Saturday, September 10, 2005

Tech Services Firms Steer Clients Toward 'Right-Sourcing'

The Internet has made it possible to develop and deliver software from almost anywhere, helping fuel the offshore outsourcing boom. Instead of developing certain programs in-house, companies in the U.S. are outsourcing more of the work. They are turning not just to U.S. tech services firms, but also to lower-cost firms in many parts of the world, such as India.
The industry is "location agnostic”
But it's not easy for many companies to let go of the controls and turn to outsourcers, especially those offshore. As a result, tech services companies -- the providers of software development and other tasks on an outsourced basis -- are more and more trying to help their clients come up with a solution called right sourcing.
Right sourcing combines several different approaches.
A tech services outfit can have its programmers work directly at the customer site.
The firm can give its clients access to near-shore facilities that are lower cost than the U.S. but close enough to comfort clients.
Or the services firm can develop programs from the other side of the planet, in very low-cost areas.
For companies, right sourcing slashes costs but reduces the anxiety of having key tasks done by outside firms.
In any case, offshore outsourcing is taking hold.

In the last year, the value of software exported from India alone rose 30% from the previous year to $12 billion.
The top rule for outsourcing success is to follow the customer, says Ram Mynampati, president of Satyam Computer Services (NYSE:SAY - News).Each project must be planned around a customer's distinct needs, or what Satyam calls "right sourcing."

That global reach and nearby presence reduces customer fears, says Mynampati. He says clients want to work with nations in which they are familiar with the culture and customs. Some U.S. customers, he says, feel uneasy about sending their software work all the way to India, but they have no problem sending it north of the border to Canada. Likewise, many Japanese clients prefer to outsource to nearby China rather than to more distant nations, says Mynampati.
Right sourcing is both an art and a science, says Marc Hebert, executive vice president of Sierra Atlantic, an outsourcing firm based in Fremont, Calif. Sierra Atlantic has developed a method it calls NShore. The idea is to help its clients come up with the best outsourcing plan. The NShore name is a play on the word "ensure."

The NShore playbook sets out guidelines on how to best install and update business software from the likes of Oracle (NasdaqNM: ORCL - News), SAP (NYSE:SAP - News) and Siebel Systems (NasdaqNM: SEBL - News). "The global delivery model is a tool that's here to stay, and nothing will stop it, not even nuclear war."

The article sponsored by A-1 Technology Inc, dealing in offshore outsourcing and offshore software development.