Project management outsourcing, especially on the Information Technology (IT) side, has been a burgeoning industry for some time. External vendors leverage a range of expertise, and for the client having capable engineers and development personnel when creating a new software application or maintaining an existing one is literally worth its weight in gold.
One of the most common characteristics of failed projects is inadequate project management, and this is especially true in regards to outsourced teams, where communication risks are very high. Thus, the question of whether to manage the team by using in-house resources, or outsource project management to the team itself rises.
As a software R&D outsourcing company, Apriorit has extensive experience of providing project managers to our clients as a part of our core offer. Over the years, we found out that managing team on the side of outsourcing provider proves efficient for both the provider and the client. However, not all clients are readily willing to outsource project management partially or completely, and there are a lot of valid concerns surrounding this practice.
This is why we decided to review both pros and cons of project management outsourcing allowing everyone to decide for themselves whether it is worth it or not. We will detail the pros first, then the cons, and will provide you with some measures that can be taken to considerably lessen the risk when taking on a project management consultant.
By far the biggest advantage of contracting project management outsourcing services is experience. Firms providing high-level, IT services bring to the table best practices over multiple clients and industries. One way to look at it is imagine if your most, in-house project manager had the chance to share best practices with what he/she is engaged in with your company with similar companies, industry-wide, on a regular basis. This is frankly impossible as: a) the time just doesn’t permit; b) firms generally are not eager to share information with would-be competitors.
Now, this isn’t to imply that an outsourced project manager would start working and share the trade secrets of a potential competitor. Disclosure agreements protect against this, and in most cases, it’s illegal. But what outsourcing providers will do, the savvy ones at least, is leverage the overall best practices of the project manager to get the most out of that individual and the contracted firm’s collective experience.
By far, one of the most difficult things to do at any level of an organization is separate oneself from a project, team or overall culture, and take an objective, outside look back in. Personal interests, relationships, office politics, etc muddle this exercise, which renders it in most cases impossible.
Outsourced project managers arrive with a vision and direction that firmly centered on developing and advancing the project to the best of their capabilities (and that of the firm contracting them). Their focus is technical and management driven, and the “noise” that generally permeates from employees steeped in their own corporate culture does not weigh in on their decision-making. Objectivity is a welcome relief to most managers, especially those seeking to move a project forward as quickly and efficiently as possible.
Cost is one of the main advantages of outsourcing project management. Having in-house resources dedicated to managing day-to-day operations of a completely geographically dispersed team is a potential cost to the company in and of itself. By using outsourced project management services, companies transfer all the risks in regards to day-to-day management of the team to the team itself. Things like scheduling, planning, task assignment, deliverable control, these are all handled by the internal project manager.
Moreover, redirecting internal resources from one project to another can be especially costly to a company if they are not 100 percent certain the action will be a beneficial one. Cost in this context should be understood over the long-term. It will typically be less costly for a firm to contract out services that an outsourced provider is more skilled in managing and providing.
While we feel the pros do outweigh the cons, it would be irresponsible of us not to mention the common disadvantages that come up surrounding the pros and cons of outsourcing project management.
Regardless of the industry, unique, company cultures are nearly 100 percent, ever-present. This is not to say that all company cultures are equally imbedded. Some are extremely influential while others are more passive. Nonetheless, within the pros and cons of outsourcing project management, one of the principal cons that firms will cite are being able to find development teams with ability to successfully integrate into a company culture that is previously unknown.
Therefore, in order to make this integration process as fast and smooth as possible, considerable efforts are required from an outsourcing company in the initial period to establish effective communication and familiarize the team with company culture at hand.
Vendor dependency is a concept that decades ago was a real concern for firms when bringing in outside parties to collaborate and take-on important services. The concern stemmed from a vendor being so skilled and highly efficient that the firm would have no choice moving forward than to depend on them for all similar such services. While in theory this sounds like something that could be potentially debilitating for a firm, the notion of competitive advantage exists for a reason and those firms that recognize how outsourced models, functions and strategy can co-exist and add value to their operation are firms that will maintain a permanent leg-up.
Moreover, vendor dependency if it is related to key competitive advantages is not a dependency issue at all. If a firm recognizes that they can depend on a valued, experienced outsourcing service that understands the company culture and integrates seamlessly with their respective teams, that is smart business, not dependency.
Of these three potential disadvantages, access to proprietary information continues to be a real concern for firms who have not outsourced and are weighing the decision to do so. It is not easy to turn over your information to an un-known, third party. Nor is it advisable – company-specific information should only be trusted in the hands of a third-party, outsourced contractor who has a history of working in a similar capacity with major firms and counts on a public presence that speaks to their professionalism and ability to manage relationships. Once a firm has proven that they can be trusted across a range of industries and over multiple years, that is a good signal that your proprietary information will be safe with them. Contracting out to un-known, up-starts and handing over proprietary information is frankly not advisable and could be extremely harmful.
As conclusion, we want to say that the benefits of outsourcing IT project management are highly advantageous, but only so if the right company is selected. Experience is critical in this area and while we recognize there are always hurdles to overcome, we hope this list of pros and cons is helpful in guiding your firm to making the right decision for that next project.