Retail IT outsourcing: Three proven strategies to make it work

According to the Deloitte Global Retail Outlook 2024, the retail businesses will be focusing on the following issues in the year ahead:

• Managing inflationary pressures and reducing costs;
• Improving supply chain resilience;
• Becoming more environmentally sustainable;
• Growing market share;
• Maintaining or increasing operating margins.

New tech adoption, retail software development, and business-wide operational and digital transformation are essential to achieving each goal. So, the businesses that lack resources to modernize their tech ecosystem will consider retail IT outsourcing. Let's review why this may be a suitable option and what a company should do before outsourcing IT for retail.

What makes outsourcing IT for retail an attractive option?

From managing costs effectively to accessing cutting-edge technology and specialized expertise, there are several reasons for retail IT outsourcing.

• Global economic challenges. According to the 2024 State of Outsourcing report, 31% of respondents outsource IT services to respond to economic pressures. They consider it as an option to restructure costs and mitigate risks.
• Need to innovate retail tech. For 38% of businesses, it's important for their IT outsourcing partner to have a strong AI capability. In-house teams often lack the resources or skills to create innovative solutions while handling their main responsibilities. Moreover, retail IT outsourcing helps retailers to keep up with digital transformation trends without extensive internal delays.
• The gap between IT needs and tech team capabilities. Outsourcing helps retailers bridge the gap between their IT requirements and the skills available in their in-house teams. It ensures they have access to the right expertise for complex projects.
• Need for scalability during peak seasons. Retailers can leverage outsourcing to quickly scale up IT resources during high-demand periods without committing to long-term staffing.
• High operational costs. IT outsourcing often reduces costs by leveraging offshore or nearshore teams. It allows retailers to allocate budgets more effectively without compromising on quality.

As in any industry, IT outsourcing has its tendencies and practices that can become project deal breakers. Below, we give three tips to help your business reach the benefits of outsourcing IT in the retail industry.

Read more: Retail technology trends in 2024

Top 3 tips to set your retail IT outsourcing project up for success

1. Know what IT functions and services you can outsource

Knowing what you can outsource will allow you to create the most effective strategy for delegating the tech task. Plus, it will help maintain the desired level of involvement and control over the project. Here are a few common retail IT outsourcing projects.

Ecommerce platform development and automation

The retailers can outsource building, maintaining, and optimizing ecommerce platforms, including payment systems, customer portals, and mobile apps. In addition, retail IT outsourcing vendors can integrate automation solutions into ecommerce systems. For example, N-iX works with Magento Enterprise, Salesforce Commerce Cloud, HCL Commerce Cloud (former WebSphere Commerce), Intershop Commerce Suite, and Hybris-based platforms.

Cloud infrastructure management

If you plan to adopt or modify existing cloud solutions and you lack in-house experts, cloud retail IT outsourcing is a great way to cover this need. The vendor's cloud engineers will help you set up and manage cloud-based platforms, data storage, and server maintenance to ensure scalable and secure infrastructure for online and in-store operations.

A case in point, N-iX played a crucial role in helping PrettyLittleThing, a leading UK-based fashion retailer, by developing and optimizing their AWS Lambda-based cloud infrastructure. This cloud solution improved scalability, stability, and security, allowing PrettyLittleThing to handle its rapidly growing customer base and product catalog efficiently. By automating processes and seamlessly integrating cloud services, N-iX enabled the client to streamline operations, enhance product management, and provide better customer service.

Cybersecurity services

Retail businesses, especially those running ecommerce operations, have various data and systems to be protected from unauthorized access. Sensitive data, such as customers', partners', and suppliers' information and payment data, should be managed according to the highest security standards.

Outsourcing cybersecurity services will help retailers implement and monitor security systems to protect against data breaches, fraud, and cyberattacks. It will also ensure compliance with security standards like PCI DSS.

Data analytics and Business Intelligence

IT outsourcing companies can help retailers with data analytics and Business Intelligence (BI) by providing advanced tools and expertise to process and analyze data from various sources, including sales, customer behavior, inventory, and supply chain operations and tools.

They can implement real-time analytics platforms that offer actionable insights into market trends, customer preferences, and product performance. Additionally, outsourcing partners can develop custom BI dashboards to visualize key metrics, enabling retailers to make data-driven decisions that optimize marketing, inventory management, and pricing strategies.

For example, N-iX delivered a comprehensive data analytics and reporting solution to our client, a provider of ecommerce and subscription management solutions for monetizing digital goods. N-iX experts used Power BI to create informative Business Intelligence reports by processing data from Snowflake, enabling the client to gain valuable insights from business-level aggregates. As a result, N-iX helped the client grow their customer base and improve decision-making by expanding their analytical capabilities, boosting data security, and enhancing their value with a robust reporting solution.

Read more: Retail business intelligence: Step-by-step implementation

Development and integration of retail IoT applications

Businesses can benefit from retail IT outsourcing to develop and integrate IoT solutions that enhance inventory management, in-store customer experiences, and operational efficiency. Outsourcing companies like N-iX can implement smart shelves, RFID tracking, and automated replenishment systems to monitor stock levels in real-time, ensuring accurate inventory control.

The tech partners can also create IoT-enabled systems like smart checkout and personalized customer engagement tools that use sensors and analytics to streamline shopping and increase customer satisfaction. Moreover, they ensure that IoT infrastructure is secure and scalable, allowing retailers to adapt to evolving market demands while protecting sensitive data.

Development and integration of AI and chatbots

Retailers can outsource AI adoption and AI-powered chatbot development to software development companies like N-iX. Outsourcing vendors provide retail clients with intelligent customer support systems and automate routine tasks such as answering common queries or processing orders.

They can also build AI-powered chatbots and integrate them with existing platforms, such as ecommerce websites or mobile apps. It can help enhance customer service by providing 24/7 support, personalized recommendations, and real-time assistance, improving engagement and satisfaction.

The external tech teams also deal with integrating AI-driven analytics into IoT, Big Data, Business Intelligence, and CRM solutions, helping retailers process and get actionable insights from the data they have.

Explore further: Applications of generative AI in retail

CRM implementation

IT outsourcing companies with retail experience can help you customize and integrate CRM platforms that manage customer interactions, streamline sales, and enhance marketing efforts. They set up CRM systems to centralize customer data, enabling retailers to track purchasing behavior, manage loyalty programs, and personalize communications and marketing campaigns.

Moreover, these tech partners ensure seamless integration of the CRM with existing systems like ecommerce platforms and inventory management tools. It helps create a unified view of customer interactions across channels. They also provide ongoing support and training, ensuring retailers can fully leverage CRM capabilities to improve customer relationships and drive sales.

Custom retail solutions development

Retail businesses also outsource the development of custom solutions tailored to solve a specific issue of the enterprise, especially if its development involves the use of skills the business lacks. These custom solutions enable retailers to make data-driven decisions, reduce stockouts or overstock, and enhance profitability.

For example, external teams build pricing intelligence systems that track competitor pricing, market trends, and consumer behavior in real-time, enabling retailers to adjust prices dynamically and stay competitive.

They can also develop demand planning solutions that help analyze historical sales data, seasonal trends, and external factors, allowing retailers to forecast demand more accurately and optimize inventory levels.

Once you know what you need to outsource, it's time to plan the execution with the best practices in mind. Here are a few of them.

2. Learn the best practices of retail IT outsourcing

Any retail business may benefit from the options below. Still, we recommend you consider your business case and tailor these practices to your specific business and project.

Create a detailed outsourcing plan

Defining what to outsource and how you're going to execute it is crucial to plan the project effectively. Create a detailed project plan with the expected deliverables and schedules. It will help you further assess the scale and required resources to achieve your goals.

Here, you should consider desired short- and long-term results to plan and allocate resources evenly. It will help you better manage risk by distributing operational risks across specialized partners who are more adept at managing specific IT functions.

Explore your tech infrastructure and team availability

Project outsourcing scope will depend on what you have already implemented in your retail IT ecosystem and how many tech experts there are in your in-house team, if any.

Exploring your tech infrastructure and team availability before outsourcing helps identify gaps that need external support and ensure compatibility between existing systems and the solutions provided by the outsourcing partner. It can also prevent integration challenges and ensures that outsourced solutions align seamlessly with your overall IT environment.

Assessing team availability also clarifies whether internal resources can handle parts of the project. It helps balance in-house efforts and outsourced expertise to achieve cost-effective and efficient outcomes.

Choose the right cooperation model

Tech vendors outsourcing IT for retail offer various cooperation models for the clients to choose from for their specific projects. Your decision here should align with your expectations and desired level of control, flexibility, and engagement over the project. Choosing the option that matches project needs and business preferences helps optimize resource allocation and collaboration, leading to more effective project outcomes.

For example, N-iX offers three cooperation models: Team Extension, Managed Team, and Custom Solution Development. Depending on your project's scale and complexity, you can choose the best approach to reach your goals. In addition, you can outsource to us tech consulting.

Plan for scalability from the start

Since retailers have seasonal fluctuations and growth, solutions that should be scaled on demand are required. Ensure your outsourcing partner has the ability to scale teams and infrastructure. Here are a few hints that a selected company may be able to do it:

• It has more than 250 tech experts on board;
• It has established partnerships with all the major hyperscalers (Microsoft Azure, GCP, AWS);
• It hires software engineers from the top outsourcing destinations in the selected region and beyond.

Scalability often implies building long-term relationships with the retail IT outsourcing partner, so make sure they already have what you might need in the future.

Invest in knowledge transfer and training

Proper knowledge transfer ensures business continuity even when personnel changes happen on either side. Ensure you document all development processes and workflows to communicate the progress and value to any new team members. You should also facilitate training sessions for your internal teams on the new systems developed by the outsourcing partner to do a smooth handover.

Integrate cross-functional teams

Some outsourcing projects in retail, like ecommerce development or CRM integration, may affect the workflows and processes of other departments, so it's crucial to have everyone on the same page.

Effective communication between your internal teams and the outsourcing partner is key to project success. Set up regular meetings and communication channels between internal stakeholders (e.g., marketing, supply chain, IT) and the external team. Such tools like Slack, Jira, or Microsoft Teams will help you streamline communication.

Start a pilot project to assess tech capabilities

Before committing to a large-scale project, it would be great to test the outsourcing partner's abilities with a smaller pilot project. This approach will help evaluate their performance and compatibility with your team while not putting too much risk and pressure, especially if your business is new to outsourcing it for retail.

Start with a smaller task, such as developing a single feature of the ecommerce platform, to assess the partner's quality, speed, and collaborative ability before expanding the project scope.

One of the key success factors of any retail IT outsourcing project is the right choice of an external tech partner. Here's what you should keep in mind when comparing your options.

3. Choose a reliable retail IT outsourcing partner

A business may have its checklist and requirements for a vendor when it comes to outsourcing IT for retail. Include these steps to make the right strategic decision.

Check the company's tech expertise

A potential partner should have the tech competencies and resources to deliver the project you're hiring for. It also should be skilled in the technologies you plan to adopt to roll out new projects and ensure business continuity. In addition, the expertise in related domains will streamline the integration process.

For example, N-iX can help global retail businesses with outsourcing software engineering, cloud computing, data analytics, enterprise platform development and RPA, AI, ML, MLOps, cybersecurity, IoT, computer vision, and other projects. Our extensive service offerings will be useful for businesses wanting quick access to various tech skills and on-demand consulting.

Learn about the vendor's retail projects

Retail-specific knowledge is crucial to understanding the unique challenges of inventory management, customer behavior, and ecommerce platforms. In addition, it also helps if the potential partner has expertise in the related fields, such as supply chain, logistics, or banking, especially for projects that involve stakeholders from the mentioned verticals.

Consider companies that have experience in implementing popular retail solutions such as POS systems, ecommerce integrations, or AI-driven customer service tools. In addition, check their expertise in demand planning solutions or pricing systems if you're looking for a provider with strong AI, ML, and data analytics capabilities.

Read what their clients have to say

Client testimonials and reviews may be a great source of getting to know the potential tech partner's handling of projects and how well it meets deadlines and delivers on promises. It also provides insights into the quality of their work and reliability.

Learning the experiences of past clients helps you assess the company's retail expertise. This information reduces the risks of hiring an unsuitable retail IT outsourcing company. Plus, it helps ensure that you partner with a provider that aligns with your expectations and business needs.

You can read reviews about outsourcing companies on review platforms like Clutch, GoodFirms, Gartner Peer Insights, or similar.

Consider their partnerships and alliances with tech providers

The more tech partnerships and business alliances your potential outsourcing vendor has, the more resources and options they can bring to the table. Partnering with tech providers ensures the vendors understand the technologies and know the specifics of their integration into various systems. Moreover, you can benefit from partnership offers and get specific deals, funding programs, and early access to new features and exclusive tools.

N-iX is proud to have established partnerships with such hyperscalers as Microsoft Azure, GCP, and AWS. In addition, we also partner with SAP, Mendix, OpenText, Salesforce, and many others.

Research the company's security and compliance certificates

Retail businesses handle sensitive customer data, including payment information, which must be protected against breaches. Certifications like ISO 27001 or PCI DSS ensure that the outsourcing partner adheres to industry-standard security practices.

When outsourcing IT for retail, ensure your partner is compliant with regulations such as GDPR to protect customers' data and avoid legal issues and penalties associated with data protection. It will help safeguard customer trust and minimize the risk of security vulnerabilities.

N-iX complies with various international standards for data protection and payment processing, including PCI DSS, SOC 2, FSQS, CyberGRX, ISO 9001:2008, ISO 27001, ISO/IEC 27701:2019, and GDPR.

Schedule an introductory meeting

Introductory meetings help clients assess the tech vendor's understanding of the business needs and industry-specific challenges. It also allows you to evaluate their communication style, responsiveness, and compatibility with your company's culture.

During the call or meeting, you can discuss the partner's experience, technical capabilities, and approach to solving the business task. This ensures that both parties align well and establishes a foundation for a successful collaboration.

Before the introductory meeting, we at N-iX sign a Non-Disclosure Agreement (NDA) to ensure our clients that we treat the business information confidentially.

Considering N-iX for the job? Here are five arguments in favor

1. Rich expertise in the retail domain. N-iX has collaborated successfully with leading retail brands, providing scalable, secure, and innovative technology solutions. Our development services help retailers with inventory optimization, personalizing customer experiences, and seamless omnichannel integration. We have developed custom pricing intelligence solutions, demand planning tools, personalized search engines, CV-powered product placement, and other solutions.
2. Over 21 years of experience in the IT outsourcing market. Our long-standing presence means we have successfully navigated technological shifts and industry challenges, consistently delivering value to our clients. Partnering with N-iX gives you access to seasoned professionals who can improve the performance of your team, delivering reliable results and helping you achieve your business goals efficiently.
3. Development centers in Europe and Latin America. We have established development centers in Ukraine, Poland, Bulgaria, Colombia, and Romania. It makes us a perfect retail IT outsourcing partner for nearshoring and offshoring projects for retailers globally.
4. Worldwide hiring. We have a strong employer brand in Europe and the Americas and hire from 25 countries globally. With offices in Ukraine, Poland, Bulgaria, Colombia, Malta, the UK, and the US, we can arrange a smooth hiring process in any region and provide the necessary paperwork and support.
5. Up to 3-4 weeks to fill in a position. We have over 2,200 software developers skilled in software engineering, cloud solutions, IoT, data analytics, AI, ML, Generative AI, cybersecurity, RPA, computer vision, mobile app development, and more. In addition, we have access to the tech talent pool of different regions, giving us the advantage of finding the right candidate faster.

If you're looking for a reliable tech partner to outsource the IT functions of your retail business, contact N-iX. Let's discuss how our retail expertise and extensive tech skills can help you reach the benefits of outsourcing IT in retail!

References:

1. The State of Outsourcing: Unveiling the Nexus of Cost, Quality, and AI | CMSWire and SupportNinja
2. Deloitte Global Retail Outlook 2024 | Navigating challenges and embracing opportunities - Insights from retail leaders around the world