Outsourcing IT projects – Is it a gamble?

IT Project outsourcing has been a trend for many companies today. Not only it saves substantial amount of dollars, staffing overheads and effort but also provides an opportunity to connect with and gain knowledge. Technology has removed every barrier that was a bottleneck few years back for companies having globally dispersed teams. But, till today there are few masses who believe in the anti-outsourcing theory. According to their opinion, outsourcing should be avoided by countries to upkeep national interest and economy and also because outsourcing sometimes does not yield good results. So our point today is: Is IT Project Outsourcing a real gamble? Let us find out.

As a business owner, what would you like to achieve at the financial year end? It is obvious that most business owners would look for Productivity and Profitability which eventually leads to company’s Growth. In order to achieve these 2P’s (productivity & profitability), every decision maker will definitely think upon the overall cost, the impact the sourcing model has on the business and the ability to control. But, before that every decision maker should know what and how to outsource. So, let us discuss these three points in detail before I conclude.

Overall Cost: Cost is an eminent factor that comes into the minds of decision maker’s before they decide upon a projects future. Whether a particular project will be executed in-house or outsourced to some other offshore providers? Or whether partial outsourcing will be done instead of total project outsourcing? Answers to these questions will decide the overall cost to business. For example, you have an IT project to be executed and for that you hire 5 dedicated developers at monthly pay scale. How will you absorb them when the current project gets over and you do not have projects for them in pipeline? Will you pay them for just sitting idle at work? So, why pay them unnecessarily when you have the flexibility to turn resources on and off by outsourcing the project to a third party at a lower cost. You can also avail the services of specific technology experts and hard to find talents at better cost than in-house hiring. But, every time it is not about the cost. Many a time’s business owners are ready to pay huge dollars but look for better control over their project execution.

Ability to Control: Control over a particular project is required when outsourcing is concerned. Every business owner these days care about the degree of control that they will get from their development partners when they outsource their work. It is acceptable that the highest degree of control on a project would be by developing in-house but, when cost incurred is high owners tend to drift towards outsourcing the project to service partners who can provide them fair degree of control over their project.

Impact on Business: The above two factors decide the overall business impact the project holds. Considering the fact that, developing a project in-house has a better degree of control, it will definitely have a better business impact. But, the cost incurred increases by a greater extent, minimizing the profit margin. Hence, with a fairer degree of control and low cost, outsourcing definitely has a medium-high impact on businesses which is enough to achieve both the P’s (productivity and profitability).

So, as a business owner I would prefer to outsource IT projects rather than developing them in-house. But, always remember to research and consider several other factors before choosing your right development partner to avoid offshore outsourcing IT project failure. Hence, we can be fearless and say that Outsourcing is not a gamble.

Please share your opinion as comments and do share if you like the post.

Cheers

Surya

Working with offshore software Development teams

In my last post, I had mentioned few factors that would help anybody decide upon the right software development partner for their requirements. What next? Once finalized with your offshore software development partner, how would you go ahead and manage the progress of your project as you would be handling teams across different time zones, different cultures, and language and also without face to face interaction?

Small businesses do a lot of work virtually as internet has removed geographical barriers. Things get done easily in this boundless world. Hence, it is essential to take advantage of technology and monitor the work done without being physically present.

Many projects fail due to the lack of communication between the company and the vendor. Hence, these loopholes should be avoided in order to efficiently and successfully deliver a project. Does working with your offshore development partner give you a lot of trouble? The below listed points might be of great help if you are a project manager dealing with offshore software vendors.

Managing Offshore teams has always been a concern!

Stay in Touch – Today’s delivery model (onsite-offshore) allows 24-hour work routine which moves the project rapidly. This is a situation where the offshore team is working when the project manager is asleep. So, make sure that there is time overlap where both parties would be alert to email/IM. The best thing to do is have a detailed discussion about the project over Skype every day. But, make a habit of staying in touch with the team.

Daily Updates – Ask your offshore team to send you daily updates on the progress of the project. Does not matter if it is a very small task done but be updated with the daily work done. If not via e-mail, then via a short video explaining the tasks done. But make sure they send you the progress of the project on a daily basis.

Visual demonstration – Prepare a small visual demonstration of what you are trying to explain. Be it a diagram or a process, it is always better to have a visual demonstration rather than both parties exchanging e-mails. This would provide greater clarity than other means.

Strict Deadlines – Make sure that you set strict deadlines for the progress of your project or else you might end up in trouble. Also be available to answer queries that come up from the offshore team.

Timely feedback – Feedback is most important. Providing proper feedback on the progress of the project would lead to successful delivery.

Communication – Communication plays an important part while working within offshore models. Make sure that the teams your work with are fluent in English. At least they have a good grasp of the language and understand each and every bit of your requirement.

Follow these above mentioned points and you will efficiently manage projects with your offshore teams. Avoiding these important points will lead you to frustration and sometimes failure. Keep Reading!

Cheers

Surya

Choose the right development partner or choose failure!!

Sometimes companies get stuck in making a decision of choosing a right development partner for their software projects and sometimes they repent after having chosen one. The bottleneck for both the situations is a number of factors that are considered before choosing an efficient offshore development partner. Every now and then there are a number of question that arises in mind:

Choosing the right development partner will bring you success but, choosing the wrong one will fetch you failure

• How to choose the right IT vendor?
• How to finalize the right software development partner for my job?
• What factors to consider when I want to outsource my web development work?
• Is it safe to outsource my software development work?

You have to fetch so many answers. It is understood that being responsible for the execution of your company’s software project, one would definitely be very cautious in selecting the right vendor. Any mistake done would cost an individual heavily and sometimes even result in project failure. So, why make mistake of choosing a vendor that would boast about its expertise and finally deliver null. Avoid risks much before your selection process. Read through the whole post to have a fair idea of the factors to consider before finalizing any offshore IT vendor.

Factors to consider before selecting a vendor:

Years in Business – Check if the business has been in existence for at least some years irrespective of the size of the company. No matter how big or small a company is, years of existence gives an idea about the stability.

Skills and Expertise – Matching skills is necessary as it will throw some light on the capability of the vendor. Expertise in a particular skill is also a decisive factor to again judge the vendor’s ability to deliver results. Without this there is no point going ahead with a vendor.

Similar kind of experience – This is again a very important factor for some, as this factor will make someone deeply understand the experience which a vendor has in developing similar applications or modules. You might not consider this factor also if you are comfortable with the vendor’s skills and expertise.

Quality Process – Ask the vendors what process/practice they have in place to check the overall quality of the work they do.

Communication – This factor plays an important part in selecting a vendor. Sometimes communication failure may lead to complete project failure. Hence, keep this in mind to evaluate a vendor. Also ask for ways of communicating in case of any unavoidable situation.

Pricing – Do not be very strict on pricing. Be flexible. Though, you might be having a budget for your project, you cannot risk quality for price if the cost overshoots by some hundred dollars. Still, try and evaluate a price with the vendor you have selected, at a pricing reasonable for both.

Transparency – Transparency in executing a project is an important one as the company paying for the services should know about the progress of its job. A transparent vendor would be the first one to check for after considering the above mentioned points.

Facilities for development –  This might well be another point to check for before selecting a vendor as sometimes people claim to run a small sized company but they actually do the work themselves.

Post development phase – Companies should look for post development support from a vendor for some months as issues might arise at any point after the release of the development work.

Any reference –This can be of great help to check the credibility of the vendor.

There is no harm in outsourcing development work to others as vendors do sign a mutual NDA (Non-Disclosure Agreement) so that the idea to develop something remains safe at the hands of the owner. So, ask your vendors questions based on these factors and if you get anyone with at least 80% of satisfying answers then go ahead with them and you will never regret.

One of the companies I know which have been following these points religiously since the last 13 years is Mindfire Solutions. Do check them if you have any software project to be executed!