suitable candidate at a lower cost than in a first-world market.

How now brown cow?

When you have tasks which require minimal English ability, workers from any of the non-English speaking countries listed above will generally be able to comprehend enough English to get the job done. ie, when hiring a programmer, you may be more interested in their mathematics and problem-solving ability than whether they can write correct grammar in your email communications.

For content writing or projects which require a fluent command of English, the Philippines can be an excellent source of workers with a very high level of spoken and written English. Be warned though, that for English text content which will be directly used in marketing to the USA or other English markets, you may need to hire a native English speaker from the first-world. Where someone from the Philippines may have an excellent command of English grammar, without the cultural background of living in a first-world country, some nuances can be hard for them to produce in their language.

Keeping outsourcees accountable

When hiring remote workers, especially from abroad and with different timezones, it becomes very hard to monitor their working hours. For this reason, I suggest working on performance-based milestones to better control your project costs and remove the issues of trust facing many IT outsources now. If you must use an hourly accounting practice, I recommend for programming, content or other applicable work to have the project maintained through a version control system. Using a popular version control system such as SVN, allows workers to “commit” their code and files at certain intervals. The project manager can then see exactly how much change has been made at each interval, with the added benefit of archived backups for each edited revision.

Overall pros and cons of outsourcing IT projects

In this article, I have covered a few key points in outsourcing, specifically for outsourcing IT projects. To summarize some of the pros and cons mentioned in point form, the below comparison is provided.

PROS

  • Potential cost savings
  • Reduced staffing overheads
  • Temporarily increase capacity

CONS

  • Harder to monitor workers
  • Language and / or cultural barriers

Payroll Services – Outsourcing Pros and Cons

This is one of the more critical departments of a business. In the terms of accounting and finance, it is the sum total of compensations, deductions, and benefits of all the salaries in a company. If the business does not have a fixed system to calculate the salaries of their employees, it could be chaotic for the business to handle paying the employees. In addition to paying salaries, there are payroll taxes that can affect the income of the business at the end of the fiscal year. These reasons are why a business needs to maintain an effective payroll system. The norm in recent years is for larger businesses to outsource their payroll services but there are pros and cons with doing this.

Pros

• Cost effectiveness

• When a business has their own payroll department it means that they have to manage a payroll department and hiring accounts but payroll services that are outsourced eases these burdens. It also saves the tedious work of calculating the payroll.

• The money and human resources invested for an in-house payroll can be used in other productive works

• It can help the businesses keep a track record of their earning and expenses

• Helps the business keep a detailed record of payrolls, which is important to any business

• It streamlines the entire payroll management into the hands of experts in that field.

• They give the business excellent results along with high performance

Cons

• Payroll services involve allowing access to private, sensitive information of the employees to a third party, which could not be safe to do

• The employees may not like the idea of outsourcing payroll services outside of the business because they value their privacy

• Not all outsourcing deals are successful even if there is high cost effectiveness is very high.

• Your returns may not worth the money you spent if you do not hire an inexperienced company

• Having the threat to privacy

• The lack of direct control over the company’s payroll services

Many reputable companies do outsourcing payroll services but you have to do your research to make sure that the company you choose is reputable. Check to make sure that they have high track record of customer satisfaction. You can also check with the BBB to see if there are any complaints filed against the company you are considering hiring for your payroll services. Looking at the pros and cons of outsourcing your payroll services you can see that it does lessen the burden of your Human Resource department, and that the payroll will be done correctly because the outsource company specializes in payroll. Choosing a qualified reputable company also will protect the privacy of the employees.