Knowledge Transfer in the Age of Outsourcing

Knowledge Transfer in the Age of Outsourcing

Most businesses know that replacing people is difficult, time consuming and costly. It’s estimated that replacing the average employee will cost a company upwards of 20% of their annual salary. The more important they are to the business, the more it will cost. 

However, when you’re in the tech industry, and the people who work in your business are critical to the development and maintenance of your products and services, those costs only increase. Even though most people will give you two weeks’ notice (or more) it’s nearly impossible to capture and transfer that much information in that little time. Even if you have found a replacement by then. 

But when you add outsourcing to the mix, things get even more complicated. 

Knowledge Transfer Basics

Before we get into any of the specifics about knowledge transfer when work is outsourced, it’s worth reviewing some of the best practices in general. 

The first and most important thing you should keep top of mind is that knowledge transfer should never be something that you start when a key person is leaving. Every step of every process, you should be documenting important processes and information, so that when someone else needs to take over – whether they leave or go on vacation – you have the means to fill the gap quickly and relatively easy. 

The next thing you need to remember is that there’s no information that’s not required. Even if the shining stars in your team know their product inside and out, and can skip over the basics, which won’t be the case when someone else has to step in. So, no one should ever assume that any information is too basic or simple. Include it all and be as detailed and comprehensive as possible.

If possible, incorporate some hands-on training. Documentation, user manuals and design notes are great, but sometimes, you also need a person to walk someone through it all. 

Finally, make sure that it’s always abundantly clear who owns the right to any IP. Your people are brilliant – that’s why you hired them – but the solutions they create on your dime belong to you. Spell that out in your contracts and documentation. 

The Outsourcing Problem

Outsourcing is fantastic for smaller companies in the tech industry. When your budget is small, but you still need to launch, grow, and scale, you’ve only got a few options. Those include:

  • Wearing many hats – but the more work you and your team put in, the more likely you are to burn out sooner rather than later
  • Scale back your plans
  • Hire lower skilled or less experienced people in some roles and train them
  • Outsource tasks and only pay for the time and skill you need

Most tech startups and early-stage companies use a hybrid approach. They’ll do as much as they can in house, keep things lean and mean and try to hire people with great potential, but who aren’t quite as experienced yet. 

Then, when things get too much, they might choose to outsource. 

But if knowledge transfer is difficult in house, it’s a lot more complicated when you’re working with people outside of your own company. There are several ways you can address this:

  • Make sure that your contract is watertight, and includes an NDA, and be ready to enforce it if anything goes wrong
  • Try to outsource non-core tasks if possible
  • Don’t let knowledge transfer fall behind – make sure that the contractors you choose provide any relevant information throughout the process
  • Use cloud-based tools that you control to manage information and project tasks – that way, you always have control

Even if a company you are outsourcing to does provide the information you need, there may be a delay between your request and their handover. Which means you might not be able to do anything until they get around to it. 

What Could Go Wrong?

Many, if not most, companies that offer outsourcing services are completely above board, and will be more than happy to provide all the information you need during each project or task. They’ll also be happy to hand over any important information if and when your relationship with them comes to a close. 

Most outsourced tech service providers would also never dream of doing anything that would jeopardize their clients’ IP. 

But not every company that offers outsourced services in the tech industry are as above board and honorable. Sometimes, you choose the wrong company, and they go as far as to use some of your ideas on their own projects. Or sometimes, they hold critical information hostage, so you can’t easily switch to another service provider, or move that aspect of your company back in house. 

Some companies will even charge additional fees to hand over important information required for knowledge transfer. 

Those horror stories are few and far between, but they are not unheard of. So, if you’re planning to take advantage of any outsourced services, make sure you have plans in place before you flip the switch. Keep your most important information to yourselves, cover yourself contractually, and make regular knowledge transfer and documentation a contractual requirement. 

Outsourcing is fantastic, and it’s a crucial tool for many smaller companies. You can get a lot more done when you have a team of experts on call when you need them, and not costing you money when you don’t. But it’s always a good idea to make sure you’re not handing over too much information that is critical to your company and getting all the information you need to take control when you need to. 


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