Thursday, August 03, 2006

Offshore Outsourcing OR Offshoring

Offshore Outsourcing - or Offshoring, which is a related term but has slightly different connotations - has a significant potential to improve an organization's bottom lines, make it more responsive to changes in technology, improve quality of offerings, import new and desired skill-sets into the organization and generally make the business enterprize more competetive in today's market-place. However, if done with little preparation and without a clear business case, can often be a sure recipe for disaster.

Here we provide you some tips on how to actually go about executing your offshore outsourcing initiative so as to make it a success.

1.Define your service level requirements (SLR) in unambiguous terms. Any outsourcing house worth its salt must have an easily customizable and flexible SLR format. If they tell you they don't, then that's one of the earliest signs of trouble.

2.While defining the SLR, see how knowledgeable, responsive and helpful the contact on the provider's side is. See if she somehow adds value to the requirements generation stage by asking relevant questions.

3. Remember always to beware of a provider who promises everything that you seek can be done! That is a clear lie. As a test try making seemingly difficult or impossible or costly demands.. Not everything that you would 'like' to have ideally would be possible in an Outsourcing scenario - at least not right away.

4. Visit the provider's office at least once. Meet the team that will work for you. Get familiar with them.

5. Ask the provider to provide you a named list of people that will work for you and insist on keeping the team composition unchanged. Any changes in team should be communicated to you explicitly. Put clauses into the Service Level Agreement (SLA) ensuring these. Outsourcing is all about people. So give this the same amount of attention as you would do if you employed these people yourself in your own office. At a later date when the relationship has matured to an extent, you may consciously decide to trust your provider. But, don't do that from day one.

6.You can additionally insist for quality and security certifications. However, even if the provider has all the required certifications, you MUST visit their location and check for yourself the quality management system and the security procedures that they use in practice. Meet the security chief and the quality manager and talk to them informally about their processes.

7.Insist on the provider coming up with measurable metrics about the work - both in terms of quality achieved and quantity served. Check if the metrics are such that you could double-check these on your own easily. Insist on a regular MIS reporting by the provider.

8.Insist on reward and penalty clauses within the SLA, based on these metrics. However, be flexible in reviewing these clauses from time to time. Remember, just as you are taking a risk outsourcing the work, the provider also is taking risks. It doesn't necessarily make you a winner if the provider's costs increase unduly while acceding to your demands.