ITIL defines Service Desk as

A single point of contact (SPOC), which meets the communication needs of both users and IT employees, but also satisfies both customers and IT provider objectives.

IT Service Desk

With the introduction of the PC in 1981, the IT support center industry has grown. In the mid-’80s Help Desk was known as the “helpless desk” due to the poorly trained employees who had access to none of the tools that a twenty-first-century service desk now enjoys.

In reaction to the immature state of IT, The Information Technology Infrastructure Library (ITIL) was developed by the UK government. This set of best practices introduced the concept of an integrated service desk that is the single point of contact for all IT-related customer inquiries.

Research shows that the most frequent technical service at a service desk is ‘password changes’ and ‘user generation’. More and more institutions have automated those processes, but they still consume substantial manpower sources. 

Most Service Desks try to increase the first-time fix rate. There are two main reasons for this. Firstly, the faster the incident is fixed, the quicker workers can start being productive again. This saves the organization time and money. It has been shown that customer satisfaction is related to the first-time fix rate. Secondly, first-time fixes also save the Service Desk money within the constraints of their budget. If the incident can be fixed at the first level and not escalated, there is no use of second or third line resources.

This means that the Service Desk has to provide the training and development that all staff performing jobs needs to acquire and maintain the skills and knowledge required for their positions.

Towa Service Desk

Now more than ever, cost pressures on the business are driving the need to migrate support to lower-cost channels and nearshore delivery locations. The IT Services organization must continue to minimize the cost of downtime to the business by providing clients with a Single Point of Contact (SPOC) for all technology incidents and requests, maximizing resolution on first contact through great troubleshooting capability, and managing all escalated incidents and problems through to resolution.

If you are a business owner you must have considered Technical Support and Service Desk outsourcing for your company. Although there are some benefits to having in-house staffing to field the types of phone calls and emails that come through to the Service Desk, there are several advantages to Technical Support and Service Desk outsourcing that you cannot afford to ignore.

Over the past ten to twenty years there has been a move to outsource the Technical Support and Service Desk function, and it appears that recently there is a move to bring the function back in-house, why is this?

I would like to propose two main reasons that organizations are unhappy with their outsourcing arrangements, and why there is a trend to reverse the situation.

Firstly, many of these outsourcing arrangements have been offshore – out of the USA, taking advantage of low labor costs in India and Eastern Europe. To the customer of your IT Services, when they call the Service Desk, for help with some sort of technical issue they should feel they are calling someone next door. Whether they are transferred to Bangalore or Ukraine it should be completely transparent. However, that has not been the case.

The Service Desk agents in these offshore locations are technically well trained; they are even given English names and receive elocution lessons. However, outsourcing the Service desk to an offshore location may yield cost savings, but customer satisfaction is not great. Generally, customer satisfaction with these offshore facilities has been low.

For the IT Services organization, the Service Desk is the window through which their customers build their perception of the value of both the IT Services department and the people who run it. So if Customers are not satisfied with the service they receive at the Service Desk, it will have a negative effect on the overall organization.

Gartner identified four factors as the main contributors to customer dissatisfaction with the offshore Service Desk and the drive to bring them back in-house:

Client knowledge: When a Service Desk is in-house, whether or not it is run and managed by the host company’s employees or an external provider, these people have access to internal communications which enable them to clearly understand the business and, therefore support end-users more knowledgeably. When the Service Desk is offshore, a good service provider may try to capture the information into a knowledge database, but the information is not always kept up to date or easily understood.

High turnover: A recent Gartner survey for all IT services showed that the worldwide dropout rate was 14.7 percent and offshore it was 22.1 percent. Although this can be a problem anywhere in the world, it can be extremely prevalent in low labor-cost countries where many IT job opportunities exist and many IT Service Desk agents will switch jobs for a small salary increase.

Cultural differences: If a client has a problem, he or she will relate the problem over the phone, but because of cultural differences, the Service Desk agent may not interpret the problem and react in the most appropriate manner. For example, a client employee may have a problem on a PC and want to know how to fix it. Instead of explaining how to fix the problem, the offshore agent may take control of the employee’s PC and fix it without explaining how this was accomplished because the agent doesn’t want to bother the client. However, the client employee may be dissatisfied because he or she doesn’t know how to fix the problem resulting in another need to call the help desk again in the future.

Cultural issues and dialect were the factors rated highest when discussing dissatisfaction with offshore Service Desk facilities

All this doesn’t mean that offshore facilities are all necessarily bad. Mexico and Central America for example have been receiving some fantastic reviews and increase demand. Mexico share 3 time zones with the USA, it is culturally more aligned, English is the ‘second language and the accent is very similar, and labor costs are super competitive.

The second reason for bringing the Service Desk back in-house is that the providers are based in technology solutions, and not a customer service focus, and this shows itself in their approach to market offering and results in negative perception for both the IT Services organization and the people running it.

Do you relate to this business case?

One company recently asked Towa to provide a Service Desk Analyst to work with their main Service Desk provider – as a pilot to test our approach. We had been selling to the organization that our approach of delivery Service Desk from a Customer design-centric focus, backed up by robust ITIL processes, so they invited us to do a 3-month trial. The main provider had been supplying IT infrastructure to the organization for many years, and a few years ago the organization asked if they could provide them with Service Desk. Of course, the answer was yes. But shortly after the contract had begun, complaints started to come in. This situation became more of an issue and eventually raise concerns about the CIO’s performance, and the overall value of the IT organization was being questioned. The main provider had a background in technical IT solutions. The people on the desk were good, technically very good engineers, but had no sense of customer service and satisfaction.

In a quick period our CSR (Customer Satisfaction Rate) started to show a trend, the company increases our team to 10 staff and more results started to be reported, better satisfaction, first-time fixes, and consistent friendly support for level 1 employees. Then fast forward 10 months later, the organization grew our team to provide more staffing for level 1 and level 2 Service Desk services. 

Many companies get more focus on technical skills than actual customer-centric mindset.

Outsourcing your Service Desk to a Customer-centric provider 

The right partner for your company will depend on many factors, like culture, language, time zone, size, and many others. Outsourcing is a good option with the right partner.  

Service Desk and Technical Support outsourcing is an efficient way to reduce costs and increasing customer satisfaction – which can ultimately increase the profitability of your company.

The main benefits of outsourcing the Service Desk and IT Technical Support are as follows:

• Better financial leverage.
• That is because it can lower fixed costs and at the same time bolster return-on-investment.
• A known fixed cost.
• Improved Net Income Per Employee.
• No Training costs – your company would not have to spend money on training its staff to learn and master the use of new software or even hire more professionals to do so.
• No recruitment costs, and the inherent management time involved in the recruitment process.
• If the facility is off-site, savings on office space and consumables can be made.
• Management Issues.
• Frees up time to spend on key competencies and applications, and focus more on the Customer – leaving the provider to deal with office support, operating systems, and other non-core tasks/functions.
• No need to worry about the constant ‘churn’ of employees.
• No worries about being able to provide career progression – the provider will take care of this.
• No worries about cover for sickness and holidays.
• You will be able to create a better customer experience – this is the business of an outsourcer with Customer-Centric designed services.

Increased positive perception of the value of IT Services and the people who run it.

A company can move its help desk outside for many reasons. Help desk outsourcing can be a strategy in itself. On its own, it can help a business achieve specific and numerous targets or goals. But logically, the practice you have to manage the partner relationship.

For the ‘cons’, Service Desk outsourcing can make a company lose its control over training, although the contract would stipulate what skills and competencies are required – it is up to the provider to ensure its employees have the required skills. It would also have to turn over specific parts of its operations to an external vendor, which can raise issues in terms of privacy and trading secrets, but with the right contract, this should be taken care of.

Some companies express their worry that Service Desk outsourcing employees may lack concern for the customers. This logically is a serious concern because most clients are sensitive over Customer Satisfaction ratings. If Service Desk representatives of the outsourcing provider are not professional and educated, it can reflect not on the outsourcing firm but on the company that pays for the service.

Finally, in a Service Desk outsourcing the setup is off-site, the company would have to get used to having remote personal. The provider can be operating in another country. As described above, there can be cultural differences that may show in the service. Businesses that prefer to keep their staff socially and culturally intact will also have inevitable issues with offshore outsourcing.

When looking for a Service Desk or Help Desk provider is a far better option to consider a neighboring country like Mexico, with lots of well-ranked Universities, proximity, cultural affinity, English as a second language, competitive and fair rates, same time zones, are a good value proposition.

Towa Software has over 20 years of experience to guarantee technical skills and outstanding customer support. 

Starting small and build trust with your provider before scaling. 

We outsource Service Desk services for companies in the USA for more than 10 years now.

You can contact us at support@towasoftware.com or give us a call via (+1) 210-787-4525 for more information.

You can Book a 15-min call call with one of our Customer Success Managers for a conversation.

All company sizes, any business can potentially benefit from outsourcing talent. Instead of taking an in-house approach for a team of developers, outsourcing top talent and management skills can save enormously in the software development budget.

It’s a win-win, you will have more time to focus on your core business strategy. And you will hire a dedicated team of skillful engineers to carry on the heavy work of development and launching software products. 

Keep in mind that any contract for software development is different for each type of company. It will be good to have a lawyer to tailor and structure the core areas such as fees, expenses, the scope of services, and costs from time to time.

Why software development agreement is important?

By signing a software development contract, you can protect your business from some downfalls. If not carefully doing it right, you can time-draining legal dispute. Don’t worry. The contract is your best protection against inevitable conflicts over things like:

• Specifications. This is one of the most important elements of the contract. A well-written scope of work (requirement specifications) defines out exactly what the finished product will be like.
• Payment. What payment terms are agreeable to both parties and when.
• Work phases. Determine how much work needs to be completed at each stage of the project.
• Intellectual property rights. Ver important, who owns the software, source code and technology.
• Copyrighted material. Who owns the copyrighted material that goes into software development.

At Towa Software, we have more than 20 years of business experience. When developing a new project for our clients, we will outline the specific requirements like audience research, deadlines for particular areas, prototyping, UI/UX design, coding, testing, DevOps, and many other activities that are needed. The software development contract helps many clients ensure that the software outsourcing company and the client are on the same page, clearly stating development services, timelines, payments and more.

What you should take into consideration when hiring an Outsourcing company?

Watch for contract loopholes in an IT outsourcing contract. There are dozens of common mistakes you can make.

Before the master contract is signed, ready carefully.

Let’s learn what to watch in contract loopholes in software outsourcing, from personal experience. 

Most Popular Types Of Outsourcing Contracts

First, you should be clear about what types of software development contracts are available.

When outsourcing a development team, it is hard to have full control over the work process. Before the project begins, the most important thing you can do is to clarify all the requirements of the contract in detail, most importante is the scope of work.

What costs are involved? Is there any hidden cost? What price rates will be agreed upon? 

Let’s find out the features of each contract for outsourcing services, most commonly used.

Fixed Price Contract

A fixed-price contract determines the price of a certain scope of work, regardless of the actual time of end-to-end implementation. Moreover, this type of IT outsourcing model can provide financial incentives for achieving specific project milestones and reach goals.

• A good option for short-term projects
• Client and Outsourcing provider agree on a ‘fixed price’ for the service
• The price is estimated by outsourcing company based on the well-defined scope of work (requirements)
• The downside is little or non-flexibility under this type of contract for adding or changing the scope of work

Time & Materials Contract

Different from the fixed price project, the T&M model does not need a detailed estimate of all the features and requirements. The client pay for the hours spent on the development of a determined scope of work. Ideal for long-term collaboration: 

• The Client pays the outsourcing company for work time and used materials monthly.
• In contrast, to Fix price, T&M allows a great level of flexibility in development, to change requirements, and to allocate resources according to business needs. 
• Ideal for long-term cooperation.

Dedicated Team Contract

This software development contract model will fit better for all kinds of development tasks. A dedicated team will only focus and work with your software project to achieve results and become a high-performer team in little time.

At Towa Software, we have been proving this model of contract for some time now and believe it is the best way to consolidate an outstanding team, with top talent, dedicated only to your product.

• More for a long-term project with flexibility and potential to scale
• The whole team is in one place or remote, same time zones and cost savings
• The team is managed by senior experts and specialists to guarantee results
• Highly motivated team members quickly react to any issues and changes
• The whole team is dedicated to your success

Now that we have discussed in general terms the most used models of contracting with a Software firm, it is time to bring some light to the most common mistakes people suffer when hiring a team of engineers, watch for these loopholes.

How To Avoid Contract Loopholes In Software Outsourcing?

It’s usually the client’s choice to select between Fixed price, Time & Materials, and Dedicated Team for hiring a software development company.

All types of outsourcing models have their risks and opportunities. Even with all things being considered, we strongly recommend watching for these key points to reduce the risk of contract loopholes.

Define Development Specifications

Specifications are the main part of any software development contract. If you don’t clarify what the final product looks like, how it will look, or what customers expect, it’s hard for the development team to build a product that meets your need.

Your contract should clearly define:

• All the functions integrating with your product.
• Write down the details of the project, be as specific as possible.

Also, the contract should describe the development services that you expect your partner to provide. It also shows the procedure of making changes to the scope. Ideally, we recommend stating any changes proposed by each party as following:

• How many times you can change a request.
• A description of the change.
• What is the result of the change has on the project cost and time.

Project Timeline

Every project should have a defined plan. The project should state the hourly rates, development phases, milestones, and deadlines. Defining each stage also helps you and your software provider. Just make sure all supplementary documents are signed by both parties.

There are project management tools that help you to manage an effective timeline such as Asana, Smartsheet, Trello, Monday, there are many tools for tracking these activities.

Payment Time

As we mentioned before, the most common forms of payment agreement are:

• Fixed-price means the price is paid for an entire project. It can be helpful for you to know upfront what the project will cost. This type is less flexible for changes but gives more certainty on how long it will take to develop.
• In Time and Materials, you have to pay for the time spent and the cost of materials. Time and materials contract is easier to kick off. Because it requires less preparation and planning. Besides, the development team has more flexibility to maintain the high quality of the project.

Your contract should detail a schedule of payments including:

• The date that each payment must be made.
• How payments will be made.
• Additional fees that may be incurred.

Planning payments ahead of time is always a better practice, know your cash flows and payment due dates in advance.

Cost Estimate 

Cost savings is arguably the major reason to outsource services and staffing. However, one of the common contract loopholes in IT outsourcing is also about the cost.

It’s easy to fall into the temptation of selecting the least expensive providers to save money. Unfortunately, sometimes the lowest bid comes with poor quality.

Nobody wants to provide a negative experience for a customer. So you and your software outsourcing provider should be made clear what are the communication channels, deadlines for payments, and if there is flexibility.

To avoid mistakes in your contract, you have to set all the rules for payment and service.

User Acceptance Testing

In general, acceptance testing is done at the end of each development phase or Sprint. If your provider has a specific QA process that should form part of the testing, it should be documented. The agreement should also note the time assigned for testing, fixing bugs, and warranty time after launch for proving support for any defects or incidents. 

For Testing, you should note the following

• Who does the testing?
• How long does it take?
• What is the warranty for bug fixing?

Measure KPIs

Your outsourcing contract should specify the key performance indicators of the project. When the contract clauses are misaligned with the business objectives, problems arise

You should consider SLA, service hours, and service elements, human resources as well as technical resources required. This allows you to prevent contract clauses and have a flexible approach to describing the service.

Duration of Contract

When you signed an outsourcing contract, it means the provider is the right one at that moment. However, things can change with time and business strategy. Maybe, you wish to transfer an outsourced service to another vendor or bring it back in-house development. Contract loopholes relating to exit management should be clear, but they are often ignored. 

Therefore, from the establishment of the contract, the exit option must be integrated. What are the elements that will be transferred back to the customer? What are the knowledge transfers that will be provided in case of not outsourcing anymore? When and why could you decided to end the services provided must be stated in the contract. 

Security on Top

Many of the most commonly outsourced processes require the transfer of data. Therefore, it can carry significant contract loopholes with data protection.

First of all, to ensure data protection, there are questions that should be asked:

• Are the outsourcing company’s services compliant with good data protection?
• What are the security measures in place to prevent abuse of data?

Outsourcing agreements should cover key data protection issues. Then, the provider has to compliant with the legislation.

The contract needs to cover the extraction and removal of your data.

It’s also highly recommended you take advantage of how the transfer back to your systems can be made securely.

Conclusion

When starting outsourcing with a new outsourcing partner, many companies tend to sign the contract without having the resources to manage the agreement. As an Owner, CEO, CIO, or CTO you should know how to follow up on a detailed outsourcing contract. But we highly suggest that you write a simple contract through a clear and structured model of cooperation. Both client and software outsourcing providers should consider including timeline, the scope of work, payment terms, data security, clarify service description, ending clause, and notice periods.

Towa Software has over 20 years of experience to guarantee the quality of every line of code, we are proud of our products and services delivered. We recommend starting small and build trust with your provider before scaling. 

We have expert Project Managers and Innovation Consultants along with top talented teams who have delivered awesome products to customers in U.S.A, Canada, Mexico, London, and Australia.

As a leading software development outsourcing company in the USA and Mexico, we have extensive experience in many fields including fintech, banking, payments gateways, e-commerce, retail, marketplaces, health care, Omnichannel, and many more.

You can contact us at support@towasoftware.com or give us a call via (+1) 210-787-4525 for more information.

You can Book a 15-min call call with one of our Customer Success Managers for a conversation.