Thursday, May 11, 2006

Offshore Development - Globalizing Software Development

Beyond Geographical Boundaries

Companies, for past few decades, have explored markets beyond their shores to increase their customer base. Companies have being successful with their products, services in different geographic markets and improved their top line & gained more customers. Going offshore for suppliers, IT development and software development has enabled companies to improve their bottom line. Companies have successfully reduced costs and improved profitability by offshoring some of their business activities. So if your organisation is looking for suppliers, Information Technology & Software Development vendors, Customer Call/Technical Support Centre, etc look beyond your own geographical boundaries and most likely you will find a vendor in a different geographic location who can do the tasks effectively, efficiently and definitely at lower costs. Thus offshoring is just an extension of “Globalisation”.

Offshore Software Development in India

India has vast pool of technical resources, years of experience in software development, requisite technology infrastructure and the right cultural background to provide offshore software development to companies worldwide.
India is the most preferred offshore development country for Software Development. Right from the Fortune 500 companies to even Small & Medium Enterprises globally have used Indian Software Companies & IT companies for their business software development. The cost advantage is just the tip of iceberg; India’s biggest advantage lies in the culture and attitude of Indians who work in these Indian software companies. Hence India is and will remain the preferred choice because the cost advantage and technology infrastructure can be replicated in other countries but not the people and their attitude which is so unique to India.

Offshoring IT application development and Software Development

WE have done offshore software development for companies of all sizes worldwide. Our offshore development services are even used by IT Consultancies and Software Development Companies in North America and Europe.

For details read here

Wednesday, May 10, 2006

Increase Your Success and Reduce Your Stress by Outsourcing

When you picture a business professional’s typical office scenario, what comes to mind?

A classy man or woman, dressed in a high priced business suit, an overflowing briefcase sitting on the corner of the desk, dictating memos and delegating tasks to a very overworked secretary?

How about a home-based business owner, sitting in their basement office, kids pulling at their pant legs while they are spending far too much time dealing with their correspondence and other administrative tasks?

Either of these sound familiar?

Well, these may be true but, with our ever-changing business environments and with the ease of using the Internet, more and more business professionals, especially small business owners, are altering how they conduct their daily activities.

Sure, they still have their offices, sometimes in their homes, but they also have more time to spend on generating revenue or to be with the kids than ever before.

How, you ask? Well….they outsource some or most of their non-core tasks to professional, reliable fellow small business owners who take pride in helping other businesses succeed by providing them with a helping hand.

These days, almost any normal (or even not so normal) task that a small business owner usually does, can be accomplished by an outside source.

Let’s take a look at the typical daily (or so) tasks that are usually needed to be done:

Read and respond to incoming mail and email
Enter account payables and receivables into accounting software program
Prepare a quotation for a potential new client
Order flowers for the spouse’s birthday
Reserve a spot in the local industry trade show
Update pages on the company website
Clean the office
Update your contact database
Book airline tickets and make hotel reservations for an upcoming seminar
Attend a networking breakfast
This list gives you some idea of the many tasks that need to be done each day by most small business owners. And, this is only a portion of what is usually required to be done.

Some of these small business owners run their businesses from their homes, which means there is the added activities of dealing with "around the house" things (that everyone seems to think you have all the time in the world to do), running errands (ditto), tending to the family, and accepting those calls from telephone solicitors who somehow know you are at home to answer the phone.

It’s all kind of like a math equation… the tasks ADD up, which SUBTRACTS from running your business smoothly, which EQUALS a less successful business and a more stressed out business owner.

So, let’s look at our list above again and see how many of those tasks can be accomplished by someone off-site; and who would be the best person or business to help you out.

Of the 10 items listed above, only two need to be handled, or at least started, by the business owner.

#3 – (Prepare Quote) This task should be developed by the business owner. Now, this doesn’t mean they have to do it all. They can put together the specifics of the quotation and then have a Virtual Assistant format and produce the final outcome.

#10 – (Networking) Again, this is something that can’t be outsourced, although, if the company is large enough, a representative can attend the meeting in the place of an owner.

#2 – (Accounting) This task is a perfect candidate for outsourcing. There are many companies that provide exceptional bookkeeping services. If you are lucky enough, you can find one that can take care of all of your accounting tasks, right down to your yearly income taxes.

#7 – (Clean office) Once again, this can be handled by a reputable office or house cleaning service, and for relatively cheap.

#6 – (Update website) This is something that can be accomplished by an experienced web designer, and usually by way of a contract or retainer agreement for ongoing maintenance.

#4, 5 & 9 – (Flowers, tradeshow, seminar arrangements) These are all best handled by a professional concierge service. They can take care of everything from booking a limousine to arranging hot air balloon rides to corporate event planning.

#1-10 – Except for #10 (which is best handled in person), and #7 (which is not something that can be done from afar), the remaining tasks can all be handled by a Virtual Assistant (VA). Now, not all VAs provide all of these services but, more than likely, they can either recommend someone who can or get the details from you and ensure that a fellow colleague will do the work according to your needs.

As a fellow small business owner, being able to provide a full-service benefit to a client is something that most VAs take pride in. If they do need to subcontract work to someone else, they make sure that the contractor is aware of their level of professionalism and that it is the VAs reputation that is at stake, something most will go to great lengths to ensure is held in the highest regard.

Outsourcing is a relatively new concept to most business professionals but, as more and more of them begin to realize the benefits that they can take advantage of by utilizing the off-site services of Bookkeepers, Concierge services, Virtual Assistants, and more, the more successful and less stressed out or overworked our business communities will be.
For details read here

Tuesday, May 09, 2006

Outsourcing CAD Offshore Assessing Service Provider Reliability

If you have decided to outsource some of your CAD to an offshore service provider ("OSP"), it is important that you carefully evaluate your potential partner first. Outsource to them only if they successfully pass through your appraisal sieve. Here are some important evaluation criteria and methods for assessing them:

---> Criterion: The OSP Should Be Web-Savvy Check if the OSP has a website. If they do not, in all probability dealing with them will yield a bad experience. If they have a website, check whether their postal address and telephone number are displayed on it so that they are physically reachable.

Give the OSP credit if the website has mostly text with limited graphics, has almost no animation, clearly explains what the OSP is doing and is easy to navigate. This implies detailed knowledge on website design, which increases their ‘web-savvy’ rating.

Your CAD outsourcing is most probably going to involve transferring large amounts of data over the web. This calls for an OSP who is proficient with email. To evaluate this, send the OSP a message asking for more information and see if you get a response within 12 hours. The response should be perfectly focused on your question. You have to be careful an autoresponder (ie, a web-based answering machine) is not replying to you, so formulate your question to require a tailor-made reply.

Subsequently send two more questions related to the work you are considering giving the OSP. Check whether these responses too are timely and relevant. If the OSP has a form on their website for sending them email, give them extra points (smart webmasters do not put their email addresses on their websites to discourage spam robots from finding the addresses and sending junk mail to them).

---> Criterion: The OSP Should Have a Satisfactory Profile
Email the OSP a questionnaire that gathers a wide range of information on them. Decide whether you like what you find. This questionnaire should cover address information, telephone number of the individual dealing with you, company history, financial performance, references, specific CAD capabilities, track record, installed hardware, software platforms, manpower, HRD policies, data security and physical security.Get in touch with some of their references and ask them whether they had a good experience with the concerned OSP.

---> Criterion: The OSP Should Know Their CAD
Now it’s time to ask them for a small paid sample, preferably a minor portion of a project you plan to outsource. Check if their output is satisfactory (you would know best about this). Evaluate whether they asked you all the questions they should have before they started drawing, which is a sign of good planning practice.

---> Criterion: The OSP Should Know Their Commercial Paperwork
Send them a detailed specification of the CAD work you want done and ask for a quotation. Evaluate their quotation based on whether it clearly describes technical scope, cost, delivery time, non-disclosure, modification costs, payment terms, guarantee and mode of payment. If all these topics are overed, you are probably talking to someone with commercial competence --- good!

---> Criterion:Be Satisfied with the Contact Person
Phone this person and chat briefly with him/her. Decide whetheryou feel he/she is competent and easy to deal with.

~~~ The Evaluation's Over: Now What? ~~~
By now you have an idea of how good the OSP is. Start by sending them a modest assignment. Don't be worried if there are many technical questions: these should decrease as the OSP does more assignments for you. But that's not all. Careful selection of offshore CAD service providers is not the only factor involved in successful offshore CAD outsourcing. A major cause of outsourcing breakdown is the client's failure to manage the ongoing process. There is a lot to be said here; it will all emerge in my next article --- stay tuned!

For details read here

Successful Offshore Call Center Outsourcing


There is much hype about the growth of outsourcing. There are an increasing number of success stories but the number of failed projects is also on the rise. This is particularly true of India where weak management and poor infrastructure are damaging the reputation of the whole offshore outsourcing industry even for countries with greater attention to quality such as South Africa and The Philippines.

How do you make offshore outsourcing work for you? I believe that this 10-point plan is a key tool, which can be used to make the difference between success and failure.

1 Right vendor
There are lots of vendors that have sprouted up in developing counties but the difference between good vendors and weak vendors immense. Even vendors that have a good reputation often fail to deliver. The key to vendor selection is to deal directly with the people who will be managing your business on a day-to-day basis. You should be convinced by their experience and ability rather than their technology, client list or offices.

2 Experience counts
Do the people managing the business know how to make your project a success? It may seem like an obvious question but you will be surprised by the poor level of middle management, particularly in India. Experienced managers may be reluctant to move to India. Remember, it is the quality of the operational management, which makes the difference. An account manager sitting at a desk in London has little influence over project delivery in Bangalore.

3 Don’t assume
Anyone who has worked in any developing country will tell you this is the most important thing to remember. ‘Reasonable assumptions’ don’t travel well- what seems logical in London, may seem illogical in India. Remember that you’re potentially dealing with a country culturally very different to your own.

4 Use multiple vendors
If your project is of sufficient size, use more than one vendor. The management of offshore operations generally requires more intensive management. The use of two or more vendors is an effective way of driving continued improvement from your vendors. It also acts as a safety net in case one under-performs. Ensure that the vendors are aware of the involvement of the other vendors. This will motivate them, as they will know there is the opportunity of additional work and having the work taken away from them depending on their performance.

5 Count the cost
It is true that offshore outsourcing brings substantial cost reductions but some vendors propose complex pricing structures in order to hide costs. This is typical of business in many countries, so be sure to always insist on a transparent pricing structure. Vendors will often try to hide costs such as telecoms, account management and other costs. Be careful and always ensure you are aware of all the costs. Be careful and always ensure you are aware of all of the costs before you start.

6 Exit strategy
Don’t start a project without knowing how to finish it. Over the next few years, you will see vendors with weak business models go out of business as their funding dries up. You must know how to cope if you are no longer able to do business with the vendor. This is far easier to control with tactical outbound projects but always be prepared.

7 Continually evaluate
Set Key Performance Indicators (KPIs) and continually review them. Without tight management, problems can occur quickly. It will always be far easier to manage a project if the KPIs are understood straight from the very beginning.

8 Own the strategy
The highest performing outsourcing companies in the United Kingdom are able to define and deliver your call center strategy for you. Whatever they might tell you, very few vendors in offshore locations have this ability. You need to control the strategy and then clearly define the execution plan for your vendor.

9 Sceptics succeed
Work from the assumption that your outsourcing will achieve limited success and that everything can go wrong. Those of us who work in Asia know that it’s often the answers you don’t get which are the most important ones- and that answers should never be taken at face value. Probe deeply in order to ensure you’re not working with the wrong partner.

10 Two way benefit
It may sound like I am telling you to give your offshore vendors a hard time-but you need more than that. Your account has to be worthwhile for the vendor .If your account is unprofitable or not worth the effort for the money, you will receive a sub-standard level of service. Of course you need to ensure you receive your money’s worth but there is a limit. Executed effectively, offshore outsourcing can be a win-win for the client and the vendor. Costs in many Asian countries are so low that everyone can benefit and the quality can remain high and even improve.
For details read here

Sunday, May 07, 2006

Inside Outsourcing

Outsourcing has become a way of doing business because the financial benefits are compelling. This is especially true for Information Technology which represents one of, if not the greatest costs in business.

That being said, the decision to outsource can not, and should not be based solely on financial factors. Other factors critically impact the outcomes of outsourcing and must be evaluated.

As a matter of background, I have been an IT VP and CIO. During the last 10 years I have been involved in 4 outsourcing efforts; most often inheriting them. These included:

* Systems maintenance using a noted public accounting firm
* A large development project with a major firm in India for mission-critical systems on new technology platforms
* A $300 million agreement with one of the world's largest technology companies to outsource an entire IT unction
* Development of business intelligence systems at a major cleaning products company by a leading consulting firm.

I also have experience in Europe, Asia Pacific, India, and Mexico that has helped me gain insight into different cultures and management.

In this article, I review items that in my experience, have shown to be critical factors in the success of outsourcing.

Determining Value

Financial Returns

At the highest level, the best measure for the financial value of outsourcing, is that everything being equal, can the outsourcing company do the same work for less cost?

To that end, outsourcing requires an inventory of applications, equipment, organization, and other areas to see what opportunities exist to get things done better and cheaper.

What typically occurs, is that the vendor initiates the process via top management who likes the potential benefits. That starts a subliminal clock running, along with the incumbency and pressure to get something done. The vendor then conducts an inventory. Then management, in an effort to lower IT costs, reviews the inventory, becomes arbitrary about needs, trims the inventory, and institutes limits and constraints on IT usage to lower the expense of the contract.

When this happens in outsourcing the business becomes under served for it's needs, which results in frustration, if not failure for all involved.

If your company is considering outsourcing, the best approach is to perform an inventory before opening relations with the outsourcing vendor(s).

Understanding and validating what is required to operate a business is the company's job, and contributes to the success of outsourcing. In the simplest terms, decide what you need, and then shop, much like in a bid process.

As such, the inventory should be completed with the business functions involved. The business rationale for the applications and services should be done by the business functions, and presented by them to management for approval, together with IT.

Other Returns

There are many other value points to be considered in the process of outsourcing, many of which can have financial benefits.

Evaluate if the outsourcing company has access to top talent that can be available to you. If you are transitioning staff, confirm that the new company has the expertise to improve their capabilities. If not, what are you gaining?

In one situation I managed, the new vendor placed one new person as the leader of the IT operations group. He significantly improved their qualities, morale, and performance. Moreover, his experience enabled him to lower operating costs with better processes, equipment, and services.

Evaluate if the vendor is a leader in business. Who you do business with can have the same value as the power of networking. How they are viewed in the marketplace can cast a positive or negative shadow on your company. Verify they have the means to stay in business and perform at the levels you need.

Determine if they have resources that can be available to you for other business needs. In the beginning of a relationship, IT management issues are the priority. Later, other things may occur where the outsourcing company can have tremendous, unforeseen value. In my experience, this has been true in developing vendor relationships, for acquisitions, divestitures, economies of scale, and even obtaining capital.

Operating Impacts


Despite the potential benefits from outsourcing, it is still a large, time consuming process. As such, the management team needs to determine the priority of dealing with an outsourcing effort against all other business needs.

In one experience I had, management wanted to be a vanguard for outsourcing, much like they were for the "quality" movement, and other business practices such as EVA, PVA, and CVA from the mid-1990's.

The work for those initiatives, as it was layered on the staff became their job vs. operating the company. The company, which had been unprofitable, never got profitable. It was then sold by its parent and many people became unemployed.

In another experience, the company was very profitable, but debt service from a leveraged buyout absorbed 90% of the profits. Outsourcing IT was seen as a "quick win" to lower costs, increase margins, and help save the company from bankruptcy. Instead, it was disruptive, absorbed critical resources from operating the business, and was futile. Not having enough operating capital ultimately lead to bankruptcy.

At the end of the day, the management team has to find out where has outsourcing worked and why. They need to determine what verifiable, accepted factors contributed to it working, if can work in the company and why, and then decide what to do.


Outsourcing is typically viewed as the CIO's initiative (and often, a mandate handed down to the CIO as penance for the high costs of IT).

In practice, the CIO rarely, if ever makes a major outsourcing decision. A decision of such magnitude is typically made collectively at the management roundtable (if not at the board level). As the ultimate end users, other senior managers and their organizations will be impacted.

As such, without maintaining a continued commitment and support at all levels, outsourcing doesn't work well.

Preparation for questions like the following should be addressed before an outsourcing decision is made: Is management willing to enforce the disciplines they required and agreed to? Are people at the operational levels supportive of their commitments?

If these issues and others like them are not addressed and managed effectively, resistance (often silent) starts, then grows and undermines the outsourcing effort.


In many areas of the country, a company is a legacy and representative of that area. Long standing relationships with government, with employees, and between employees are significant contributors to a company's success.

As such, outsourcing requires a culture that is open to outsiders. If a company is insular, "outsourcing" with "outsiders" will inhibit benefits from outsourcing.

Consider the following items:

Media - I would suggest that dealing with the media is one of the most critical issues related to outsourcing. How the media views and presents outsourcing will affect how stakeholders respond to outsourcing. In a recent article in the Chicago Tribune, Sears announced an IT outsourcing, but made clear that part of the criteria for choosing a provider would be assuring the benefits of the affected employees.

A proactive strategy that deals with content, distribution mechanisms, timing, addressees, responses, and unforeseen issues is vital.

Government - You will have to manage political agendas for maintaining jobs where your company does business. You will have to address where jobs will be getting done, by whom, and why. For example, using resources in India has compelling financial benefits, but there are also compelling political issues, as in Mexico and the Asia Pacific region.

The Community - The community will be concerned about the impact on job opportunities, real estate vacancies and values, corporate contributions and volunteers, and other similar issues. A strategy for managing these issues that includes community action is important.

Customers - Customers can be and are impacted. In the 12/22/03 issue of Fortune Magazine, an article on page 44 highlights companies who have outsourced customer service to offshore locations, and are losing customers due to cultural misunderstandings. As a result, they are revisiting their off-shore outsourcing strategies.

Business Relationships - Your business partners must also be recognized. Many may not like outsourcing. They may resent the fact that you are doing it, and the impact on the community. Moreover, they may not like the vendor you have chosen, have had a bad experience with that vendor, and not want to do business with them on your behalf.

Company and Vendor Match - You must also evaluate the match of style and personality of your company and the outsourcing company. People who don�t like each other don't work well together. In a situation I took over, the match was so poor, and hostile, that I had to cancel the agreement. The company culture made it extremely difficult to work with outside providers, and that had to be considered in every subsequent situation.

Background Differences - I inherited a troubled project with a manager who was not getting along with a peer in England. When I probed deeper, I found the problems, of all things, were from differences in how in "UK English" and "US English". In another company, I encountered outright racism from employees towards people from India. The location of the company, in an outlying area, and personal backgrounds in the workforce played into the situation significantly.

Employee Treatment

I've left this section until last, because in the very end, it is the affected employees who make outsourcing successful.

How they are treated is critical. What respect you show for their history in the company, and how you make that influence the outsourcing initiative is critical.

Initially, positive actions will definitely shape the view of employees who will not be affected by the outsourcing. Otherwise, they will worry for their coworkers who are their friends, and sometimes will even rally for their foes. They will fear for their own jobs and future. They will become untrusting of management and less productive.

For the affected employees, no one wants to be rejected. When a company decides to outsource, their perception becomes that their work and value to the organization isn't good. They find it even more humiliating that economics overrides their company identity, motivation, dedication, loyalty, and tenure.

They will have fear about not being retained by the outsourcing company. They will fear for their future and well-being of their family. They will be less productive. They will be untrusting. And often, their view of benefits for themselves will become clouded.

In one situation, I had 110 employees who were going to be transitioned in a total outsourcing to the outsourcing company. The company is literally one of the finest in the world with opportunities, pay, benefits, and training far beyond what they had ever received.

With the right management strategy and actions, they remained productive and subsequently realized the opportunities they had. After the transition, virtually all of them got increased pay and training, and many were promoted in recognition of their abilities and experience.

Most significantly, they became much more capable, motivated, and productive contributors to the company they were no longer employed by, but still came to work at every day.

Every bit of their company identity, motivation, dedication, and loyalty was brought forward to the benefit of both companies. Within the scope of their efforts, financial benefits were achieved.

It is the affected employees who make outsourcing successful.
For Details read here

Saturday, May 06, 2006

Outsourcing Data Destruction

Data processing, archiving and management is yet another lucrative outsourcing industry. Abstracting, indexing and storing of information all require professional and expert handling, which some offshore companies provide. Most of these companies are also large firms, employing hundreds of people for specialized work.

But while you could trust offshore companies to handle data storage and protection, would you trust them with the task of data destruction? We’re talking shredding and disposing of erroneous or outdated paper documents, which may otherwise include sensitive information. Is there a difference in risk? Would there in fact be more damaging information in documents set to be destroyed, than documents that are just waiting for be filed and classified?

Note that sometimes, sensitive files are encrypted onshore, then just sent offshore for remote storage.

Many companies already do their data destruction work in-house. Arguably this is not any safer than sending it offshore, since even within a company there could be malicious employees who are more aware of the potential value of the sensitive data that is about to be destroyed.

Security is also an issue in sending important papers offshore. Using a secure freight service for deliveries is a given, but a shipment could still be intercepted on its way to the target offshore firm.

But if security is not such a risk, as in the documents that are set to be destroyed do not contain important information after all, perhaps more offshore firms (even the ones that already handle data processing and management) would want to invest in offering data destruction services. It might save onshore firms, especially large corporations, much extra spending and valuable man hours to contract data elimination services in low-cost locations.
For details read here

Thursday, May 04, 2006

Taking IT offshore

Offshore outsourcing: Like it or loathe it, the ability to get the same work done for less money by overseas workers is likely to be a big draw for U.S. corporations struggling to remain competitive.Many organizations have discussed offshore outsourcing options. More than 80% of all U.S. companies will have considered shifting U.S. IT jobs overseas, while 40% of all U.S. organizations will have completed some type of pilot or will source IT services from non-U.S.-based service providers.
In addition to the cost benefits, shunting tasks such as programming and application migration to foreign lands frees up in-house staff to work on more strategic developments.

As offshore service providers get more experienced at dealing with U.S. corporations, they are beginning to move up the value chain to offer business process outsourcing, call center outsourcing and network infrastructure management .

Countries such as Canada, India and the Philippines are good locations for service providers offering network management outsourcing. Those regions offer large pools of highly trained workers, have a modern telecom infrastructure and are likely to be able to make the required capital investment in building network management centers.

"The Philippines is an archipelago that has high-speed underseas telecom cables between the islands right up to the management centers," in comparison to continental regions that might rely on older, domestic pipes.

On the other hand, countries that don't have an expansive pool of workers or can't afford big capital investments instead often concentrate in niche areas. Russia, for instance, offers scientists and mathematicians who can help solve large-scale, complex technical problems. There, an average developer salary is about $7,500 per year.

For details read here

Wednesday, May 03, 2006

The art of successful offshore outsourcing

Even IT executives who have successfully outsourced parts of their companies' services abroad can tell you the road to profitable relations with offshore partners can be painfully bumpy. Just ask Group 1 Software Vice President of Postal Affairs Tim King, who was forced to pull the plug on two of the four offshore application development pilot projects he initiated in the past 12 months.

"Either, in the design phase, they just didn't get it, or the code they delivered was just not up to our standards," King says.

Fortunately for Group 1, King quickly reassessed Group 1's offshore outsourcing strategy and -- complying with the company's rigorous project approval and management process for offshore contracts -- limited the financial exposure of the aborted relations to approximately $100,000 each.

Despite these setbacks, King has achieved success with offshore ventures; but he is by no means alone in experiencing failed outsourcing projects. In fact, his case is typical for IT executives pursuing outsourcing relationships, experts say.

"Over half the people we talked to for our own research said that offshore projects failed to achieve full potential for cost savings," says David Foote, president of IT advisory and research company Foote Partners.

As with marriage, making an outsourcing project successful requires considerably more effort than simply saying, "I do."

Foote and other IT executives believe offshore project success requires self-examination on the part of the client company to clarify goals and expectations, rigorous project-management discipline, and an understanding of how best to manage communications with everyone involved.

Great Expectations

The first step in making an outsourcing relationship work is to analyze your company's outsourcing expectations, says Tony Greenberg, CEO of Ramp Rate, an IT outsourcing advisor.

"We have a whole series of questions," Greenberg says. "What do you hope to gain from outsourcing -- cost reduction, business transformation? What criteria do you use to identify vendors? Do you truly understand your internal costs?"

There are legal and regulatory questions to consider as well, Greenberg adds, citing the financial reporting requirements of the Sarbanes-Oxley Act and the medical and insurance reporting requirements for HIPPA (Health Insurance Portability and Accountability Act).

Oftentimes, the best course of action is to stay at home.

"Companies also must realize that ultimately the vast majority of outsourcing is done cost efficiently in the U.S. and that offshore outsourcing is not for everyone," Greenberg says.

Establishing a decision process to define what should and should not be outsourced goes a long way toward avoiding pitfalls down the road, Group 1's King says.

"We wouldn't outsource those things we sell that are regulatory in nature -- for example, a postal coding product. The code has to be in the hands of customers at a certain date in order for them to comply with U.S. postal service regulations," King says.

According to many who contracted offshore services, understanding the real benefits of offshoring and setting reasonable expectations are also important to ensuring success.

For details read here

Offshore partnerships demand a wide range of expertise

Like it or not, offshore outsourcing is becoming increasingly central to IT. As the drumbeat grows ever louder, chances are you’ll eventually be asked to get in step.

But how do you design and implement an effective offshore initiative? What are the key issues to keep in mind? The offshoring landscape is littered with the spectacular failures of companies that missed or lost sight of the big picture. “People who jump on the bandwagon to make some quick savings get quickly frustrated,” says Ramakrishnan Ramamurthy, general manager and practice head at Bangalore, India-based Wipro Technologies.

To avoid becoming an offshoring cautionary tale, heed the following tips from expert offshore outsourcing consultants, vendors, and analysts.

1. Never outsource your core value.
Firmly establish which IT functions are key to your company’s competitive advantage, advises Frances Karamouzis, research director at Gartner. Those functions are the ones you’ll want to keep in-house or at least onshore. She advises managers to consider how they expect their companies to remain competitive and what intellectual capital they must retain in order to thrive.

After deciding what you should not move offshore, put everything else on the table. “The scope is really the big kicker,” says Ben Trowbridge, managing partner at Alsbridge, an outsourcing consultancy. “People go into an offshore deal thinking it’s only the nonthinking work [they] can move offshore -- the raw coding. In reality, they can probably move a much wider scope.” Karamouzis recommends a complete portfolio analysis for every application development project or IT process. For example, examine how offshoring will affect customer retention, the supply chain, and so on.

Make offshoring part of a broad business strategy. Unfortunately, many companies dive in tactically in search of cheaper labor rates on specific projects, Wipro’s Ramamurthy says. “The ones who succeed are the ones who’ve thought it through, ... have very clear areas they want to outsource, and [have] a long-term strategy.”

2. Get boardroom ownership.
Get senior management committed to your offshoring initiative in its initial phases. “The CEO, the CFO, someone pretty senior has to own a direction and a broad business case for offshoring early -- and keep steering the team back to that business case,” Trowbridge says.

With buy-in from the big shots, you’re better positioned to get everyone else on board as well. To do so, develop a communication and change management strategy for handling the various internal issues that will arise. “Passive resistance in the organization can doom the outsourcing relationship,” explains Cliff Justice, multishore practice leader at consultancy EquaTerra.
3. Forge internal competencies.
Build a strong internal project management team. “The greatest challenge is getting yourself prepared and putting the governance structures and people in place,” explains Peter Bendor-Samuel, CEO of The Everest Group, an outsourcing consultancy. “Managing this when it’s remote takes some organizational redesign. There have been plenty of cases where people have badly stubbed their toe.” Bendor-Samuel advises creating an internal “center of outsourcing excellence” that can provide the “superstructure” of tools and best practices for effective outsourcing project management, including governance vehicles, incentives and penalties, oversight mechanisms, risk mitigation strategies, service descriptions, and metrics.

Internal competencies include the ability to manage internal demand so that the offshoring vendor isn’t overwhelmed with excessive or conflicting requests. “The client organization has to become very good at developing requirements,” EquaTerra’s Justice says. “You can’t do that at the watercooler anymore.”

For details read here

Tuesday, May 02, 2006

Offshore Storm: The Global Razor's Edge

The defining political issue for America in the next decade has arrived now, courtesy of India, China, and any number of aspiring developing nations. That issue is offshore outsourcing--not of blue-collar factory guys, but of well-paid knowledge workers. It is a question that will get traction in November's elections. It will only grow bigger and more divisive.
The tipping point? Perhaps we've just witnessed it. In December, The Wall Street Journal reported that IBM will soon ship as many as 4,730 white-collar jobs overseas. The news is essential for three reasons. First, this is IBM--still, arguably, this nation's preeminent technology company. Second, these aren't lowly coding grunts (a function IBM has staffed from India for years), but engineers and managers making $75,000 to $100,000 a year. Indian talent likely can do comparable work for one-fifth the cost.

Third, and most telling, IBM didn't comment on the leaked news. IBM knows its public relations: Shredding the pay stubs of middle-class workers is a sensitive matter. Last summer, as the Journal also reported, union activists got hold of a tape of an IBM employee-relations exec warning human-resource managers that offshoring "is going to raise a lot of tensions."

So, welcome to your future. Researchers at the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, estimate that as many as 14 million ser-vice workers, or 11% of the nation's total jobs, are vulnerable to offshoring. Intel is opening a glittering new $41 million campus in Bangalore to house 1,000 workers. Morgan Stanley Dean Witter has announced plans to ship some equity research overseas. "A ferocious new wave of outsourcing of white-collar jobs," the Fisher Center folks call it.

The reality is, offshore outsourcing is inevitable--and for the economy, that's not such a bad thing. Nowhere is this clearer than in the place you would least expect: Silicon Valley, the cradle of America's technology economy.

Sure, hourly workers and engineers in the Valley are jittery; offshoring is a touchstone issue for a nascent union drive at IBM's plants there. But listen to the serious money--the entrepreneurs and venture capitalists who make things happen in the Valley. They understand, first, that this isn't about a race to the bottom. Rather, to compete in a climate of weak capital markets, their companies have to be run as efficiently as possible.

"It is a global world that we live in, and this is just business as usual," says Richard Kramlich of New Enteprise Associates, a big VC firm. "We demand that businesses stay profitable or go out of business; to do that, they have no choice but to go overseas."

Two-thirds of the portfolio companies at Mayfield Ventures, another VC firm, already have offshore operations. And Mayfield won't consider funding new companies without an offshore strategy, says partner Yogen Dalal. "All startups need to be as efficient as possible in getting their developments to market with the least amount of money," he says. "If they can do that by utilizing talent overseas, so much the better."

Others argue convincingly that the drive for cost efficiency obscures even bigger potential benefits. "The reality is that you are also creating a very large market opportunity for U.S. firms," says Arjun Gupta of TeleSoft Partners. "When consumers in India get higher wages from these new jobs, the first thing they do is spend it on consumer products, and they want American products." Things like washing machines, clothes dryers, cars, and microwaves. "The second-order effect of this will more than offset the short-term loss of jobs," Gupta says.

Is there a risk? Of course there is. Think back to the 1970s, when American companies unloaded the manufacturing of consumer electronics products to factories in Japan. Today, those Japanese companies--Sony, Matsushita, Sanyo--dominate that industry, even though the United States remains the largest consumer market for TVs, stereos, and other gadgets.

That precedent is what worries venture investor Gary Morgenthaler. "It may be shortsighted to teach engineers in China to compete with us. Once they know how to build high-tech products, they will develop more advanced technologies. They'll sell first into their own markets and then enter our markets to sell against us. It is the epit-ome of arrogance for us to assume they won't."

That's the conundrum. If tech companies resist offshoring, they forfeit dramatic cost efficiencies that let them compete globally. Higher costs yield lower growth, then lower investment, then death. Yet if companies send jobs overseas, they risk giving away the keys to the kingdom.

What's your pleasure: survival or survival? The Valley's answer: "You go wherever you need to go to get the job done in the best and cheapest way," says Kramlich. "Here we are, we've been trying to export capitalism and democracy, it's been one of our national goals, and now that we've succeeded at it, we're awed and even afraid of it! That is the greatest irony of all this."

For details read here.

Monday, May 01, 2006

India's outsource workers snub unions

The rest of the civilized modern world view India as the seat of sweatshop labor with long, late hours and low pay. Thus, with the noble intention of protecting workers’ rights and improving working conditions, international alliances of unions have been attempting to organize them into protected groups. They have been faced with a shocking discovery though: the Indian outsourcing workers have no desire nor see the need for unions.

Beyond the negative image of unions the mostly-youthful Indian employees have, most see themselves as ‘members of a relatively well-paid, respected professional elite in no need of a union’s protection.’

The Union Network International, made up of 900 unions is targeting India’s back-office outsourcing workers for unionization. This alone amounts to 350,000 and is expected to shoot up to add 80,000 within the year.

An employee of IBM’s outsourcing center in Pune says, "A union would make sense if there was no job security," and goes on to point out "Here jobs are more, people are less - companies are trying all means possible to keep employees happy so that they won't leave."

That wasn’t the first wave of resistance UNI has encountered either. Indian software programmers had turned their noses up at the offer of union protection, back in 2000. The union drive serves a critical purpose for the UNI since the jobs lost when shipped over to India represent cuts in the unions’ traditional member pool – mostly from Europe and North America. He exhorts the workers to join as these can help facilitate improvement in the industry’s working conditions.
For details read here