India has become a major outsourcing destination for engineering and software development due to its large, skilled English-speaking workforce and established software industry. Companies can achieve significant cost savings by outsourcing to India, but must carefully select providers and implement quality processes to ensure work is completed on time, on budget, and defect-free. Close coordination between client and provider management teams is also important for successful outsourcing relationships.

1. By :
Abhijeet Harne
&
Atonu Haldar

2. • The IT engineering and software development
outsource industry in India alone has grown into an
$10B industry, pioneers like GE, IBM leading the way in
the early ‘80’s forming software development centers
in India’s Bangalore high tech corridor.
• Now, companies both large and small are being forced
to outsource, as pricing pressures surface at home from
global players that have integrated into their cost
structure and offerings.

3. • Why are so many companies outsourcing to
India rather than other low cost regions?
• What are the cost savings? Are they real or lost
to lower productivity, poor quality?
• How does one coordinate & manage
engineering staff half way around the world?
• What services can be outsourced and still
ensure timely, defect free deliverables?
• How does one integrate offshore engineering
services into their existing infrastructure?

4. • India is known for its large, highly skilled, motivated
workforce having logical and abstract thinking.
• English is the technical and business language
• business practices like MBO, ISO certification, Six
Sigma, Malcom Balridge are in common use.
• Because software development is now a major Indian
export industry, intellectual property and copy right
protection laws are even tougher than in the States.

5. SIGNIFICANT SAVINGS

6. • opportunistic rather than strategic -- Let’s do this
project offshore to save money. Or, reduce our price to
win
• quality process to ensure defect free deliverables.
• Not enough time and effort is spent on evaluating the
service provider’s infrastructure
• a full service-engineering provider rather than
engaging the “Best-in-Class” provider

7. WORK PACKAGE
 defines the work
(engineering activities) the
engineering service
provider can do remotely,
work that can be done on-
site and work that can only
be done at the user’s
engineering office.

8. WORK FLOW
 starts defining the provider work package
 Once the user gives work authorization and releases the
project plan and design inputs, the provider can
commence preparing their work plan, review inputs and
submit inquiries for user for clarification.
 Once the clarification process is done, the engineering
service provider can commence detail engineering and
implementation.
 The provider performs internal quality checks, then
releases the Work Package deliverables to the user’s
engineering center or site installation, start-up and
commissioning team which, completes the cycle.
 At the completion of the project, the provider may
complete as build documentation if this is one of the
deliverables.

9. OVER ARCHING QUALITY PROCESS

10. ENGAGEMENT OPTIONS & MODEL
 Have the provider bid certain portions of a budgetary
proposal to pull together a winning price
 Select a pilot project to evaluate the provider’s
technical expertise, responsiveness, quality
 Use the provider to staff peak loading requirements
which often accompany a fast track project
 Use the provider to provide special services, skills and
expertise that be may required

11. ALLIANCE COORDINATION &
MANAGEMENT
 Each side should assign an alliance manager both
accountable for the engagement relationship,
resolving relationship issues, handling commercial
aspects.

12. STRATEGIC DECISION

13. THE FINAL ANALYSIS
Total Cost-of-Ownership = f (Offshore Leverage + Process
Adoption)
Where:
Offshore Leverage is a combination of the amount of engineering
outsourced and the provider’s ability to deliver comparable results:
Doing 1,000 hours engineering work, defect free with no more
engineering, management, administration, coordination than had
the user done the work.
Process Adoption is the engineering service provider’s
deployment and use of best practices, performance metrics,
continuous improvement processes, workforce maturity: Doing the
same 1,000 hours engineering work above in 950 hours.