Outsourcing
Also Known As
- Contracting
- External Hiring
- Third-Party Development
Related
Addresses / Mitigates
- Agency Risk: Accesses external resources and skills that may not be available internally.
- Funding Risk: Can be cost-effective by leveraging economies of scale.
- Schedule Risk: Can speed up project timelines by increasing the workforce.
Attendant Risks
- Agency Risk: Creates dependencies on third-party vendors and their reliability.
- Communication Risk: May introduce communication challenges with external teams.
- Security Risk: Sharing responsibilities across multiple organisations can introduce new security risks.
- Market Risk: Increasing the size of the supply chain introduces risks that the state of that supply chain changes with the market.
- Legal Risk: Outsourcing relationships may be more legally complex than hiring staff directly.
Description
"Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally, and sometimes involves transferring employees and assets from one firm to another." - Outsourcing, Wikipedia
Outsourcing involves hiring external vendors to handle specific tasks or projects. It can provide access to specialised skills, reduce costs, and accelerate timelines. However, distributed teams face Coordination Risk and reduced communication bandwidth—mitigations include video chat, periodic face-time, regular demos, and modularising work along team boundaries (Conway's Law). Additionally, outsourcers have their own Agency Risk: they're more interested in staying solvent than solving your problems.
Variations
| Outsourcing Type | Description | Reference |
|---|---|---|
| Offshore Outsourcing | Contracting work to companies in different countries for cost savings. | Offshore Outsourcing, Wikipedia |
| Nearshore Outsourcing | Contracting to nearby countries for better timezone alignment. | Nearshoring, Wikipedia |
| Staff Augmentation | Adding external contractors to work alongside internal teams. | Staff Augmentation, Wikipedia |
Used By
No methods use this practice