4 Common Misleading Beliefs about Outsourcing

Many people can find outsourcing topics misleading, as many folks do not have all of the facts or they are only looking at an industry that stands out and is giving the rest of the outsourcing crowd a bad name. We will go over a few points that will show you that many of the outsourcing techniques employed today use good practices and actually make sense for business and the economy.

Outsourcing--300x181 4 Common Misleading Beliefs about Outsourcing

FALSE: Outsourcing takes jobs away from Americans

Not all outsourcing projects are outsourced to other countries. Outsourcing simply means bypassing the in-house hiring process and hiring an individual or a business that does not work in your office.

FALSE: Outsourcing takes away employment from less skilled American workers

With the American economy the way it currently is, many Americans have been out of work and are willing to train to learn new skills then work from home at a very competitive rate. Again, jobs and money remain in America which include instructors required to train these new outsourced employees keeping people employed in America. This is a popular option many are taking rather than moving to a minimum wage position.

FALSE: Outsourcing hurts small businesses

Small business accounts for the majority of job creation in America and what we are seeing is “out with the old and in with the new”. Those small businesses that can no longer keep up with modern technology will be replaced by new businesses who started as an outsourced employee working from their living room and developed a successful business due to competitive rates and quick turn around. These newly developed businesses often employ like minded young people willing to work hard and spend their money on their new families keeping money in America with mortgages, car payments, raising children, etc…

FALSE: Outsourcing only leaves minimum wage jobs for the rest of us

Companies are waking up and have realized that they have been duped into paying someone $100,000 a year to type a few lines of code. This is when the layoffs start and instead of asking you to take a pay cut of $50,000 a year then advertising that position with a wage that would historically pay top dollar for nowhere near the industry standard, they have no choice but to outsource. Many of these employees who are now out of work are not willing to work for less than $100k. Times are changing and you need to change with the times. This often means working for less than what you are used to working for.

As you can see, not all outsourcing fears are valid, and many beliefs are simply not true. Outsourcing has been a touchy subject for many but when we take a few steps back we realize that we are all just looking to save a few bucks.

Questions to ask when outsourcing technology services

global-outsourcing Questions to ask when outsourcing technology services

In almost two decades of dealing with clients in the IT outsourcing industry, I have answered almost every hard question imaginable for prospects worried about finding the right IT outsourcing partner.

Based on my experience, I would like to share the top five questions you should ask outsourcing vendors like us before making a decision.

Do you have demonstrated capability in providing similar solutions?

The key word here is similar because finding an exact match will make your search overly difficult and rule out well-qualified vendors.

Specific points to consider include:

  • size
  • team dynamics
  • process
  • technology
  • industry

What can go wrong? What are the possible risks to achieve the desired objectives?

The purpose of this question is to test the vendor’s ability to think through the project, anticipate risks and create a plan to mitigate them.

The answers don’t need to be perfect, just demonstrate the vendor’s intelligence.

What does the vendor need from you?

Any outsourcing arrangement is going to require some effort on your part to make it work.

Depending on the project, the vendor may need some of your time, artifacts like documentation, a governance structure and access to your infrastructure among other things.

Clearly understanding the needs of both parties beforehand will help ensure the partnership succeeds.

How does communication between two teams work?

Many outsourcing projects fail not due to individual capabilities, but more due to process and communication.

Ensure that communication aligns with your process through daily scrums, weekly meetings, informal Skype-based meetings or whatever works for your organization.

How do both sides have skin in the game?

The vendor should be prepared be penalized if they miss key milestones and rewarded if they meet them ensuring that they are invested in your success while strengthening your relationship.

These questions discussed in face to face meetings and phone meetings lead to a common understanding of objectives, comfort between two teams and can be used as the basis for 90 days plans.

Once the relationship begins, it is important to review the actual results against the expectations set in pre-sales.

With a little extra caution and effort, the results of your outsourcing partnership will be cause for celebration.

Are there any questions that you think I missed? Share your thoughts in the comments.

IT Outsourcing Destinations – Is this really a debate?

it_outsourcing_centers_at_night-300x133 IT Outsourcing Destinations – Is this really a debate?

The world as viewed by NASA at night.

We are often asked questions about IT outsourcing  destinations such as…

  • Do companies still outsource locally?
  • Does India still have price advantage?
  • What about China?
  • How is this new location in Caribbean?

These debates have been going on for years; meanwhile, many companies including ours,  have been consistently delivering premium-outsourcing solutions to clients by using a hybrid delivery model.

All of these are valid debates. The more I think about them, the more convinced I am that a hybrid delivery model consisting of a strong local presence consisting of both technical and business people, coupled with a talented back office team in India has a unique advantage.

A strong local presence helps in understanding client needs in the right context. Having a business analyst or solution architect on site to work with the client’s team enables an outsourcing partner to understand the business reasons behind the technical solutions. Through white boarding sessions and collaborative brainstorming, a real partnership is able to identify the best solutions to help clients succeed.

The back office team helps with scalability, speed, efficiency and a process driven workflow. Successful outsourcing firms have mastered this art over last few decades. I would even venture to say that most projects succeed in this model. Projects that fail are often suffering from other challenges such as poor project selection, misaligned team capabilities, inter-personal issues, or false expectations. A well-established outsourcing partner knows what their team can and more importantly cannot deliver.

For our back office, we choose India due to various reasons including process maturity, English as primary language, availability of skilled resources and insights gained in over 40 years of providing outsourcing services.

We are seeing tremendous traction in the hybrid model and that is true for all of our offerings. From software development, to software testing, and business intelligence, we leverage cloud based infrastructure and mobile technology to deliver industry leading solutions.

I think that trends like telecommuting, improved communication infrastructure, better collaboration tools, and cloud based SaaS/IaaS, have all contributed to higher comfort around our hybrid delivery model. But with all the great tools out there, nothing trumps the elegance of a proven process.

Trip to India: Our Global Delivery Center in Noida

Optimus-Team-Noida-300x210 Trip to India: Our Global Delivery Center in Noida

Team Optimus in Noida

I recently returned after spending two weeks at our Global Delivery Center in India. It was a great opportunity to spend time with the team, work on projects with them, and learn the challenges and opportunities they’re facing. It was 44 degrees Celsius in Delhi so I stayed inside the office for most of the day and evening, making my visit even more productive.

The visit itself reinforced the merit of our business model which revolves around hybrid delivery. We focus on providing a strong local presence and an equally strong offshore presence with both teams working closely and seamlessly with clients.

As many of you know, our three engines of growth are software development, software testing and business analytics. We are able to implement our “local presence, global delivery” model to all three engines. Our salient points of unified reporting, single point of client ownership and speed with quality are resonating well with clients.

Also, more clients of ours are expanding their relationship with us. For example, testing clients are engaging with us for software development and business analytics while software development clients have started to use our testing services. This is an efficient model as initial investment in client specific knowledge, process, and relationship is amortized over a bigger base.

We look forward to hearing more from you and how we can help you with your technology needs.

Strategic vs. Tactical Outsourcing: Understand the Difference

delivery-model1-300x163 Strategic vs. Tactical Outsourcing: Understand the Difference

Example of a Delivery Model

What is strategic vs. tactical outsourcing? The difference lies primarily in the relationship that you create with the vendor. Clients choose outsourcing to benefit them in both strategic and tactical situations. As long as clients are aware of the pros and cons, have a process in place, and make a well-informed decision, outsourcing can be very successful.

Tactical Outsourcing

There are situations where you need help for only a few months or quarters. These situations may include meeting a deadline, having limited availability of specific resources or bringing a project back on track. These are tactical reasons to outsource; however, these are good opportunities to begin a relationship and then move towards strategic relationship.

Strategic Outsourcing

Another important aspect is the pairing of vendor and client. Are you close to the vendor? Are you an important client for the vendor? Do you have access to the management team of the vendor? A vendor for a $500K per annum relationship is different than a vendor for a $10M per annum relationship, even though both may look similar.

Proximity is another important factor. When things go wrong, you can spend face-to-face time with the vendor and bring things back on track. Local presence is important. Also, if vendor has her own facility in low cost destinations like India, it may offer an added advantage and flexibility.

Lastly, demonstrated capability is crucial. Has the vendor successfully delivered to companies like yours?

Outsourcing with Optimus

We have clients who decided to use Optimus as an extension of their core team. This provides them with elastic delivery capacity, while at the same time, retaining key knowledge within their own team. Many of these relationships have continued for years and have provided clients with significant economic and time to market benefits.

We develop relationships based on these factors. We are conducting 2 hours workshops to discuss “Outsourcing in Connected World.” Let us know if you are interested.

Offshoring – Next Gen

With improved infrastructure and work – life being integrated, there is tremendous opportunity to disrupt exisiting way of offshoring. We are aiming to do that. Cloud, SAAS and good internet bandwidth. Can we move to “Pay as you go” model for offshoring.