Outsourcing Digital Transformation Projects: Should or Shouldn’t?

Outsourcing Digital Transformation Projects: Should or Shouldn’t?
N-iX
1970-01-01T07:58:43+00:00

Digital transformation is a trend which all long-sighted leaders are looking to embrace. Many companies outsource digital transformation projects  to implement innovations faster and more efficiently. According to the IDC research, 33 % of industry leaders will get disrupted by more d...

Outsourcing Digital Transformation Projects: Should or Shouldn’t?
By Tetiana Boichenko March 31, 2017

Digital transformation is a trend which all long-sighted leaders are looking to embrace. Many companies outsource digital transformation projects  to implement innovations faster and more efficiently. According to the IDC research, 33 % of industry leaders will get disrupted by more digitally mature competitors by 2018. And if you are still wavering over whether to outsource or not, this article is for you.

Which digital transformation projects are outsourced most frequently?

To undertake digitization of a business, first of all, you need to leverage strategic digital technologies. Accenture  research indicates that implementing key digital technologies is cited by 57% of the survey respondents as the most critical factor to enabling a digital business.

Findings of the report on digital transformation projects outsourcing

Source: Accenture

Why companies choose to outsource digital transformation projects

Enterprises outsource digital transformation projects to provide enhanced, more advanced and digitally-driven user experiences, for this is the ultimate goal of successful digitization of a business. Outsourcing aids in doing this in the most time-efficient and cost saving way, liberating you from overhead costs, sharing risks with you, and offering exclusive capabilities to plug the gap in case you have any.

According to Accenture report, providing an improved customer experience is given as the main reason for outsourcing digital transformation projects by most respondents – 45 %.

Findings of the report on digital transformation projects outsourcingSource: Accenture

Let’s take a closer look at the benefits of outsourcing digital transformation projects:

  • It gives you access to first-rate specialists in various technologies who may be quite rare and challenging to find. What’s more, it offers flexibility to manpower. You may bring in a person with a particular skill set (Data Science, BI) for the time period you agree on with your outsourcing vendor. Or you may use a service of a dedicated team, which will work full time, will be fully committed to your project and will be completely accountable to you. Everything depends on the specifics of the project and your preferences. Also, outsourcing helps you to find and build a team of the needed specialists with little effort and within a shorter timeframe. For example, to develop an average VR application, you would need a gaming expert, a software engineer, 2D/3D artists, an animation expert, an audio engineer etc. Delegating this task to an offshore or nearshore provider that has the necessary resources and experience will save you a lot of valuable time and money.
  • Exhaustive expertise in technological innovations such as VR, AR, blockchain, BI, data science, enterprise content management, enterprise mobility, IoT and other digital strides market leaders use as the key tools for digital transformation of their business.
  • Hands-on experience in many horizontals, such as fintech, telecom, healthcare, insurtech, hospitality, education, energy, manufacturing, entertainment etc. Digital transformation in banking is very different compared to telecom or hospitality industry. Adopting a digital technology in a certain industry calls for specific expert knowledge.  Your cooperation with the vendor that has had previous experience in your industry and thus has the necessary domain knowledge will bring much more value.
  • Complex solutions require a holistic approach that would combine competencies in multiple technologies and innovations. To meet the demands of the global market, a lot of IT outsourcing vendors develop expertise in a wider range of services from mobile solutions to VR, from ECM to blockchain etc. For instance, our client, Lebara, a global telecom provider, required a wide range of technologies, domain expertise and big pool of specialists. Our development for them has bridged 3 industries: Telecom, Media & Entertainment, and FinTech. Thus N-iX has built a development centre for this client with over 100 professionals. We work on many projects and deliver many solutions covering various aspects of their business in order to meet the changing needs of modern customers. Our cooperation involves software development, mobile application development, quality assurance, BI, technical support and other services for successful digitization.
  • Cost-saving, time-efficiency, and scalability. Outsourcing of digital transformation projects eliminates the need to buy expensive licenses, software, and hardware, pay for rent and office facilities, etc. Your outsourcing partner will take care of all those work aspects for you while you and your in-house team can focus on internal processes and core competencies.
  • Leveraging the benefits of data science services.  Effective digital transformation is always driven by data. Building your in-house data centre and team of data experts is rather expensive. According to Techradar,  setting up a data centre would cost you £8,000 (around US$13,000, AU$14,000) per rack, and you may need dozens of them. What’s more, expert data scientists are challenging to find. Therefore, it is more efficient to order data science as a service, and have your data collected, analyzed and turned into actionable insights by professional analysts.   

Things to consider while outsourcing digital transformation projects:

  • Maintaining effective communication with your digital transformation outsourcing vendor might be a bit challenging due to distance and language barrier. However, if you nearshore your project to Eastern Europe, there will be just a slight time difference. For example, Ukraine has just 1-2 hour time difference with key European cities. As for the clients from the US, outsourcing to Eastern Europe shouldn’t cause any issues either since high qualified vendors always adapt to the customer’s working schedule and have vast experience in cooperating with both nearshore and offshore clients.
  • The processes you outsource do not happen in-house, so you have less control over them. This shouldn’t be a problem if you select an established vendor with solid experience, impressive portfolio, and proven customer loyalty. To ensure the best results, choose the cooperation model aligned to your business needs and don’t forget to communicate all your needs and requirements.

Wrap-up

Businesses nowadays meet a threat of getting disrupted by competitors and face an urgent need for digital transformation to prevent that from happening. On their way to digital maturity, companies need partners to aid them in leveraging innovations and undertaking digital transformation projects. The benefits such cooperation offers are numerous. For instance, a large talent pool, proficiency in many verticals and horizontals, efficiency, flexibility, scalability, and the ability to deliver complex solutions. There may be some inconveniences, such as language barrier and less managerial control. However, they will be easily solved if you approach your future cooperation not as mere outsourcing of certain digital transformation services, but rather as a partnership, and will see the vendor’s services as a seamless extension to your in-house expertise.    

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By Tetiana Boichenko March 31, 2017
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About N-iX

N-iX is an Eastern European provider of software development services with 900+ expert software engineers onboard that power innovative technology businesses. Since 2002 we have formed strategic partnerships with a variety of global industry leaders including OpenText, Novell, Lebara, Currencycloud and over 50 other medium and large-scale businesses. With delivery centers in Ukraine, Poland, Bulgaria, and Belarus, we deliver excellence in software engineering and deep expertise in a range of verticals including finance, healthcare, hospitality, telecom, energy and enterprise content management helping our clients to innovate and implement technology transformations.

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