Our first instinct – our first choice – is to perform work within our own organization.  It’s what we’re used to, it’s where our product and project expertise lies, and it’s usually the path of least resistance. Next in line is the concept of bringing in outside consultants to work on the project as needed.  For example, you may need particular software expertise on your project and everyone in your organization with that expertise is booked on another engagement. 

Since you need the work performed now – not in two months – you bring in an outside expert for, say, five weeks to get the task completed and you move on. The third choice is to outsource, and that is what this article is about.  There may be times in the life of your projects or during your project management career, where the best alternative is to outsource an entire portion of the project to an outside vendor to perform, say, all of the development work or all of the testing of the system prior to user acceptance testing.

Outsourcing Services

An alternative to using consultants is outsourcing, by which an independent vendor provides a service and assumes responsibility for the results. For example, a project manager might outsource the development and delivery of a deliverable or component of the product being built.

Outsourcing has its advantages.

Outsourcing has its advantages. It can help shift the development of difficult, complex deliverables to expertise that does not exist on the team. It can shift nonessential deliverables to outside vendors so that the team can focus on critical matters. Finally, it can allow for flexibility in responding to a fast-paced environment, since less is invested in a project infrastructure and the outsourcing can be canceled without investing too much. Outsourcing has its disadvantages, too. The potential for losing control may be high. The work can cost more initially. And it takes time to find a reliable outsourcing vendor.

To ensure that you make a good outsourcing decision:

1.  Do an analysis to determine if outsourcing is a better option than having the team do the work.

2.  Select from several outsourcing vendors. Compare each one, not just on a cost basis but also on the reputability of work and service.

3.  Identify what is too critical to outsource. A bad outsourcing decision can have disastrous results on the entire project.

4.  Identify what you can outsource. Often, these are services or deliverables not essential to the outcome of the project.

5.  If outsourcing something critical, then ensure that reviews and audits are stipulated in the contract. Actually, the rights for reviews and audits should be incorporated in the contract as a general rule, but especially for critical services or deliverables.