IS5600 – 9 Global IT Offshoring
What is Offshoring? <ul><li>Contracting software development or the provision of IT services to an overseas firm </li></ul...
Offshoring is a Huge Activity <ul><li>Global total: US$80 Billion annually </li></ul><ul><ul><li>India had $58 Billion </l...
Introduction <ul><li>Offshoring or Outsourcing? </li></ul><ul><ul><li>Outsourcing – getting someone else to do the work </...
Inshore or Offshore? Insource or Outsource? <ul><li>Outsource </li></ul><ul><ul><li>Ask someone else to do it (outside the...
Background <ul><li>Providing IT services is big business </li></ul><ul><ul><li>India, China, Philippines, Russia, Brazil <...
Software Commoditisation <ul><li>Standard practices and tools </li></ul><ul><li>Established industry benchmarked procedure...
Strategic Issues 1 <ul><li>Cost </li></ul><ul><ul><li>It should be cheaper – but is this strategic? </li></ul></ul><ul><ul...
Strategic Issues 2 <ul><li>Talent </li></ul><ul><ul><li>Access resources unavailable at home </li></ul></ul><ul><ul><ul><l...
Strategic Issues 3 <ul><li>Agility </li></ul><ul><ul><li>Respond to opportunities and get products to market faster </li><...
Strategic Issues 4 <ul><li>Take advantage of time zone differences </li></ul><ul><ul><li>Send work from time zone to time ...
Who is offshoring? - US <ul><li>IBM  </li></ul><ul><ul><li>R&D in US, IL, CH + 16 sw devt centres </li></ul></ul><ul><li>M...
Who is Offshoring?  - Europe <ul><li>Fewer than in the US, due to more conservative business culture, as well as stricter ...
And what about ‘Nearshoring’? <ul><li>Germany to E Europe </li></ul><ul><li>Japan to China, Vietnam, S Korea </li></ul><ul...
The Big Three: China, India and Russia <ul><li>Large number of engineering graduates and well-qualified employees </li></u...
Indian Restructuring 1 <ul><li>A decade ago, Indian firms like TCS set up offshore operations in places like Shanghai. </l...
Indian Restructuring 2 <ul><li>Initially they thought that existing MNC clients operating in China, who were also their wo...
Offshoring IT Services <ul><li>“ If you want the loan application processed today, click ‘1’ and it will be done in Fiji. ...
Offshoring IT Services <ul><li>All these various services are highly dependent on both IT and language </li></ul><ul><li>T...
It all depends on language <ul><li>UK, US, CA, AU, NZ > IN, PK, LA </li></ul><ul><li>FR > MU, MA, DZ, TN (Mauritius, Moroc...
What do IT Professionals cost? <ul><li>US </li></ul><ul><li>Canada </li></ul><ul><li>Japan </li></ul><ul><li>Singapore </l...
What are the Costs? <ul><li>Salary </li></ul><ul><ul><li>High: US, Canada, Japan, Singapore </li></ul></ul><ul><ul><li>Med...
And what about…? <ul><li>Transaction costs </li></ul><ul><li>Infrastructure costs </li></ul><ul><li>Knowledge transfer cos...
The IT Offshoring Journey <ul><li>SunnySystems (SS) is a small sized HK software house. It needs to reduce costs, so it de...
Is It Too Dangerous? <ul><li>Offshoring can be exciting or scary </li></ul><ul><ul><li>Depends on your appetite for advent...
Three steps (not that special) <ul><li>Laying the foundations </li></ul><ul><ul><li>Do we have a plan, a strategy? Who is ...
Laying the Foundations 1 <ul><li>Assessing if we are ready </li></ul><ul><ul><li>How good is our project management?  </li...
Laying the Foundations 2 <ul><li>The launch team </li></ul><ul><ul><li>Offshoring is complex – it needs a powerful team </...
Laying the Foundations 3 <ul><li>Strategy & Plan </li></ul><ul><ul><li>Why are we doing this? (specifically why?) </li></u...
Identifying the Providers <ul><li>In India, there are thousands of providers! </li></ul><ul><li>Many have offshore agents ...
Selecting a Country <ul><li>While selection of the provider is often done carefully, selection of the country is the subje...
Provider Selection Criteria <ul><li>General Criteria </li></ul><ul><ul><li>Company size & stability </li></ul></ul><ul><ul...
Send an RFI, using the criteria <ul><li>Who we are </li></ul><ul><li>What we are looking for </li></ul><ul><li>Questions a...
Send an RFP to the most promising firms <ul><li>What we expect in the proposal </li></ul><ul><li>How are you going to unde...
Assessing & Selecting the Provider <ul><li>Evaluate the RFPs </li></ul><ul><ul><li>Identify false promises, too good to be...
The Offshore Visit <ul><li>Important for large/complex projects, long-term cooperation and situations where there is a hig...
Offshore Things to Do <ul><li>Don’t just visit the HQ, but also the work site, national software association, … </li></ul>...
Recommendations & Contract Negotiations <ul><li>To offshore or not. </li></ul><ul><li>Project objective, functionality sco...
Contract Specificity <ul><li>It would seem sensible to have specific contracts </li></ul><ul><ul><li>More quality and sati...
Concluding Lessons <ul><li>Don’t underestimate the importance of careful planning, or of allowing enough time to lay the f...
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IS5600 – 9 Global IT Offshoring

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IS5600 – 9 Global IT Offshoring

  1. 1. IS5600 – 9 Global IT Offshoring
  2. 2. What is Offshoring? <ul><li>Contracting software development or the provision of IT services to an overseas firm </li></ul><ul><li>It is often seen as being cheaper, faster. </li></ul><ul><li>But there are many hazards as well </li></ul><ul><ul><li>Managerial, HR, Work Style, Political, … </li></ul></ul><ul><li>Offshoring should be a strategic choice, not an accidental mistake </li></ul><ul><ul><li>Failing to plan for it – is planning to fail at it </li></ul></ul>
  3. 3. Offshoring is a Huge Activity <ul><li>Global total: US$80 Billion annually </li></ul><ul><ul><li>India had $58 Billion </li></ul></ul><ul><li>By 2020, look for $0.5 trillion </li></ul><ul><ul><li>Though the potential total market would be approx $1.75 trillion </li></ul></ul><ul><li>So, it is no wonder that offshoring is seen as a great opportunity, and not only by India. </li></ul>
  4. 4. Introduction <ul><li>Offshoring or Outsourcing? </li></ul><ul><ul><li>Outsourcing – getting someone else to do the work </li></ul></ul><ul><ul><ul><li>Inside the host country (inshoring) or outside (offshoring) </li></ul></ul></ul><ul><ul><li>Offshoring often implies the involvement of a less developed country (compared to the client) </li></ul></ul><ul><ul><ul><li>E.g. a US firm outsources software development to India. </li></ul></ul></ul><ul><ul><ul><li>E.g. an Indian firm outsources software development to Vietnam </li></ul></ul></ul>
  5. 5. Inshore or Offshore? Insource or Outsource? <ul><li>Outsource </li></ul><ul><ul><li>Ask someone else to do it (outside the organisation) </li></ul></ul><ul><li>Insource </li></ul><ul><ul><li>Do it yourself </li></ul></ul><ul><li>Backsourcing </li></ul><ul><li>Inshore </li></ul><ul><ul><li>Do it in your own country </li></ul></ul><ul><li>Near shore </li></ul><ul><ul><li>Do it in a nearby country </li></ul></ul><ul><li>Offshore </li></ul><ul><ul><li>Do it somewhere else, usually a less developed country </li></ul></ul><ul><li>Backshore </li></ul><ul><ul><li>Bring the work back home again! </li></ul></ul>
  6. 6. Background <ul><li>Providing IT services is big business </li></ul><ul><ul><li>India, China, Philippines, Russia, Brazil </li></ul></ul><ul><ul><ul><li>Technology parks, IT parks, lots of engineering graduates </li></ul></ul></ul><ul><ul><ul><li>China graduates 4 times as many engineers as the US – annually </li></ul></ul></ul><ul><ul><ul><li>The cost of calling IDD has dropped 80-90%, if you still call, with VOIP at 100% below. </li></ul></ul></ul><ul><ul><ul><li>Bandwidth has increased similarly, with developing countries now connected by gigabit lines. Only 10 years ago, it was close to 0. </li></ul></ul></ul>
  7. 7. Software Commoditisation <ul><li>Standard practices and tools </li></ul><ul><li>Established industry benchmarked procedures </li></ul><ul><li>Some software tasks have been commoditised </li></ul><ul><ul><li>They can be offshored to the lowest cost, most productive bidder </li></ul></ul><ul><ul><li>Like shopping in an online supermarket </li></ul></ul>
  8. 8. Strategic Issues 1 <ul><li>Cost </li></ul><ul><ul><li>It should be cheaper – but is this strategic? </li></ul></ul><ul><ul><li>If you are in an ‘offshore or die’ situation, then is it really sensible to offshore? </li></ul></ul><ul><ul><li>Total Cost of Engagement? </li></ul></ul><ul><ul><ul><li>China is cheaper than India for programmers, more expensive for Supervisory & Mgt staff. </li></ul></ul></ul><ul><ul><ul><li>There can be many hidden costs… </li></ul></ul></ul><ul><ul><ul><li>If you always worry about cost, you will get poor quality solutions. Quality costs! </li></ul></ul></ul>
  9. 9. Strategic Issues 2 <ul><li>Talent </li></ul><ul><ul><li>Access resources unavailable at home </li></ul></ul><ul><ul><ul><li>But employee churn and provider reliability is a major problem </li></ul></ul></ul><ul><ul><ul><li>Resource quality (esp at smaller providers) </li></ul></ul></ul><ul><ul><ul><li>Knowledge transfer and the risk of IP loss/theft </li></ul></ul></ul><ul><ul><ul><li>Do you share values with the provider? </li></ul></ul></ul><ul><ul><ul><li>Good governance? Ethics? Efficiency? Flexibility? </li></ul></ul></ul>
  10. 10. Strategic Issues 3 <ul><li>Agility </li></ul><ul><ul><li>Respond to opportunities and get products to market faster </li></ul></ul><ul><ul><ul><li>If you can overcome the differences of language, communication style, culture </li></ul></ul></ul><ul><li>Anything strategic requires corresponding investment of resources – and a long term vision. </li></ul>
  11. 11. Strategic Issues 4 <ul><li>Take advantage of time zone differences </li></ul><ul><ul><li>Send work from time zone to time zone </li></ul></ul><ul><ul><ul><li>US to S or SE Asia to Europe </li></ul></ul></ul><ul><ul><ul><li>Non-stop work </li></ul></ul></ul><ul><li>But coordination must be perfect </li></ul><ul><ul><li>Few success stories </li></ul></ul><ul><ul><li>Small and simple tasks are more suitable </li></ul></ul>
  12. 12. Who is offshoring? - US <ul><li>IBM </li></ul><ul><ul><li>R&D in US, IL, CH + 16 sw devt centres </li></ul></ul><ul><li>MS </li></ul><ul><ul><li>most R&D in the US, but also IN, CN, IL & UK. </li></ul></ul><ul><li>Google </li></ul><ul><ul><li>R&D in IN. </li></ul></ul><ul><li>All the top 20 US tech firms do offshoring, but only about 10% of the Fortune 1000 devote more than 10% of their budget to offshored activities </li></ul>
  13. 13. Who is Offshoring? - Europe <ul><li>Fewer than in the US, due to more conservative business culture, as well as stricter labour laws (redundancies) </li></ul><ul><li>Language is an issue – few Indian programmers can read or build in French or Danish </li></ul><ul><li>UK - much work outsourced to IN, PK, BD, LA </li></ul><ul><li>Germany </li></ul><ul><ul><li>80% of the large firms have yet to offshore </li></ul></ul><ul><ul><li>60% of German offshoring is to E Europe (nearshoring) </li></ul></ul><ul><li>Dutch – extensively to 35+ countries, India preferred </li></ul>
  14. 14. And what about ‘Nearshoring’? <ul><li>Germany to E Europe </li></ul><ul><li>Japan to China, Vietnam, S Korea </li></ul><ul><ul><li>NEC started offshoring to China in 1982, with 40+ firms and 3000+ employees now involved </li></ul></ul><ul><ul><li>Several JP firms are spending US$10-30M/year in China </li></ul></ul><ul><ul><ul><li>Dalian is emerging as a hub for JP-focused work </li></ul></ul></ul><ul><li>US to CA and MX – growing potential here </li></ul>
  15. 15. The Big Three: China, India and Russia <ul><li>Large number of engineering graduates and well-qualified employees </li></ul><ul><ul><li>Thousands of software exporting firms </li></ul></ul><ul><li>But around 100 countries provide some offshoring services (RO, BR, PH, VN, PO, HU, MY, AR, FJ,…) </li></ul><ul><li>The Indian firms in particular are now global firms in their own right – with offshore operations to service clients ‘locally’. </li></ul><ul><ul><li>Offshore sites in AU, CN , HU, JP, UK, US, UY </li></ul></ul><ul><ul><li>A significant threat to US- and Europe- based firms </li></ul></ul>
  16. 16. Indian Restructuring 1 <ul><li>A decade ago, Indian firms like TCS set up offshore operations in places like Shanghai. </li></ul><ul><li>However, this “bright idea” seems to be undergoing a re-evaluation. TCS has now moved its Asia-Pacific HQ to Singapore, hired new management with direct experience in Asia-Pacific and China, and moved the other employees back to India. </li></ul><ul><li>Indeed, firms like TCS are cutting back on all their China operations. </li></ul>
  17. 17. Indian Restructuring 2 <ul><li>Initially they thought that existing MNC clients operating in China, who were also their world-wide clients, would like to have their local (in China) work done in China. But it seems that the MNCs would still prefer to have the work done from other centres. </li></ul><ul><li>However, two factors have made them change their minds: </li></ul><ul><ul><li>They have lost their IP in China </li></ul></ul><ul><ul><li>Their Chinese employees are setting up parallel and competing operations with the stolen IP. </li></ul></ul>
  18. 18. Offshoring IT Services <ul><li>“ If you want the loan application processed today, click ‘1’ and it will be done in Fiji. Otherwise press ‘2’, it will be done in the US, and will take a lot longer’ </li></ul><ul><li>What % clicked ‘1’? </li></ul><ul><li>There is increasing offshoring of IT services </li></ul><ul><ul><li>Application processing, telemarketing, help-desking, airline reservations, data entry, etc. </li></ul></ul>
  19. 19. Offshoring IT Services <ul><li>All these various services are highly dependent on both IT and language </li></ul><ul><li>The relevant data is mobile – it can be sent through the Internet easily </li></ul><ul><li>HSBC employs thousands of staff in China, India and malaysia. </li></ul><ul><li>English speaking countries (populations) have a distinct advantage </li></ul><ul><ul><li>In this respect, China has a lot of catching up to do. </li></ul></ul><ul><ul><li>But can you understand Indian English? </li></ul></ul>
  20. 20. It all depends on language <ul><li>UK, US, CA, AU, NZ > IN, PK, LA </li></ul><ul><li>FR > MU, MA, DZ, TN (Mauritius, Morocco, Algeria, Tunisia) </li></ul><ul><li>NL > ZA, SR (Surinam) </li></ul><ul><li>ES > ?? </li></ul><ul><li>DE > ?? </li></ul><ul><li>IT > ?? </li></ul>
  21. 21. What do IT Professionals cost? <ul><li>US </li></ul><ul><li>Canada </li></ul><ul><li>Japan </li></ul><ul><li>Singapore </li></ul><ul><li>Brazil </li></ul><ul><li>Mexico </li></ul><ul><li>India </li></ul><ul><li>Russia </li></ul><ul><li>China </li></ul><ul><li>Vietnam </li></ul><ul><li>63,000 </li></ul><ul><li>57,000 </li></ul><ul><li>44,000 </li></ul><ul><li>43,000 </li></ul><ul><li>20.000 </li></ul><ul><li>7,000 </li></ul><ul><li>8,000-9,000 </li></ul><ul><li>5,000-18,000 </li></ul><ul><li>3,000-14,000 </li></ul><ul><li>1,400-6,000 </li></ul>All salaries US$/year and rising
  22. 22. What are the Costs? <ul><li>Salary </li></ul><ul><ul><li>High: US, Canada, Japan, Singapore </li></ul></ul><ul><ul><li>Medium: Brazil, Russia, Mexico </li></ul></ul><ul><ul><li>Lower: India, China </li></ul></ul><ul><ul><li>Low: Philippines, Vietnam </li></ul></ul><ul><li>But what about housing, medical insurance, transportation, loans, 13 th month bonus, etc. </li></ul>
  23. 23. And what about…? <ul><li>Transaction costs </li></ul><ul><li>Infrastructure costs </li></ul><ul><li>Knowledge transfer costs </li></ul><ul><li>Currency movements </li></ul><ul><li>Dispute resolution </li></ul><ul><li>Travel costs – in the early stages </li></ul><ul><li>Unpredictable risks – wars, financial collapse, terrorism, regulatory changes (e.g. nationalisation, tax breaks), IP theft, corruption, proprietary knowledge, etc. </li></ul>
  24. 24. The IT Offshoring Journey <ul><li>SunnySystems (SS) is a small sized HK software house. It needs to reduce costs, so it decided that the next version of its software would be developed in India. The project manager met a rep. of a large India provider at a US IT fair and decided to sign a contract. Problems started almost immediately: SS used a development platform called Progress, but this is little used in India. SS overlooked the fact that the Indian programmers had no experience with the latest version of Progress. Knowledge transfer from SS to India was fraught with problems. One year later, the project was written off as a failure and abandoned. Clients now started to lose confidence in a company that could not deliver. The project manager had already lost his job. </li></ul>
  25. 25. Is It Too Dangerous? <ul><li>Offshoring can be exciting or scary </li></ul><ul><ul><li>Depends on your appetite for adventure, for the exotic, for risks </li></ul></ul><ul><li>Many lessons have already been learned, and can be read, so companies considering offshoring have no excuse not to know in advance what they are getting into. </li></ul><ul><li>But are the risks over stated? Is it really that dangerous? </li></ul><ul><li>What should be done? </li></ul>
  26. 26. Three steps (not that special) <ul><li>Laying the foundations </li></ul><ul><ul><li>Do we have a plan, a strategy? Who is involved? Are we ready? [a year? 18 months?] </li></ul></ul><ul><li>Identifying the providers </li></ul><ul><ul><li>Which country? Which providers? Selection criteria? RFI and RFP. [6 months] </li></ul></ul><ul><li>Assessing & Selecting the Provider </li></ul><ul><ul><li>Visit the offshore location. Meet the people. Observe their work. Sign the contract. [at least a month] </li></ul></ul>
  27. 27. Laying the Foundations 1 <ul><li>Assessing if we are ready </li></ul><ul><ul><li>How good is our project management? </li></ul></ul><ul><ul><li>Can we manage an offshore project? </li></ul></ul><ul><ul><li>Can our people work with them? </li></ul></ul><ul><ul><li>Are changes in work norms acceptable? </li></ul></ul><ul><ul><li>What is our appetite for risk? </li></ul></ul><ul><li>The hardest step is re-engineering internal processes – so as to ensure that they are ready. </li></ul>
  28. 28. Laying the Foundations 2 <ul><li>The launch team </li></ul><ul><ul><li>Offshoring is complex – it needs a powerful team </li></ul></ul><ul><ul><li>Build a strategic vision, commitment and push for implementation </li></ul></ul><ul><ul><li>Agile and able to make quick decisions </li></ul></ul><ul><ul><li>Expertise in offshoring </li></ul></ul><ul><ul><li>Learn from others’ experiences (including consultants) </li></ul></ul>
  29. 29. Laying the Foundations 3 <ul><li>Strategy & Plan </li></ul><ul><ul><li>Why are we doing this? (specifically why?) </li></ul></ul><ul><ul><li>How are we going to achieve this goal? </li></ul></ul><ul><ul><li>What are the risks? </li></ul></ul><ul><ul><li>Operational issues </li></ul></ul><ul><ul><ul><li>HR costs, skill sets, current & future operations, exactly what are we offshoring, </li></ul></ul></ul><ul><ul><li>Develop a business case for offshoring </li></ul></ul><ul><ul><ul><li>With performance indicators to measure later success </li></ul></ul></ul><ul><ul><ul><ul><li>Costs, satisfaction rates, productivity rates, delivery times, benchmarking against competitors, </li></ul></ul></ul></ul><ul><ul><li>Planning for resistance to change </li></ul></ul><ul><ul><ul><li>How to keep key people, retrain some, let others go… </li></ul></ul></ul>
  30. 30. Identifying the Providers <ul><li>In India, there are thousands of providers! </li></ul><ul><li>Many have offshore agents – in your country! </li></ul><ul><li>Globally, there are tens of countries that do offshore work </li></ul><ul><ul><li>Which one do you want? </li></ul></ul><ul><ul><li>General skills or specific? Language? </li></ul></ul><ul><ul><li>Risks? IP protection? Security? Culture? Time? </li></ul></ul><ul><ul><li>What is your strategic concern? Cost, quality, efficiency? </li></ul></ul>
  31. 31. Selecting a Country <ul><li>While selection of the provider is often done carefully, selection of the country is the subject of much less care. </li></ul><ul><li>It may relate to personal factors or connections. </li></ul><ul><ul><li>Who is going to have to go and work there, to supervise and control? Can they cope? </li></ul></ul><ul><ul><ul><li>So many expats don’t like their assignment… </li></ul></ul></ul><ul><ul><ul><li>Spousal/family issues. </li></ul></ul></ul><ul><ul><li>Is makes no sense to select a country that no one wants to visit or live in. </li></ul></ul>
  32. 32. Provider Selection Criteria <ul><li>General Criteria </li></ul><ul><ul><li>Company size & stability </li></ul></ul><ul><ul><li>HR policies </li></ul></ul><ul><ul><li>Quality management </li></ul></ul><ul><ul><li>Technical expertise </li></ul></ul><ul><ul><li>Business domain knowledge </li></ul></ul><ul><ul><li>Track record </li></ul></ul><ul><ul><li>Methodologies used </li></ul></ul><ul><ul><li>Costs </li></ul></ul><ul><ul><li>Quality initiatives – ISO, CMM, 6 Sigma, etc. </li></ul></ul><ul><li>Extra care criteria </li></ul><ul><ul><li>Infrastructure </li></ul></ul><ul><ul><li>SW production environment </li></ul></ul><ul><ul><li>Interntional experience </li></ul></ul><ul><ul><li>Language skills </li></ul></ul><ul><ul><li>Employee turnover </li></ul></ul><ul><ul><li>Org culture – flexibility, responsiveness, soft skills </li></ul></ul><ul><ul><li>Global presence </li></ul></ul><ul><ul><li>Disaster recovery & backup </li></ul></ul><ul><ul><li>24-hour support </li></ul></ul>Weight the criteria; matrix the providers
  33. 33. Send an RFI, using the criteria <ul><li>Who we are </li></ul><ul><li>What we are looking for </li></ul><ul><li>Questions about the provider </li></ul><ul><ul><li>History, customers, management, geo-locations, turnover, infrastructure, security </li></ul></ul><ul><li>Questions on services offered </li></ul><ul><ul><li>Domain expertise, platforms, skills, subcontractors </li></ul></ul><ul><li>Questions on strategy </li></ul><ul><ul><li>Vision, market share, alliances </li></ul></ul>
  34. 34. Send an RFP to the most promising firms <ul><li>What we expect in the proposal </li></ul><ul><li>How are you going to undertake a specific project </li></ul><ul><ul><li>Need to provide sufficient project details </li></ul></ul><ul><li>Try to stimulate the provider’s creativity by asking more specific/difficult questions </li></ul><ul><li>Ask for references of work they have done. </li></ul>
  35. 35. Assessing & Selecting the Provider <ul><li>Evaluate the RFPs </li></ul><ul><ul><li>Identify false promises, too good to be true offers </li></ul></ul><ul><ul><li>Learn that “yes” means ‘yes’, ‘no’ and ‘maybe’. </li></ul></ul><ul><ul><ul><li>Often all simultaneously </li></ul></ul></ul><ul><ul><li>Check the references </li></ul></ul><ul><ul><ul><li>Ask what worked, and what didn’t. </li></ul></ul></ul><ul><ul><ul><li>Technology always has problems. </li></ul></ul></ul><ul><ul><li>Soft issues – culture, values, trust, wavelength. </li></ul></ul><ul><ul><li>Don’t only look at cost. Too good to be true is almost certainly too good to be true. Quality costs. </li></ul></ul>
  36. 36. The Offshore Visit <ul><li>Important for large/complex projects, long-term cooperation and situations where there is a high degree of dependence on the provider (i.e. it is hard to switch) </li></ul><ul><li>Launch team members should be involved, but also other members of senior management and those who are not yet convinced about offshoring. </li></ul>
  37. 37. Offshore Things to Do <ul><li>Don’t just visit the HQ, but also the work site, national software association, … </li></ul><ul><li>Talk to other ‘foreigners’ who are already there </li></ul><ul><li>Plan the site visit carefully – not on the plane </li></ul><ul><li>Don’t visit too many and don’t only listen to sales pitches – they are all the same. </li></ul><ul><li>Do speak to project managers and programmers </li></ul><ul><li>Walk around - literally </li></ul>
  38. 38. Recommendations & Contract Negotiations <ul><li>To offshore or not. </li></ul><ul><li>Project objective, functionality scope, </li></ul><ul><li>Comparison of providers </li></ul><ul><li>Financial justifications to top mgt. </li></ul><ul><li>Legal/contract issues: price, IP & confidentiality, penalties & incentives </li></ul>
  39. 39. Contract Specificity <ul><li>It would seem sensible to have specific contracts </li></ul><ul><ul><li>More quality and satisfaction?? </li></ul></ul><ul><li>Consultants report that a less than complete contract means more room for creativity and flexibility </li></ul><ul><ul><li>The vendor can then work within a framework and be creative – which is more satisfying for vendor staff </li></ul></ul><ul><ul><li>They are not just being told what to do </li></ul></ul><ul><ul><li>An onsite supervisor can help </li></ul></ul><ul><li>It requires the client and vendor to have similar cultural values – tolerance for uncertainty </li></ul><ul><li>A client-vendor matching process is needed </li></ul>
  40. 40. Concluding Lessons <ul><li>Don’t underestimate the importance of careful planning, or of allowing enough time to lay the foundations carefully. </li></ul><ul><li>The project launch team should be small, agile, open-minded and pro-offshoring </li></ul><ul><li>A low-risk pilot project will help a company find out if it is ready for offshoring </li></ul><ul><li>Contracts are important, but developing a relationship with the provider is probably more critical. </li></ul><ul><ul><li>The two parties need to align their business interests for the duration of the project. </li></ul></ul>

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