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Technology Outsourcing
Successful Offshore Technology Outsourcing
Offshore sourcing is an important tool to contribute flexibility, low cost and high productivity to certain types of work. However, along with the benefits, offshore sourcing brings new challenges and risks. Successful Offshore Technology Outsourcing has identified ten keys to success to overcome the challenges and mitigate the risks of offshore sourcing.
Successful Offshore Technology relies on governance and total scope adherences
Offshore Knowledge Base Working with offshore organizations is a specialty, requiring a unique body of knowledge that grows with time and experience. Most companies don't have this body of knowledge nor are they willing or able to make the sustained investment to build and maintain it.
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Export Compliance System There are many legal complexities that need to be fully understood in order to comply with all the regulations involving moving work offshore. Certain processes and procedures need to be followed to obtain export approval, which can be time consuming and costly. Some companies have been heavily fined for not adhering to the government regulations.
Initial Investment When launching an offshore project, there is a tendency to underestimate the initial investment of time and effort to scope the work to be moved offshore, develop the governance guidelines for working with the offshore company and to determine the most appropriate project management tools.
Best Practices An important part of the body of knowledge needed for successful offshore sourcing is the development of best practices and their refinement over time. Required topics include: identification of suitable work, project and change management, knowledge transfer, communication, project life cycles, staffing, technology / infrastructure and general principles of engagement.
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Project Management When companies choose to partner directly with an offshore group, they often underestimate the effort required to manage offshore projects. Besides the complications introduced by vast distances and time zones, they have little or no experience in dealing with cultures in the offshore locale. In turn, offshore operations typically lack strong project management expertise, compounding the issue.
Decision-making Once underway, even the best planned IT projects require frequent decisions and consideration of trade-offs. Decision-making involving offshore companies can be frustrating and time-consuming due to both distance and culture. Such decisions can include contractual ones, business, project scope and other issues. When working directly with offshore operations, companies devote significant effort to clarifying and expediting decisions.
Industry Experience Offshore groups generally have good technical skills, but they often lack relevant business-related experience. Few offshore groups have industry vertical organizational structures, and where they do, they typically involve a group of like clients and pricing models. The actual industry experience is lacking. In addition, they may not understand the business practices of the specific region.
Business Analysis A weakness of many offshore companies is the lack of strong business analysts. This role is needed to understand companies' specific business needs and then assist with translating them into how they are applied through IT. Instead, offshore operations generally focus on coding software to provide 'software parts,' with the business analysis falling back on their clients.
Joint Understanding In any business relationship, it takes time to fully understand the business drivers, culture, operating model and key objectives of the other party. The better the two parties understand each other, the more appropriate will be the solutions they jointly develop.
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