Do Your Homework
An entrepreneur that is using offshore outsourcing
to build his startup venture said, "Offshore
outsourcing is not going to be an easy process, but
it can be relatively simplified if you know what
you're getting into.” Offshore outsourcing
is quite different than contracting, more specifically
time and material (T&M) contracting.
T&M contracting--the more prevalent form of
IT contracting--usually entails getting people to
join your team to complete the work. The client keeps
the control and tells the contractors what is needed,
when it is needed and how it will be done. The project
management, resource planning, scheduling etc., are
all done by the client.
On the other hand, in the case of offshore outsourcing you ask the vendor to
deliver you something and it is responsible for the complete development
and the delivery of the final product. In this case the vendor is responsible
for project management, resource planning, scheduling etc., hence it calls
for a different type of preparation than T&M contracting.
In offshore outsourcing, the completeness and thoroughness of business analysis
is very critical. You need to ensure that your analysis specifies each and every
aspect of the proposed job.
The lessons learnt mentioned by a panel
of CEOs discussing offshore outsourcing in
a recently held Washington, D.C. event included
requirement specifications and documentation.
These companies spent a large amount of time
writing the specs and completing the documentation
that they then handed over to the vendor.
They broke their specs in multiple modules,
which could be much easily communicated to
the development team as compared to the complete
system. They developed elaborate matrices
to measure the final product. They communicated
this matrix to the vendor well in advance.
Their suggestion? Don't even think about
offshore outsourcing if you are not willing
to develop detailed specs and the measurement
It's the ProcessIn offshore outsourcing projects,
even though the project management, resource planning
and scheduling is done by the vendor, the client
still has to monitor the vendor. The lack of proximity
to the vendor puts a greater importance on the process
that is employed to communicate the work, to get
the work done and to report back the progress.
That is why many companies are putting greater emphasis
on the certification like CMM, ISO900, TQM, etc.,
as compared to the technical resources of the vendors.
The vendor must deploy a consistent and high quality
process for analysis, design, development, QA, reporting,
project monitoring and management. The client and
vendor must have a clear understanding about the
process. Otherwise, the project will fail.
Other than SDLC processes and certification, another
critical aspect is the offshore outsourcing contract.
The contract should be flexible enough to be able
to address various late-stage concerns and modifications.
Protect Your IP
When the software is developed in a far-away
place that you do not visit very often and
where you do not have control, it can raise
doubts about the protection of your intellectual
property rights. How you go about protecting
your IP will have a great impact upon the success
of your company, not just the success of your
offshore outsourcing initiative.
One company split its system into multiple
pieces and worked with multiple companies,
finally integrating all pieces and coming out
with the eventual product. This way none of
the offshore outsourcing vendors have a clear
idea about the eventual product. They only
knew about the modules that they worked on,
not the whole picture.
A common problem that the software people
face is the miscommunication of requirements.
A CEO of a company that offshore outsourced
work to India once mentioned that while developing
software in the United States, he had same
communication issues while developing software
in India. However, when the development is
in a different country, the problem can be
exacerbated. How you address this will have
critical bearing over the success of your project.
You need to develop thorough communications that
address all foreseeable issues, including the time
difference between different locations, the language
and cultural differences, whether video conferencing
capabilities exist, etc. Such a plan should specify
how often you communicate, who will set up the agenda,
who will initiate the discussion, etc.
IT offshore outsourcing has been gaining momentum
for some time. The industry has matured to a very
good level. A number of big and small companies have
consciously made an effort to pursue offshore outsourcing
on a strategic level and they have set up many good
and bad examples. Getting your IT work done offshore
has many advantages, but it also comes with a number
of risks. If you do not address those risks and take
care of all the areas mentioned above, then your
offshore outsourcing project may become a nightmare