IT Outsourcing As A COVID-19 Survival Strategy

It seems that it doesn’t surprise anyone that the frequent economic crises of the last decade have been the major factor to shape the economic landscape. Today, however, it’s the virus that stole the show and became the reason for the current economic crisis itself.

BTW, one of the first diseases that significantly affected USA economics was the Asiatic cholera pandemic that raged in New York in 1832, which has brought the city’s businesses to a halt.

As the world is finding the “new normals” in every industry and in every situation, let’s look at COVID-19’s impact on the IT industry and IT outsourcing in particular. We’ll also cover what helps Shakuro agency cope with the impact of the crisis and remain a reliable partner for our clients.

 

An overview of outsourcing in the IT industry 

An outsourcing company like us is one whose aim is to provide niche services for off-shore partners. Businesses from startups to enterprises use this kind of assistance to capitalize on our ability to provide quality services at lower rates. 

According to researches conducted by Opinium and LiveArea, 37% of UK companies plan to outsource IT tasks while 32% are considering doing it with marketing.

The main attractive factor of using outsourcing services is the ability to tap into the market of specialists based in other countries with lower cost levels. For example, while web or app development costs are about $35-50/hour in Eastern Europe, they can go up to $150/hour in the USA.

Businesses are able to find specialists they lack in their country, saving money and resources and transferring them instead to other areas of business and concentrating on the company’s core tasks.
To remain competitive, outsourcing companies are always at the forefront of their industry, using creative approaches and innovative solutions on a regular basis.
Outsourcing allows small businesses to compete with larger companies due to the greater accessibility of IT resources and services. 
The main drawback of using outsourced services has always been diminished control over the remote team performance. Also, the most frequent reasons for managers to be hesitant about outsourcing are time zones discrepancies, issues with language, and culture. All in all, it looks like the list of drawbacks is quite small in magnitude in comparison with the advantages. You can find a more detailed pro-and-against analysis in our article about 10 Killer Reasons To Outsource Web Development.

IT outsourcing and the effects of COVID-19

Contrary to many other industries like logistics or retail and thanks to the nature of its business, the IT industry hasn’t borne the brunt of coronavirus, like the inability of free travel, for example. What’s more, the absolute majority of IT services can be rendered remotely, using video conferencing and chats as a mode of communication. Furthermore, in contrast to traditional outsourcing which is about manufacturing and transferring physical goods, it happened so that the BPO (Business Process Outsourcing) industry was set just right to handle the pandemic measures. 
However, you can hardly say that those who provide and make use of IT services haven’t felt a thing.

Psychological effects

IT or no IT, the sudden period when everyone who could work remotely was asked to do so, was a stressful time for many business owners, managers, and employees whose usual policy was to work “on-premise”, so to speak. No wonder that remote work guides started popping up like mushrooms around March. By the way, we have one of our own, go check it out. It’s impossible to know all the tricks and you are sure to learn something valuable there. 
Stressed-out managers faced the necessity to find new working approaches to control their colleagues’ performance and deal with the potential reduced efficiency. Organizations now have to rethink their ways to manage their employees and adopt more nimble approaches. Still, half a year into the pandemic and associated working culture changes, it seems that even managers unwilling or hesitant to take on remote working policy in the past found out that in the majority of cases it doesn’t entail any significant reduction of efficiency. 

Upwork found out that over half of managers think working remotely during the pandemic has gone better than expected.

 

Image: upwork.com

Ironically, one of the pandemic’s extra silver linings is that outsourcing can also mean less stress for business leaders over employee turnover or potential layoffs.

Technological effects

Apart from the psychological aspects, there are some digital challenges every company has to face to cope with the pandemics. The work-from-home norm created a new reliance on technology. Industries have found themselves plunged into the online world, even ones that relied before on the pen-and-paper approach.
If previously an organization’s security efforts were often focused on providing physical security (in other words, physical access to the building), now the attention is mostly paid to information and data security. Every issue with security now rose in size and poses a serious problem to privacy. That’s why hiring a third-party that specializes in outsourced IT services and thus has an immensely greater experience in data security is not only a smart move but one of today’s essentials.
There’s also the increased cloud migration. Thanks to cloud technology, vital data is stored in a centralized location, accessible to all authorized users, regardless of their individual location. Very convenient nowadays. Among other things that clouds give to businesses is the speed of infrastructure deployment. You don’t need to negotiate with the vendor, agree on specifications, wait for deliveries from abroad, which may be delayed, especially in current times. 

Robotic process automation, software bots, automation, machine learning, and other disruptive technologies are becoming ubiquitous and taking over the world. It is expected that the outsourcing industry will also be affected by this and new digital approaches will emerge. 

Our experience of working amidst the pandemic

Shakuro’s customers always valued not only the technical expertise of our engineers and designers but the ability of our project managers to be in charge of projects and product management, especially in a turbulent time of the pandemic. Our managers use a decade of experience, best practices, and approaches to motivate employees including the remote ones, and conduct communications. Take a look at this review on Clutch, for example:

We do what we can. No one knows when the pandemic will be over, but even during the time of uncertainty (or even because of it!), we do our best remotely and closely monitor the quality of the solutions we provide to our clients.
We communicate regularly. There is never enough communication, especially in a remote team. Regular communication sets a clear rhythm for work and allows you to focus on the goals of the project and not lose perspective.

We focus on goals and roles. It is important to make sure everyone understands what the goals of a project are, how roles are assigned, and how each team member contributes to its success. Clarifying roles helps us understand which colleagues we can turn to for help or consultation.
We value dedication and hard work. Shakuro is made of people — developers, designers, QA engineers, and more. The way we strive in pursuit of our goals is especially important in these difficult times.

As for recruiting, we noticed that many IT companies like us have been experiencing difficulties following their clients from the affected industries. As you can understand, the well-being of an outsourcing company depends on the well-being of companies around the globe that might make use of its services. We were fortunate enough to keep the majority of our projects and continue working in a normal capacity. We even used this period to enrich the company with some highly qualified employees.

What’s in the future

Outsourcing service providers look especially attractive in times when businesses and countries face the gravest challenges. The Y2K problem in the 1990s was the reason for the first wave of IT outsourcing. The second one followed the 2008 financial crash. The COVID-19 pandemic might be a thing to begin the third wave. 
The COVID-19 crisis is still developing. Bringing more efficiency to the daily workflow while also scaling productivity, will become the focus of many businesses in the future. Businesses today have the opportunity to adjust and improve their business outsourcing processes. This way they are more likely to be stronger and more ready for the next unprecedented event.

Among other findings made by Opinium and LiveArea, almost 28% of UK companies want to outsource at least one area because of the coronavirus crisis.

What we learned from the global situation with the pandemic, is that the IT industry we knew yesterday will never be the same. Twitter has told its employees they can continue to work from home permanently. Other big tech firms like Google and Facebook have said they will operate at around 30% of official capacity, with most workers allowed to work from home for the foreseeable future. The findings made by Upwork seem to support this view:

Technavio market research company claims that the IT outsourcing market is to grow by $98 billion during 2020-2024, with a CAGR of almost 5%. 

 

Taking it all into consideration, it is expected that there will be further moving away from the more traditional single-source approach to the more diverse multi-source one with contractors residing in different countries all over the world. Along with the heightened and sustained demand for outsourced services. The future of work was always heading in a remote direction. COVID-19 has simply accelerated the process, condensing what was expected to happen during the decade into a handful of months.

According to a recent report by Global managed services, 45% of businesses will have to outsource more than they will insource over the coming 18 months. 

In conclusion

To remain afloat and profit in the current changing situation business owners have to be open to new ways to control costs and increase business efficiency. As you are coping with the impact of COVID-19, it’s time to pay attention to your primary goals and what only you can do by laying off some of the tasks to an outsourced partner. Companies must rethink their businesses and invest in adaptability and resilience. Cutting on IT services while keeping the quality level might be precisely what your business needs to survive for another quarter till the crisis is over and you could finally be able to let out a sigh of relief. 
Do you have design, web, or app development projects to outsource? Contact our agency to learn more about our services and discuss your project.

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By the way, we at Shakuro have a model that is called a team extension that can be a really effective way to work on your project. By combining the best of our teams, we can reach the best results. No matter the industry, your team can scale its capacity with more skilled IT professionals who are ready to accomplish your company’s goals. Now it’s more important than ever to become one big team.