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
The shared services & outsourcing network published a good list of ten mistakes that companies make when offshoring. Although all factors are relevant, by focusing improvement efforts on 5 of them, you will improve your chances of success by at least 80%. The list of ten from SSON can be read in the original article and I have listed the 10 factors below. I will shortly discuss the 5 most crucial and what you can do to change the odds.
Lacking a corporate offshoring strategy
This is where it all begins. Although corporate and strategy may sound heavy, especially for SME’s engaged in offshoring, the most important first step is to make a conscious strategic decision. Why do we want to go for offshoring? What problem do we want to solve? What will we do onshore and/or offshore? Who will be accountable for what?
Developing a clear vision and a detailed offshoring roadmap will create more clarity and support from the management team. The decision is long term (it is not easy to turn back once started) and offshoring is not something you do overnight.
Het shared services & outsourcing network heeft een goede lijst van tien fouten die bedrijven maken bij het offshoren.Hoewel alle factoren relevant zijn, zult u uw succeskansen met minstens 80% verhogen als u zich richt op het verbeteren van 5 van deze factoren. De lijst met alle 10 van SSON kunt u lezen in het originele artikel of onderaan dit artikel. Ik zal kort 5 van de meest belangrijke factoren bespreken en aangeven hoe u uw kansen kunt verbeteren.
Geen offshoring strategie
Hier begint het allemaal. Hoewel ‘corporate’ en ‘strategie’ misschien zwaar klinken, vooral voor MKB’ers die zich bezighouden met offshoring, is het belangrijk een weloverwogen strategische keus te maken. Waarom willen we voor offshoring gaan? Welk probleem willen we oplossen? Wat doen we onshore en wat offshore? Wie is waar verantwoordelijk voor?
Het ontwikkelen van een duidelijke visie en een gedetailleerd plan zal zorgen voor meer duidelijkheid en steun van het management team. Het is een lange termijn beslissing (het is niet gemakkelijk alles terug te draaien wanneer er eenmaal gestart is) en offshoring is niet iets dat u ‘even’ doet.
The shared services & outsourcing network published a good list of ten mistakes that companies make when offshoring. Although all factors are relevant, by focusing improvement efforts on 5 of them, you will improve your chances of success by at least 80%. The list of ten from SSON can be read in the original article and I have listed the 10 factors below. I will shortly discuss the 5 most crucial and what you can do to change the odds.
Lacking a corporate offshoring strategy
This is where it all begins. Although corporate and strategy may sound heavy, especially for SME’s engaged in offshoring, the most important first step is to make a conscious strategic decision. Why do we want to go for offshoring? What problem do we want to solve? What will we do onshore and/or offshore? Who will be accountable for what?
Developing a clear vision and a detailed offshoring roadmap will create more clarity and support from the management team. The decision is long term (it is not easy to turn back once started) and offshoring is not something you do overnight.
Die Shared Services & Outsourcing Network veröffentlichte eine gute Liste von zehn Fehlern, die von Unternehmen beim Offshoring gemacht werden. Obwohl alle Faktoren relevant sind, können Sie ihre Erfolgschancen um mindestens 80% verbessern, wenn Sie sich auf die Verbesserung von 5 dieser Fehler konzentrieren. Die Liste der zehn Fehler von SSON kann hier im originalen Artikel eingesehen werden und ich habe zusätzlich die zehn Faktoren unten aufgelistet. Ich werde kurz die 5 entscheidensden Fehler und wie man diese vermeiden kann diskutieren.
Das Fehlen einer gemeinsamen Offshoring Strategie
Das ist, wo alles anfängt. Obwohl gemeinsam und Strategie sich vielleicht ein bisschen hart anhört, besonders für SME’s, die mit dem Offshoring in Verbindung stehen, ist es der wichtigste erste Schritt eine bewusst strategische Entscheidung zu treffen. Warum wollen wir Offshoring betreiben? Welches Problem wollen wir lösen? Was werden wir onshore und/ oder offshore tun? Wer wird für was verantwortlich sein?
Not allocating sufficient time and resources to transition, insufficient ongoing management & Not having clearly defined roles and responsibilities
This is usually a result of the first ‘trap’. If you made a conscious strategic decision, you are likely to take the effort serious and allocate time and energy to make offshoring work. In the transition, some very crucial things need to be done:
1. Develop a strong offshore process; describe every step that will be taken by all people involved to produce the desired outcome.
2. Define clear roles and responsibilities; for each person involved on both ‘sides’ it should be clear what his responsibilities and accountabilities are. These accountabilities can be attached to each step in the process.
3. Set up performance measures; performance indicators can show if you are reaching the desired outcomes and can identify the teams’ strengths and weaknesses. Additional to the performance indicators, other feedback mechanisms could be created in which individual team members are assessed or in which both the onshore and offshore company keep up a ‘mirror’.
3. Create a structured meeting rhythm; as the SSON article describes, not every detail can be described in process documents. By ensuring regular contact between the team members, actions, responsibilities and outcomes can be more aligned and gradually improved. Any derailer can be identified at an early stage and bent to stay on track.
Not achieving a level of partnership with a vendor
The ideal as described in the article is ‘Strategies are shared and the offshore provider is an extension of the clients operation’. One aspect worth adding is the human side of offshoring. In many cases offshoring partnerships are started with official RFI’s and RFP’s, followed by professional negotiations and monitored with thick SLA documents. But wait, aren’t we talking about services, which is by definition a people business? The human aspect is frequently ‘forgotten’, while it’s such a crucial ingredient for success.
By creating a human relationship with the key people on the vendor side, by visiting the vendor’s office, going out for dinner and getting to know each other, the chances of selecting a vendor that ‘fits’ are more likely. By being involved in the selection of each individual team member on the offshore side, you are more likely to select the right person for the right position. By regularly visiting your team or by asking them to travel onshore, the human relations are intensified, people will value each other more and will understand each other better.
Top Ten Mistakes Made When Offshoring according to SSON:
1. Not allocating sufficient time and resources to transition
2. Not making the appropriate choice between outsource and captive
3. Having insufficient disaster-recovery plans and backup
4. Skimping on the due diligence
5. Lacking a corporate offshoring strategy
6. Letting advisors and attorneys lead the negotiations
7. Not creating sufficient visibility around offshore operations
8. Insufficient ongoing management
9. Not having clearly defined roles and responsibilities
10. Not achieving a level of partnership with a vendor
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.
View all posts by Hugo Messer →
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.
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
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.
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.