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Offshore Outsourcing: The Big Five Continued

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 matrix.


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.

Communicate Well

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 for you.


Back to part one.





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