Poor Results?5 Major Concerns for Offshore

Outsourcing

Successful Outsourcing

What is the Problem?• Outsourcing software development projects is not a

simple “throw it over the wall and forget it” option• Outsourcing to offshore resources is inexpensive on an

hourly basis but brings many issues that companies and managers new to the field may not expect or be ready to deal with• Certainly, offshore outsourcing can be successful. It wouldn’t

be a multi-billion dollar industry if no one could make it work• Understanding the problems that can arise, need to be

considered and mitigated in projects is part of making the right choices for your situation and seeking the best alternatives

5 Major Concerns for Offshore Outsourcing

1. Is your project a “best case” for an offshore project?• Do you have experience in offshore outsourcing, the vendor,

and the type and size project you are considering? Does your team? • If your answer is “fuzzy” – you may be facing an uphill battle

• Is your internal goal for the project clear & well understood across your organization? • Common drivers are cost savings, access to resources & skills,

improved time-to-market, etc. Often several drivers are cited. But if the drivers are not clear and linked to business goals – it can be hard to deal with internal barriers and culture through the life of the project

5 Major Concerns for Offshore Outsourcing

1. Is your project a “best case” for an offshore project?• Does your project fit well in situations where communication with the

development team may be limited and operations may be different than your own?• Requirements are straight-forward, well-described and STABLE. No changes are

contemplated. • Application is not complex and technology required is not new or debatable. Project

is not “groundbreaking”• Functionality is well-described and in a user context• Application is not large. Can be broken down into small, independent modules. • Not mission critical or risky based on cost and timeline to completion

• Any outsourced project would be more successful if all these issues could be covered but in the final analysis, few IT projects, if any, completely fit the mold. They could be called the “golden unicorns” of outsourcing…

5 Major Concerns for Offshore Outsourcing

2. Failure to disconnect people & problems• This is a problem in outsourcing relationships across all situations - but of

particular importance in offshore projects• When problems arise in a project, they are most often traced back to a person

or a team• The processes or operational procedures that created the environment where issues could

arise and not be controlled are seldom investigated or changed• We have a strong tendency to find a scapegoat

• Leads to loss of trust within the team and enforcement of hierarchical control – exactly the opposite if we want strong, agile development teams

• Increased hierarchy means less direct communication, less independent thought from ”knowledge workers” paid for their pr0blem-solving skills

• In an offshore situation if there is not full-time offshore and onshore coordination & management (which raises costs & lowers productivity) to control and assess issues properly• We can end up creating the same environment and running into the same problems again

5 Major Concerns for Offshore Outsourcing

3. Travel & Communications• In outsourcing travel is strongly linked to communications in general because

face-to-face meetings are the most efficient way to communicate• There is no better way to communicate than face-to-face

• Baring a meeting of the entire team, getting key resources together can be a reasonable alternative but there will still be a deficit in communications to deal with

• But if cost savings are part of the drivers, the time & cost to visit an offshore dev center or bring resources to your location can be prohibitive• Hourly costs are lowest in fairly distant, remote locations• Even in high density of offshore hubs, comfortable travel and accommodations can be

hard to find – creating unnecessary pressures on what should be business-focused meetings

• Visas, entry processes, unfamiliarity with local customs and language can make travel from offshore locations to the US a very difficult proposition

5 Major Concerns for Offshore Outsourcing

3. Travel & Communications• In projects with some uncertainty –

the cost and time required for travel can delay meetings that would be beneficial to the project until a time when issues become very critical – turning what should be cordial collaboration into frustrating negotiations

• But let’s say that your project is fairly straight-forward and although there is some uncertainty, you have enough cash to allow for trips when you need them. What other communication issues should you consider?

5 Major Concerns for Offshore Outsourcing

3. Travel & Communications• Language

• English is the language of business around the world but it isn’t everyone’s native language

• Many people can read English but not everyone can write and discuss ideas verbally with the same proficiency

• Culture & context are part of understanding. If a person in your team has very little experience in English, they are not likely to participate fully in meetings & discussions

• As barriers rise, so to work-arounds. A facilitator or go-between is added to ”ensure clear communication” – but they often oversimplify, leaving out important details and not forwarding complete questions. A translation point is added so each side doesn’t have to deal with complex issues in another language, but because the translators are not technical or business domain proficient – they create more issues

5 Major Concerns for Offshore Outsourcing

3. Travel & Communications• Time Differences

• In offshore situations the working day difference can mean there is no overlap between offshore and local teams

• Accommodating issues usually means putting one or two people on the entire team at a disadvantage – working in both time zones• When a product owner and offshore technical manager do this – it means

losses in communication fidelity because they are often trying to switch back and forth between their own teams and the distant team they are coordinating with

• There are many variations and work-arounds, but for software development projects – the issue can be a significant barrier to good project communication

5 Major Concerns for Offshore Outsourcing

3. Travel & Communications• Us versus Them

• In any outsourcing situation there are always barriers to getting teams to think as one unit with shared goals & responsibilities

• In offshore – teams face significant barriers in language, culture, vendor-to-client relationships and time differences. If things go wrong, there is a tendency to blame and many cultures accept blame without question, deepening divides

• Trust – the ability to speak openly and discuss critical issues without fear is a serious problem in offshore teams in projects with shifting requirements and critical outcomes

5 Major Concerns for Offshore Outsourcing

3. Travel & Communications• Us versus Them

• In any outsourcing situation there are always barriers to getting teams to think as one unit with shared goals & responsibilities

• In offshore – teams face significant barriers in language, culture, vendor-to-client relationships and time differences. If things go wrong, there is a tendency to blame and many cultures accept blame without question, deepening divides

• Trust – the ability to speak openly and discuss critical issues without fear is a serious problem in offshore teams in projects with shifting requirements and critical outcomes

• Business domain sharing• Every business has internal, proprietary knowledge that is part of their competitive

advantage. Sharing knowledge openly takes time, thought and trust. In outsourcing, and in offshore particularly, legal concerns, technical business language, access to subject matter experts (SMEs) in real time and dense technical docs can become barriers to communication. Few teams understand at the outset how difficult sharing business knowledge can be.

5 Major Concerns for Offshore Outsourcing

3. Travel & Communications• Frustration overhead

• All the possible and real problems with communications can add up to a level of frustration that can make it very hard for teams to work together

• Frustration is rarely discussed but it creates deep divides and can stop clear, open communication between teams altogether

• When frustration limits communication to a few critical issues at a time – it is a critical issue itself

5 Major Concerns for Offshore Outsourcing

4. Technology & Methodology Differences• Globally – it might seem that technology is in sync - but that

is a big assumption• Regionally – access to technology can be limited by

licensing, educational resources, access to technical information, experience and local preference. • Gaps in methodologies can be even greater

• An offshore team is naturally limit in their implementation of agile by time and communication issues. Real time communication, the cornerstone of agile, is at a premium if it exists at all

• DevOps practices & experience may not exist in their context

5 Major Concerns for Offshore Outsourcing

4. Technology & Methodology Differences• Questions to consider

• Are the dev platforms & systems used by the offshore team appropriate for required productivity and the required application?

• Are their operational practices compatible and up to standards? Are their implementations stable and dependable?

• Is their implementation of agile fully functional or so limited by communication & cultural issues that it is barely recognizable?

• How does their QA work? Is it integrated into development processes or separate and walled off? Will it integrate seamlessly with your functional QA or will quality and communication issues create endless loops & finger-pointing?

• Is their coding productive, up to standards & maintainable? How much time can your team spend on coding issues when teams are separated by many hours or full working days?

• Do they have small, skilled teams or large teams with lots of communication overhead? Is their turnover high or low and stable?

5 Major Concerns for Offshore Outsourcing

5. Social & Organizational Differences• Organizations in the US tend to be flat (or flatter) than their

offshore partners• Hierarchical cultures don’t foster independent thought,

responsibility & the soft skills that form the backbone of agile • Offshore teams can function fully as agile teams – but it

takes a lot of work to be successful

5 Major Concerns for Offshore Outsourcing

5. Social & Organizational Differences• All outsourced teams have a certain

amount of risk adversity. It is always an easier choice to go with your experience than try something new even if it may have great advantages. • Offshore teams have greater

communication barriers and hierarchical cultures. They may be very adverse to change, upsetting the vendor-client relationship

• High turnover rates and a feeling they have a career limiting lack of challenge may create serious lack of motivation in offshore teams. Keeping a sense of ownership and shared opportunity can be difficult.

What is the Alternative?• There are many

successful outsourcing engagements or no one would ever do it!• Experience does count.

Knowledge of the bumps in the road is very helpful.• Keeping projects relatively

small and low risk is of course an alternative but not practical in many situation

What is the Alternative?• We do have a bias.

• Scio is a nearshore provider of software development services to our clients in North America• We are subject to the same

issues all outsourcing vendors face but…• Our location, practices and

focus gives us an advantage in all the communication, cultural and operational issues we have discussed.

What is the Alternative?• We do have a bias.

• We work and communicate in real-time with our clients

• We have at least a six hour overlap with our client teams

• We share North American identity & culture

• We are fully aware of how US teams work – we’re in direct communication and collaboration with them on a daily basis

• Travel to our clients and from our clients to us is not much different than across the US. Business travel and visas are part of the NAFTA trade agreement

What is the Alternative?• We do have a bias.• Our hourly wages are not as low as offshore vendors claim,

but our total cost of engagement works out to be very beneficial with less risk and complication• Nearshore is not a silver-bullet but – if you are facing issues

resourcing a team and can’t handle the risk of an offshore project – an experienced, nearshore agile team that can partner with you and work in real-time, in direct collaboration on your project can be a serious advantage.

• Are you interested in a serious advantage in your next project?• Contact us. Let’s discuss your project and see how a

nearshore team could be the difference.