Exploring Examples of IT Projects Outsourcing

According to ISG, in 2019 as much as 92% of G2000 companies were using IT project outsourcing. Now, the global IT services outsourcing market size is expected to reach $1,180.42 billion by 2030, registering a CAGR of 8.0% from 2023 to 2030.

Outsourcing IT projects is a proven strategy that enables businesses to optimize costs, access skilled professionals from around the world, and remain flexible in a highly demanding market.

To maximize efficiency and unleash the full potential of the process, understanding the ways IT project outsourcing can support your business is crucial. Gain a deeper understanding of how to define a project's scope to select the best IT partner.

Below, you'll find everything you need to know about outsourcing IT projects to successfully deliver your projects.

Key takeaways

• Understand Strategic Selection: Choosing the right IT project for outsourcing is crucial for maximizing efficiency, ensuring strategic alignment, and achieving project success.
• Get to Know Outsourcing Models: Gaining a clear understanding of various outsourcing models enables the IT project manager to adapt strategies that effectively meet project and organizational needs.
• Uncover Benefits and Challenges Balance: Employing tried-and-tested project management methodologies can help you maximize outsourcing benefits and navigate its challenges.

Understanding IT project outsourcing

Let’s start by defining IT project outsourcing.

Simply put, IT outsourcing involves using external human resources—a third-party company or an external team—to support your business in IT-related projects.

Depending on your needs, outsourcing IT projects can target specific tasks, projects, technologies, or even an entire business division. It can be utilized during selected phases or throughout an entire process.

IT project outsourcing can benefit your business by providing highly skilled talent to fill the competency gaps within your in-house team more quickly and cost-effectively than traditional hiring methods.

It can also aid in better resource allocation by freeing up your team members to focus on core business operations.

Ways outsourcing IT projects can support your business

Depending on your industry, the software type, and the project phase you're in, the process can vary. Below, we'll explore several examples of fields and project types that can benefit from IT project outsourcing.

IT project outsourcing in various industries

• Healthcare: External sources can assist, for example, in developing and managing IT projects for electronic health records (EHR) systems, patient management software, and telehealth services.
• Finance and banking: An external team can support institutions with processes such as implementing financial management systems, fintech applications, and security solutions.
• Retail: A third-party team can, for instance, assist retailers in creating e-commerce platforms, customer relationship management (CRM) systems, and supply chain management solutions.
• Manufacturing: Outsourced talent can assist in automating production processes, inventory management systems, and integrating IoT for smart manufacturing.
• Education: An external team can assist educators in developing e-learning platforms, student information systems, and virtual classroom technologies.

Note that these are just some examples of how IT outsourcing can help specific sectors grow.

Types of software projects in IT project outsourcing

IT project outsourcing can support you in various ways and business ventures.

External talents can take care of almost anything – from developing web and mobile applications to building custom software.

They can also support your business by assisting in managing cloud services, infrastructure, and storage solutions.

In 2024, companies frequently outsource Business Process Outsourcing (BPO) services such as:

• IT support,
• software development,

• customer service,

• sales and telemarketing,

• technical support,

• administrative tasks,

• data entry,

• and digital marketing.

Outsourcing IT projects in various stages

• Conceptualization and planning phase: During this initial stage, IT project outsourcing can include consultancy services to assist with market research, feasibility studies, and planning the technology stack.
• Development and testing stage: At this point, external teams support the business with coding, development, and quality assurance testing.
• Maintenance and support process: After deployment, outsourcing maintenance and support services can ensure the software operates smoothly and remains up-to-date. To ensure safety, project outsourcing can also encompass regular security checks.
• Entire project lifecycle: In some scenarios, IT project outsourcing may involve external project management from the conceptualization stage through to the execution phase and ongoing maintenance.

Successful outsourcing: IT project examples

From tech giants to small companies, businesses are increasingly turning to outsourcing their IT projects to external teams.

Below, we've gathered a few examples of successful IT project outsourcing processes, including some executed by Netguru teams.

Slack

The need: Support in bringing the app to life

The answer: Outsourcing software development, marketing and branding

One of the top messaging apps for business – Slack – is also one of the most well-known examples of successful IT project outsourcing.

Its web and mobile apps, marketing site design, and logo were developed with the outside help of a Canadian agency. Their nearshore IT project cooperation culminated in the creation of a truly unique messaging software.

Google

The need: Team extension to fill contemporary expertise gaps

The answer: Flexible outsourcing based on current needs

This company needs no introduction. It's another excellent example of how IT project outsourcing can bolster your in-house operations.

What’s interesting, since 2018, Google’s external team members outnumbered internal professionals. According to Medium, IT project outsourcing is the company's solution for bridging expertise gaps and filling positions of workers on parental leave.

Spendesk

The need: Support in delivering an internal banking system

The answer: Outsourcing web development, quality assurance, and project management services

The all-in-one spending solution for modern finance teams, Spendesk, developed its internal banking system for handling incoming and outgoing payments with the external assistance of the Netguru team.

Netguru's self-organized team of experts delivered a functional service for managing SEPA incoming and outgoing payments, supporting the client in web development, quality assurance, and project management.

Zeller

The need: Team extension to support the internal professionals in meeting tight deadlines

The answer: Outsourcing web development, mobile development, and product design

Zeller is a payments and financial services solution for businesses. Valued at over $1 billion, billion, this Australian fintech unicorn required IT project support for building enhancements to its solution ahead of the product launch.

Being at the very start of the business, Netguru scalable skilled talents enabled swift delivery to complement Zeller's own product and engineering project teams as they scaled up. Our dedicated extension team supported the client with product design, web development, and mobile development within a tight 12-month initial launch timeline.

FairMoney

The need: Developing a secure and scalable mobile banking app for Africa.

The answer: Optimizing KYC processes and enforcing strict compliance.

FairMoney, a leading fintech platform, required a partner to enhance its mobile banking app, ensuring it met stringent security standards while providing seamless financial services to millions of users across Africa.

Netguru assisted FairMoney by optimizing its KYC workflows, improving app stability, and reducing time-to-market by 30%. We helped the platform expand across multiple African regions, delivering a secure and reliable banking solution on both iOS and Android.

Evaluating IT projects for outsourcing

Now, let's consider: should you outsource your IT project? The decision to outsource a project is often not an easy one, especially if your company has never done it before. If you're uncertain about whether your projects truly require outsourcing, we're here to assist you.

When it comes to outsourcing IT projects, there are some indications that suggest you should do it. These include:

• Competency gaps
• Technological lapses
• Shortage of internal resources
• Fluctuating workload
• Challenging project timelines
• Tight budget or the need to optimize costs

All of these challenges put a strain on your business. Hiring professionals internally is not always the answer, both in terms of time and budget.

In the ever-changing tech environment, adaptability is key to moving forward. When your business needs change and you have to scale up or down, the flexibility provided by IT project outsourcing is unmatched.

With IT project outsourcing, you can quickly augment your teams with the exact skill set and number of talents needed for the given project, all without having to navigate the complicated hiring process.

Defining your outsourcing needs

Establishing the right IT project outsourcing strategy is crucial for the successful delivery of the project. To do so, you need to consider a couple of aspects.

• Specify Your Goals: Outline scope and project requirements. This step is fundamental for formulating a successful outsourcing strategy.
• Define Your Direction: Set a realistic timeline and budget. This ensures all parties have clear expectations and goals.
• Determine Reasons for Outsourcing: Identify and articulate the specific challenges your project faces, such as heavy workloads, hiring difficulties, tight deadlines, lack of expertise, or budget constraints.
• Assess Project Needs: Deep dive into the project's complexity and requirements with a focus on scalability.

Geographical models of IT projects outsourcing

Now that you've established your project needs, there are a couple of other elements you need to consider before searching for your outsourcing partner. One of them is the geographical model, also known as the outsourcing location.

There are three geographical models of IT project outsourcing, depending on the location of your vendor.

Onshore outsourcing

Onshore outsourcing is a cooperation model where your partner is located in the same country as your business.

The biggest advantages of this model include no disturbances related to culture and time zone aspects.

The downside of this choice is little or no cost-reduction benefit.

Nearshore outsourcing

Nearshore outsourcing is the model where your partner is located across the border.

The top advantage of the nearshore model is the small time zone difference between your in-house and external teams.

The downside is a lesser advantage in cost reduction compared to offshore outsourcing.

Offshore outsourcing

Lastly, offshore outsourcing is a cooperation model where your partner is located overseas.

The advantages of choosing offshore outsourcing include potentially lower costs of labor and living, a significant financial advantage, and around-the-clock working flow of internal and external teams caused by the significant time zone difference.

The downsides, however, include limited management possibilities, geographical and possibly cultural gaps, language barriers, and a noticeable time zone difference.

Types of IT project outsourcing

Another important consideration when choosing your vendor is the type of project outsourcing operational model. Depending on the project schedule, scope of work, and project budget, your resource needs will differ, so it's crucial to select the right model of cooperation.

Here are the three most common IT project management approaches in outsourcing.

Staff augmentation

Staff augmentation (also called staff leasing) is a cooperation model based on expanding your in-house team with external talents.

Responding to the needs of your business, you can leverage this model to add one or more positions within your team. It's the best choice when you're looking to fill expertise gaps within your team in a short time and with a restricted budget.

In this model, you can also choose to outsource project management or handle it internally.

Project-based outsourcing

Project-based outsourcing is an outsourcing model where the external company or an outside team takes care of the entire project.

In this type of cooperation, you gain a whole team of various skilled professionals. It's the top choice when you're bringing new IT projects to life that require a complete set of experienced professionals, especially when time is of the essence.

Managed IT services

Managed IT services is a business model based on entrusting a third-party company with control over the entire project or system.

While it may sound similar to project-based outsourcing, managed IT services typically involve more complex and long-term project delivery. Opting for dedicated teams is especially beneficial when you're seeking continuous cooperation rather than a temporary business partnership.

Best practices for successful IT project outsourcing

Regardless of the type of operational model you choose, ensuring effective cooperation that leads to the successful completion of your IT project requires adhering to a few rules.

Let's go over some tips that you might find quite useful when you choose software development company.

Establish the roles

Once you've defined your project objectives and challenges, and selected the operational model, establish the roles of all project stakeholders and team members.

Setting clear roles and responsibilities will help streamline the process and ensure that every team member knows exactly what their job is.

Ensure everyone has had a proper introduction to the project

Employing an external project team means you need to integrate them into your business. Be sure to provide them with proper training materials and the right tools to manage projects.

This will help them effectively carry out scheduled project tasks and ensure that everyone is on the same page in terms of project deliverables.

Make good communication a priority

Communication can make or break any project. Being straightforward, open, and communicating regularly with your teams (both internal and external) will help you build trust and ensure a collaborative atmosphere.

Establish ground rules

Part of the risk management process is defining clear rules about your requirements and ways of working.

Before kicking off the project, you should discuss matters such as data confidentiality, data security, quality assurance, and any other terms that are important to your specific situation.

Define the process

Together with your business partner, you should develop a process that allows you to track project progress while giving the team the right amount of space. You can achieve this by implementing a proven project management methodology tool or methodology such as Agile, Scrum, or the Waterfall methodology.

Selecting the right methodology will help you align work processes, monitor and track progress, and ensure the timely delivery of all project milestones.

The pros and cons of IT projects outsourcing

As with every other process, IT project outsourcing presents many opportunities, but also some challenges that need addressing to ensure successful project cooperation.

Let's review the most common ones and see whether the benefits outweigh the risks.

The benefits of IT project outsourcing

• Cost savings: Outsourcing talent saves businesses hiring and training costs while providing the company with a diverse skill set of experienced professionals.
• Time optimization: By outsourcing experienced talent, the time-consuming tasks of hiring and vetting professionals are alleviated.
• Access to global talents: Access top-notch talent from around the world without the complexities of the hiring process. Skip the complicated paperwork for foreign professionals and immediately integrate external teams into the project.
• Flexibility: Choosing to outsource enables you to almost seamlessly scale your team at any given moment during the process. If the scope grows or drops suddenly, you're able to quickly react to the situation and adapt the project plan.
• Focus on core business activities: Transfer work to external team members to free your internal experts to concentrate on core business operations.

The challenges behind IT project outsourcing

• Cultural and Communication Issues: Overcome language and cultural differences with external partners by ensuring they have a good command of English and by organizing face-to-face or video meetings. Verify team leaders have necessary facilitation skills and understand your project management methodology.
• Time Zone Difference: While time zone differences can be challenging, they also offer the opportunity for around-the-clock work. Establish communication time frames that suit both teams to ensure collaboration isn't negatively impacted, potentially benefiting the project timeline and budget.
• Quality and Security Risk Management: Address potential security and quality risks with external teams by examining the vendor’s work standards and setting clear cooperation rules. Ensure alignment on quality assurance and secure the partnership with an NDA (Non-Disclosure Agreement).

Harnessing the potential behind IT project outsourcing

Getting started with IT project outsourcing can be a challenge, but it doesn't have to be too difficult if you follow these steps.

Remember to always start by defining your project requirements and challenges. Once you've established those, it's easier to move on to selecting the best operational type and geographical model for your business.

Implementing these best practices will help simplify and shorten the process of searching for the right partner. This will make the final choice much easier and help you get the most out of your IT project outsourcing process.