Guide for a correct estimation of IT outsourcing services costs

The cost estimate of IT outsourcing services is crucial to determine the financial viability of the software project, the scope of work to be outsourced and the expected return on investment.

To make an accurate cost estimate, several factors must be considered, such as the type and complexity of the software, the resources and skills required, risks and uncertainties, timelines, and quality standards. Communication and coordination between the client and the IT outsourcing service company is crucial in determining the total costs of the project and the service.

In this article we will talk about everything you need to know to correctly estimate IT outsourcing services, so that you have the best experience developing your project, without financial setbacks, waste of money or time.

Recommendations for evaluating the costs of IT outsourcing services

The evaluation of the costs of IT outsourcing services offered by a provider is an important task that requires careful and detailed analysis. As a client, you must be very clear about where the costs come from, the reasons for these costs, and the entire structure that the provider manages so that you are sure that you are paying what is fair for the service received.

Some recommendations for carrying out this evaluation are the following:

• Analiza la estructura de precios

La estructura de costos que te presente el proveedor de los servicios de IT outsourcing debe ser muy clara y detallada, que desglose los costos por servicio y por período de tiempo. Esto te permitirá comprender cómo se calculan los costos y cuáles son los elementos incluidos en la tarifa.

• Compara diferentes proveedores

Solo podrás tener una visión más amplia y realista de los costos si evalúas diferentes cotizaciones y propuestas de varios proveedores de servicios de IT outsourcing. Solicita estas propuestas a diferentes proveedores y elige la que más te convenga.

• Consider hidden costs

In the software development cycle there are always hidden or over-budget costs that could arise during the project. These costs should always be considered when putting together a budget or evaluating the quote that a supplier sends you.

These hidden costs could include implementation costs, transition costs, training costs, additional support costs, or any other costs that may arise outside of the base fee.

• Evaluate the cost-benefit ratio

Don't just focus on finding the cheapest option, but on evaluating the cost-benefit ratio. Consider the quality of the services offered, the provider's experience, responsiveness, flexibility, and other relevant factors. Find a balance between cost and the value you will receive from the IT outsourcing company.

• Consider support and problem management

Evaluate how the IT outsourcing provider handles technical support and problem resolution and make sure you understand if these services are included in the fee and if there are any additional costs associated with them.

How to make a correct estimate of costs of IT outsourcing services

We share with you a series of steps and criteria to make a correct estimate of costs, adjusted to the needs of the client's project:

• The scope and complexity of the project must be taken into account, detailing the activities and deliverables expected from the IT outsourcing service provider, as well as the level of quality and the required deadlines.

• The cost is also affected by the profile and experience of the IT outsourcing team. The skills, competencies and knowledge of the software engineers who will work on your project must be taken into account. Another aspect that affects the cost is the availability and rotation of the team.

• Identifies and analyzes the possible risks that may affect the development of the project, both internal and external, and establish mitigation and contingency plans. This will imply allocating a margin of time and budget to cover possible unforeseen events or changes in the scope.

• Evaluate very well the return on investment that you will obtain when contracting IT outsourcing services considering the tangible and intangible benefits that will be generated for the client. These can include greater efficiency, quality, innovation, flexibility, scalability, among others.

• During the cost evaluation of IT outsourcing services, it is essential that the client communicates his needs and expectations to the provider, so that he knows which services are appropriate in this context. In this way, they will be able to reach an agreement that benefits and satisfies both parties.

Do you need IT outsourcing services to develop your software project? At Rootstack, we have +12 years of experience supporting companies in their digital transformation. Contact us!

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