24 February 2011

5 Mistakes Made When Offshoring & what to do about them5 Veelgemaakte Fouten Bij Offshoring & wat daar aan te doen5 Mistakes Made When Offshoring & what to do about them5 Fehler beim Offshoring und was man dagegen tun kann

About Hugo Messer

Hugo Messer is a Dutch entrepreneur, distributed agile team specialist, and author. He is the founder and owner of Bridge Global, a software services provider, and ekipa.co., an agile coaching agency. He has been building and managing teams around the world for the past several years. His passion is to enable people that are spread across cultures, geography and time zones to cooperate. Whether it’s offshoring or nearshoring, he knows what it takes to make global cooperation work.

4 thoughts on “5 Mistakes Made When Offshoring & what to do about them5 Veelgemaakte Fouten Bij Offshoring & wat daar aan te doen5 Mistakes Made When Offshoring & what to do about them5 Fehler beim Offshoring und was man dagegen tun kann
  1. Here is an answer I had given for another, very similar question.

    “I think it is necessary to abstract out the essence of the issue.

    There are three vectors that need to be addressed by both parties viz. transparency, a shared vision of success & a persistence of the relationship. Let me explain each one.

    • Transparency. This is more than a cliché. Both parties need to comfortable being open and honest – at all levels of the relationship. A lot of legal agreements often do not take this into account. Often times, the relationship is out of balance and does not facilitate the transparency required.
    • Shared vision of success. For a relationship (of buyer & seller) to be truly successful, there needs to be some (a lot of?) common ground in the definition of success for both. For example, for a buyer to see productivity, the seller must see growth – if that is not understood on both sides, there will be trouble eventually.
    • & finally, persistence of the relationship. The mantel of relationships between organizations changes hands (sometimes very frequently). Goals, objectives, common ground must survive this inevitable passing of the baton.

    Of one thing I am certain, the blame game has no winners. There is more than enough of that to go around.”

    Getting of the “long view”, I do believe expertise is the core of any outsourcing (offshoring decision), but so is the ability to sustain an offering (can the outsourcer attract, nurture, develop and retain talent), management capability & vision. The decision needs to be a balance of all these factors.

  2. 1.) Not picking the right firm and not personally ensuring that you are picking the people in the seats by resume. Many times they will commit to 50 developers but only 10 are of the quality you need…rest are new or low level and drag productivity of the others. You are better off with 10 from 5 shops that way…

    2.) Not having a strong manager on site to manage the offshore resources and stay in tune and delivery requirements and accept proof of work/keep timelines, etc.

    3.) Not renegotiating costs when work is not acceptable – get your money back or you’re not saving anything!

    4.) Not being proactive in your approach to asking questions and being clear and concise about expectations before you start work with an offshore team.

    5.)Not having clear SOW’s that are structured correctly for your work product and company.

    6.) Also, locking yourself into a long term contract or agreement without having seen a proof of concept or pilot be successful

  3. There are so many researches out there trying to help avoid off-shoring mistakes. But truly, the most critical mistakes can be best understood by people who’ve made them and later realized the poor results.

    Although I agree with most things by Cassandra here, In my view there are 3 absolutes to remember in any offshore engagement.

    1. Off-Shoring Strategy – Validate your reason to offshore, and integrate off-shoring with your business strategy. It makes sure that there are right people responsible for making decisions at the right time. You will need dedicated people to manage the off-shoring engagement, whatever may be the size & nature of your project.

    2. POC is a must – Always have a 30 days, Proof of Concept from at least 4-5 vendors, to understand the implementation style, gaps & quality. This will really help you in determining the right expectations from off-shoring.

    3. Choose a Partner not a Vendor – Tactical vendors without consultative approach will mostly lack to knowledge to execute the job. Vendors who say ‘yes’ to everything are not serious about the engagement, unless they can prove it.

    Then there are things like strong reference checks, Industry / Domain / Technical expertise etc. Any Outsourcing engagement, whether offshore/onshore/hybrid will mostly result in an outcome that you’ve asked for. As Ashutosh has rightly mentioned, Blaming wouldn’t help. So it is critical to ask the right questions & look for the right things.

  4. It is true that strategy should be in place PLUS an extensive research about the culture and processes of the offshore company you will be partnering with is a MUST. This strategy should be clearly discussed with the possible partner so they can understand what your goals are and work with you in filling the gaps.

    Most companies who outsource forget that the core business of BPO company is NOT the same core business as their company so don’t assume that the outsourcing partner will be able to capture everything about your industry. For example, you industry is in Telco, and you are offshoring your customer service department, do not assume that your partner will know everything about your business and processes since a BPO company’s expertise is more on providing people and facility to perform that specific business process. Knowledge transfer is very crucial. Even if the offshore partner has extensive experience servicing companies from your industry, every company’s needs are always different from the other since not all organizations in a certain industry has the same goals — so be perfectly clear with your strategy and goals before diving into it.