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The Trade-Offs of Technology Outsourcing

by | March 4, 2021

Xoomworks has been in business since 2000. It’s not easy for any of us to remember a time in the technology sector before the smartphone or social media. In 2000, Google had just turned two and was starting to monetize searches with the launch of Adwords, now Google Ads. Technology was beginning to disrupt the marketing function – although it would take another ten years for marketers to begin grappling with the ‘omnichannel customer experience’.

At Xoomworks, we knew the new millennium would be driven by technology – and we had just more than an inkling that technology would change the way we live, and how businesses create new value. Twenty years on, we look back on how the focus has changed on technology.

Back then, the business imperative was to implement technology that would create process efficiencies and help organizations to streamline and become leaner. Companies would outsource their internal business functions to offshore teams with the analytical or technical skills they needed. It was an economic strategy that resulted in cost savings: no less, no more. Even Michael Porter’s Value Chain model represented technology as a mere support activity in reaching the desired margins. Making decisions around offshore technology outsourcing was as simple as saying: “Can they do it? And how much cheaper can they do it for?” The emphasis on cost and location. Today Asia continues to be a good option for this type of activity.

From a supporting role to a boardroom priority

Technology today is a without a doubt a key driver of competitive advantage – not because it cut costs but because it creates business value. Consumers carry incredibly sophisticated devices in their pockets, and they expect engaging, seamless and efficient digital experiences. They want immediate access to information and services. They want technology to keep them safe and secure, entertained, healthy and much more. This shift in consumer behaviour has spilt over to the workplace, where employees expect technology solutions to behave in the same way.

Over recent years organisations have invested in digital transformation. New technologies like mobile, cloud, automation, AI, the internet of things, blockchain and augmented reality are helping create new start-ups and driving innovation in organisations that rely on technology to achieve their business outcomes and grow. Today’s technology agenda is firmly in the boardroom, and technology innovation is a top priority. With increased competition and new consumer expectations, businesses need to get to market faster without comprising on quality. They need their USP to be about getting quality technology products to market – and getting it right the first time. That puts pressure on cost. A highly skilled team that can challenge and inspire, find solutions and deliver a quality product quickly as well as be accountable to business leaders will come at a cost in talent-scarce locations like London. This far up the value chain, when the need for speed and quality is critical, decision-makers have to think of outsourcing to new locations. That’s where technology nearshoring with an experienced partner becomes a more viable and attractive option.

Xoomworks Borderless™

When speed and quality are critical, you want the best people on your team – and quickly. Just not at any price. It’s why over the last decade Xoomworks has invested time and energy in building a multi-location nearshore network that allows us to access a range of hard-to-find skills in digital development, product and project management very quickly. As the war for tech talent ramps up, businesses need to be flexible with their locations or else their costs will spiral.

Cultural alignment and communication

There is no doubt that cultural alignment and communication are key to working with outsourced teams – more so when dealing with innovation and problem-solving. It’s essential to put aside the typical buyer/supplier relationship and work in partnership. In our experience, the kind of relationship that works is one where getting it wrong and admitting failure is not a problem, merely an inevitable part of the journey on the way to achieving a challenging objective. It’s one that works as ‘one team’, unafraid to share issues and challenge each other’s thinking. It’s the kind of relationship that has to thrive under extreme pressure and work seamlessly to produce a great result.

Part of the team: a case study

NotLost is a British start-up that wanted to revolutionise how lost property is handled in the UK. The founders had envisioned a fast and easy way of registering and searching for items that would reduce the hassle of managing lost property across a number of large London-based venues. It would save venues from having to register and record lost items, match them to their owners and dispose of unclaimed items. From a customer experience perspective, losing personal property can cloud their enjoyment and impact the venue’s brand perception. From a technical perspective, it needed a fast way to register found items, capture rich data to make it searchable as well as allow for owner validation on the platform.

With a limited budget, NotLost partnered with Xoomworks enabling them to overcome many of the technical challenges in ways they had not even considered before. From an initial scope of a 100-day build, Xoomworks pulled together a top development team that delivered a rigorous and secure digital technology platform with a collaborative approach to problem-solving. Thanks to input from the developers, the product has continued to evolve as the business grows. Throughout the process, the NotLost team viewed the developers as part of their own team rather than as outsourced developers that work for another company.

Still appetite for risk

The fall out of the pandemic has been harsher with some of our client sectors – we know they are doing all they can to survive and stay in business. Other sectors we work with are thriving.

The message from the UK government is clear that we need innovation to grow out of this crisis. A recent communication from UKTech cites research on 300 CEOs and company directors of large businesses shows that there is some appetite for risk. While overall investment in innovation is down since the start of the pandemic, a third of companies still plan to spend at least £1million on innovation in 2020 – in spite of the crisis, with over 1 in 10 large businesses still planning to invest £25 million or more.

A trusted business partner that delivers technology well

These businesses don’t just need a technology partner; they need a trusted business partner that can deliver technology well – and fast. For companies that want speed, quality and more value from their investment, the solution is a partner with borderless capability with the right range of skills and understanding of the risk, whilst focused on business outcomes.