How IT outsourcing works: Five questions for Florian Apel, Co-Founder of BitKollegen GmbH and Omnics Technologies Pvt. Limited
How does IT outsourcing actually work?
What is important and what are the challenges?
Many companies that have not yet dealt with IT outsourcing have questions about the actual implementation.
We asked Florian Apel a few questions on the subject to shed some light on this and to counter common prejudices about IT outsourcing in an offshore destination.
Florian is an IT outsourcing specialist and co-founder of our companies BitKollegen GmbH and Omnics Technologies Pvt. limited.
Florian, how long have you been professionally involved in IT outsourcing?
Which destinations have you worked with?
What differences have you noticed?
I started actively using IT outsourcing around 15 years ago.
I was able to gain experience in both the offshore and nearshore sectors.
Among others, I have worked with service providers and freelancers from Turkey, China, Vietnam, South America, India, Poland, Romania and Belarus.
I haven’t had any experience in Africa yet, but there is an exciting new market emerging there that I would also like to take a look at.
From my point of view, there are a lot of differences, which I can only describe in excerpts.
Generally speaking, you can say that nearshore employees are usually closer to us culturally.
Because of this, communication works better, onboarding is easier and it’s easier to get into the flow of work.
However, the costs in the nearshore area are around 30% to 50% higher than in the offshore area.
Language is also a very important factor.
A good command of English or even German is, of course, first of all individual to the employee.
However, in my experience, the average language level in the various outsourcing destinations is sometimes very high and sometimes not so high.
In my experience, it is particularly difficult with English skills in South America; these countries are more suitable for outsourcing to Spanish- or Portuguese-speaking Europe.
In India, where we are currently active with BitColleagues and Omnics, English is even the official language, and court hearings and correspondence with authorities are usually conducted in English.
Communication with employees from India is therefore not a problem in terms of language.
Many people may now object: But the accent!
From my own experience, however, I can say that you get used to the accent within a few days.
In addition, there are of course a number of differences in communication and learned working methods.
Asian countries, for example, are culturally more non-committal, which can lead to different expectations between the customer and the outsourcing employee.
Incidentally, this is an important starting point for our cultural coaching, which is very important to us at BitKollegen and Omnics and should take place right at the beginning of the outsourcing process.
Sufficient time should definitely be invested in this to ensure that outsourcing is a long-term success and not just a flash in the pan.
Incidentally, we do not only provide such coaching for employees in the outsourcing destination to prepare them for the European or US market, we also recommend it to our customers or the people in the customer’s company who will be working with their new team members in the future.
What different outsourcing models are there?
For which use or which type of project is IT outsourcing particularly suitable?
In web-based software development, I would divide outsourcing into two categories in terms of complexity.
- Outsourcing front-end development: I recommend this option to companies that are making their first experiences with IT outsourcing.
The complexity is low and integration into the existing team in Germany is simple. - Outsourcing backend and frontend development: In my opinion, this form of IT outsourcing is very complex and requires a lot of communication and project management from Germany.
I would only recommend this option to companies that already have experience with IT outsourcing.
What resources do companies that are considering IT outsourcing need?
This is actually the first and most important question to ask yourself at the start of an outsourcing process: Does the company have the necessary resources to coordinate the outsourcing employees and their tasks in the project?
First and foremost, the customer must have IT experts who can reliably coordinate the project(s) and evaluate the quality of the work performed.
In addition, the customer needs clear objectives and requirements and should strive for clear communication so that the partner can also meet expectations.
Here too, we support our customers, especially those who are gaining their first experience with IT outsourcing, with our consulting services.
When it comes to front-end development, project management on the customer side from Germany can also support the outsourcing team.
In my opinion, back-end and front-end development always requires an additional back-end developer with strong communication skills on the customer side in the team, who is sometimes even deployed as a project manager.
However, a product owner with a good technical understanding may also be able to do this.
When a customer has booked IT outsourcing services: What are the usual process steps to set up a suitable setup?
The first step, of course, is to have suitable personnel available.
Either we already have suitable specialists in our team or the position is advertised.
If an advertisement is required, we usually post a job advertisement on several online portals that specialize in the Indian market for IT professionals.
Typically, 300-500 professionals apply for an open position with us.
To screen the applications, we have established a five-stage selection process.
First, we use AI support to filter out those applicants who have the required skills.
The remaining candidates are checked for consistency, including an extensive background check.
Typically, around 10% of applicants are left after this step, which are then manually screened by our more experienced local senior developers.
Then there is the first technical applicant round with the senior developers.
Here the applicants program live and solve small problems.
Incidentally, the aim is not to complete the tasks as quickly as possible, but to check whether the applicants approach solutions creatively.
A small assessment center, in other words.
Those who score well in the technical round have a second interview, usually with one of the founders, in which the most important key points of the employment relationship are discussed.
In the last round, the favored applicant has a final interview with one of the founders from Germany, which essentially revolves around the cultural aspect, i.e. the question of whether this employee is suitable to fit into a team at a European company.
A sure instinct is required here, and not every cultural difference means that there is no chance of working together.
Once the employee or outsourcing team has been selected, further important steps are required.
These mainly take place in-house at the customer’s premises.
We also provide support here if required.
To name just a few important points:
- Select suitable communication tools (chat, video conferences, special communication apps such as Slack, Teams) and make a conscious decision to use them consistently.
- Setting up a functioning ticket management in a project management tool to provide the tasks for the outsourcing partner.
- Formulation of programming guidelines and guidelines for documentation.
Once such common standards have been agreed upon, they should be adhered to in the long term. - Possibly setting up test systems suitable for third countries with anonymized databases for development.
- Cultural coaching, if possible on both sides.
Generally speaking, if you prepare carefully and have structured processes and clear communication in place, nothing stands in the way of successful IT outsourcing!
What are typical problems and challenges in IT outsourcing in general and which solution strategies are suitable?
On the part of the outsourcing provider, the main challenge is to be able to consistently offer highly qualified, culturally trained staff with strong communication skills.
For example, if the partner
If the partner is unable to create a homogeneous working environment or does not have a good wage level, there will inevitably be a lot of staff turnover and loss of know-how.
That’s why I advise customers who are considering IT outsourcing and looking at different providers to find out whether the developers in the outsourcing destination have a good working environment.
Are there photos of the offices on site?
The partner should be transparent here!
Finally, outsourcing can also entail certain risks in terms of security and data protection.
Make sure that the partner has suitable security and data protection measures in place and integrate these into the contracts.
Other problems can arise during the outsourcing process that can jeopardize the success of the project.
Inadequate or unsuitable communication is a common problem.
So are requirements and expectations that are not clearly formulated.
This often leads to misunderstandings and misinterpretations.
Customers should prevent this by establishing clear communication channels, clearly defining requirements and involving employees in the team, e.g. through their regular participation in routine meetings such as the Weekly or Daily.
Ultimately, however, all of these challenges can be solved if the outsourcing process is approached in a structured and culturally sensitive manner from the outset and if difficulties are not immediately thrown in the towel, but rather if we work together to find a solution.
We also see ourselves as a reliable partner at our client’s side during the ongoing outsourcing process, who can always fall back on our cultural coaching and consulting if required.
