2. Contents
Why to Outsource?
3
The UP & DOWN sides of Outsourcing
7
Choosing your Outsourcing Partner
10
Killer Outsourcing Mistakes
15
4 Ways to Overcome the Challenges in Outsourcing
19
Outsourcing – The Right Way
25
BONUS CHAPTER
31
Happy Outsourcing!
35
4. By definition, OUTSOURCING is the act of obtaining goods and services from any kind of outside
source in lieu of an internal one. In business, this often times means a foreign company. This
practice has been going on for quite some time, specifically when there were instances where a
company stood to save a substantial amount of money.
The aforementioned point revealed the prevailing reason why businesses choose to outsource.
The ultimate goal of any business is to save money.
Outsourcing puts a company in a better position to do that.
Since that's a rather broad stroke,
therein lays the need to expand upon
the point.
5. When a software development company considers their day-to-day expenses, it becomes
abundantly clear why so many of them outsource.
Let's say that the outsourcing company is in the United States. The company would have to deal
with:
ENERGY COSTS
INSURANCE
REGULATIONS
WAGES
BALANCE & DIVIDE THE WORKLOAD AMONG HIRED STAFF
Not only can this become expensive, dealing
with these types of things and
the non-essential workload of these personnel can eat
significantly into the profit garnered from any given project.
6. This is where the outsourced company would come in.
They can handle a significant portion of some of the non-essential, less-taxing or even
alleviate the stress inflicted onto internal staff.
Benefits of Outsourcing
Reduce Cost
Foster Innovation
Increase Speed to Market
Focus on Core
Improve Quality
Conserve Capital
8. While outsourcing can provide a great deal of benefits, it's inherently a process that can
quite possibly provide drawbacks. Fortunately, many of these deficiencies can be overcome
through a thorough and extensive vetting process.
Common Benefits To Outsourcing Include:
Save Money – It can save a company a great deal of money.
Concentrate on Core – Outsourcing can free up employees for more essential tasks.
Improved Workflow – It can increase and/or improve the company's morale. When a staffer can
stay away from tedious tasks, there's the potentiality for improved workflow.
Growth – It allows the company to take on more ambitious projects
9. As earlier stated, the drawbacks to outsourcing can be hugely detrimental to any project.
This is why it's always an integral to assure that any company that outsources understands
exactly the company they will potentially work with before they commence assignment.
Common Drawbacks to Outsourcing
Language Barrier- Outsourcing to foreign companies may result in a language barrier. This can
delay projects or result in erroneous work.
Time Zone Difference- Time zone differences may limit the interaction between principles.
Capability of Staff is Unknown- Outsourcing isn't in-house development. The ability to
differentiate exemplary staff from sub-par staff will always be guesswork until certain milestones
are met.
Intellectual Property at Risk- Intellectual property could be at risk. However, this is
genuinely a problem normally experienced by companies who have not thoroughly investigated.
11. Choosing the right team can assuredly be enough to give pause. After all, the goal is to
increase and streamline workflow. In truth, great deals of companies who outsource do not
achieve the results that they are looking for. However, there are a number of things that the
principle company can do to improve their chances.
1
Choosing the Software Development Model
The first step is to determine the function that your business needs from a prospective firm.
It's imperative that they fit the particular business model and are
versed in the software development model that the parent company
uses.
For example, if a company uses the waterfall model to develop products - the hired company
should be able to perform any of the integral steps in all 6 phases in this particular
12. development model. However, the company may not even want to hire them for any phase
of development. It could be something as a routine as accounting.
Regardless of the nature of the job, it's imperative that the hiring company lays out exactly
what is expected of the vendor. This should be followed even if the tasks are rather simple
and wouldn't normally call for explanation.
2
Defining Potential Vendors
There are a number of different ways to do this. Fortunately - with the prevalence of
outsourcing -
there are plenty of platforms that make finding a large
number of vendors easier than ever.
Businesses have made great relationships
through using search engines and dedicated websites. While it may be time-consuming, it's
necessary to use any of the available platforms to find attractive candidates. Normally,
companies decide on five possible vendors to move forward with. This could either be on
direct contact with a vendor or even a reputable bidding site.
13. 3
The Vetting Process
This is essentially going through all of the interested parties and
determining whether or not the relationship will work.
The vendor should
have a proven track record of providing the solutions that the availing company would need.
Additionally, their prior workload should be voluminous and - if possible - exceeding their
price point. At the very least, they should exhibit proficiency in the capacity that the hiring
company is looking for.
4
Determine the Cultural Fit
If the company satisfies the aforementioned, the last step is determining the cultural fit.
The vendor and the hiring company needs to have similar workflow, expectations and
output. While one can't reasonably expect for many companies to work the same way, the
hiring company should expect them to be somewhat autonomous. A business owner expects
14. their in-house staff to perform with little governance; the same has to be said about the
company they are choosing for the outsourced work. This can prove problematic, as it can
be difficult to ascertain another company's workflow without hiring them.
This is usually why many business owners decide on visiting the facility in which the
company works in just prior to - or shortly after - hiring a company. This is very important in
software. Companies use a plethora of different models, methods and tactics to get the job
done.
While an in-house team can work with a lot of different vendors,
the relationship is much better when they share similar software
development models.
16. Killer outsourcing mistakes
can pull your business down
and ruin your profits. Therefore for a business owner, there are a few things that they
should avoid.
Curiously Low Bids
The first thing comes rather early on in the process. If a business has received bids from
qualified sources - using one of the many platforms - it is always been something of a red
flag when they receive curiously low bids. Companies that outsource are generally looking
for a way to save some money, although this doesn't mean that they should go for the
cheapest price available. This usually is the mark of an outfit - or even worse, a sole entity! That doesn't have the ability to garner the results. It could even be the mark of a company
who is trying to become privy to company secrets for their own financial gains.
17. Absence of Proper Documentation
Another common mistake is the business owner not being clear enough in their instruction
or documentation. While a contract should cover much of what is expected out of the
vendor, it's very important for the company to speak more about the scope of the project
and some of the finer points of what it entails. This is crucially important because a great
deal of outsourcing is done by companies who may not speak the same language. As such,
there should be clear and extensive detail - and affirmation - when speaking about the
project.
Ignoring Red Flags
Another common mistake that the business owner face is ignoring red flags. For example, if
a vendor is chronically late for development meetings - there's a good chance that they
simply aren't the right fit. There isn't anything particularly stating that this company will be
able to adhere to strict deadlines. Another example is the contact that can be hard to
18. reach. While a significant time zone difference may be a factor, it should not be a problem to
get in touch with any point of contact during standard business hours.
Language Barrier
Lastly, a company that may not quite understand the jargon is another problem. Language
barriers may exist, but most industries use the same words for most functions and aspects.
19. 4 Ways to Overcome the
Challenges in
Outsourcing
20. 1
Minimize the Language Barrier
With over 6,000 different languages spoken across the world, language barrier is one of the
major problems that you are likely to face while Outsourcing to foreign countries. Here are
few tips to help you get over the language barrier:
- Do the research to find a country that is both skilled and has language compatibility
Countries like India have long been outsourcing hotspots, due to cheap labor and infrastructure
capabilities. But India has largely been an outsourcing leader because of the prominence of the
English language in the country.
- Adopt a multi-layer communication process
A multi-layer communication process will involve:
Verbal communication
Email
21. Illustrative communication through diagrams, data/process flow and high and low level design
documents
- Follow few ground rules of video conferencing
Speak slowly
Speak at a time
Let other person finish before interrupting
Look at each other while talking
Try not to distract by talking here and there with others
Sit with an Agenda
Send MOM after the meeting with ARs on both sides
For maximum benefit from outsourcing use simple language and try to bring down the
frustration and hesitation if any by adding a bit of humor. With these simple tips you can
expect a major leap over the language barrier!
22. 2
Climb the Cultural Boundary
Cultural differences have been regarded as one of the most serious challenges in offshore
outsourcing projects. A successful outsourcing project is one that overcomes the challenges
and makes a profitable alliance.
Educate the outsourcing partner – Take time to make them analyze and understand your work
culture. Make sure they adapt themselves into it.
Be upfront with concerns – If you have any concern raise it and try to come up with a solution
by discussing it with your off-shore team.
Understand where other people are coming from – While they learn about your culture, make
an effort to understand theirs and include a bit of it in yours. An effort from both sides will
minimize the cultural gap.
23. 3
Time-zone Gap is actually an advantage
Whereas time-zone gap is a major turn off for most of the companies who consider
outsourcing, very few are aware that this is more of an advantage than disadvantage.
If you partner with an off-shore team that is 8-12 hours ahead of your time-zone you can
efficiently utilize the time-zone gap to make your project go round the clock. While you sleep
your off-shore team works and when you wake up your project is ready for you to review.
Following tips can add on to the advantage:
- If you start early, ask your off-shore team to start 2-3 hours late; off-shore team from
India are more than eager to start late.
- Maintain 80% of the communication (minor feedbacks) through email, chat or project
tracking tool while rest of the 20% communication (major feedback or project blocker)
should happen over video or voice call.
24. 4
Intellectual Property need not be risked
When you outsource your project to a new team you run a huge chance of risking the
intellectual property. While there is no way of judging the actual capability of a team before
handling the project; however there are few measures you must take to ensure the
minimum risk.
Don’t risk a high budget project by outsourcing it to an altogether
new team. Instead try with a low-budget project (preferably an inhouse requirement) without a rigid time constraint. This is the best
way to decide the actual capability of a team; although it involves
little risk but it can lead to the foundation of long term relationship
with the correct off-shore team.
Never transfer the requirement through verbal communication. If
you have no time to write specs make sure to involve an analyst to
write stories. A time to time review of the stories will make sure
that the project is leading in the right direction and you’ll always
have time to provide early feedback!
26. Maximizing output is - at least initially - one of the easier things to do in outsourcing. Of
course, there are certain things that a business owner can do to make their efforts a bit
more worthwhile. This depends on a particular company's workflow, culture and the scope
of the project. While that may be the case, there are three things that encompass the
process.
Here, we'll discuss some of the most important.
Assigning Work
Assigning work is rather simple. If the company doesn't utilize a slew of vendors, the
onus is generally on the company being outsourced. That said, it's important for the
company to understand what the vendor does well and what they may not be that
experienced in. One of the most important things is to make sure that the principle
company has a good understanding of the vendor's experience level.
27. Effective Communication & Proper Documentation
Other than that, it's important for the principle to provide the tools for the vendor to
succeed. Proper documentation is always important for any developer, but even more
so for a prospective software development vendor. To that same vein, the hiring
company should engage in effective communication to discuss requirements with the
vendor's developers. This line of communication will produce favorable strategies,
including easy methods to use if any exist.
Understanding the Team
It is important to understand the staff that they have available to handle the tasks that
they need. This allows the hiring company to have a good understanding of how much
work the vendor could handle.
28. Managing Work
Managing the workload can be done in a variety of ways. One of the most popular ways
is through a few points of contact.
For example, it's important for the business owner - or project leader - to talk to the
other of the same designation. From there, it could be two other contact points. A
senior engineer could correspond with the other senior engineer. The last point of
contact could be any member of the "rank and file" to another of the same.
Not only does this make sure that everything is getting done on time, but it also
promotes a level of unity between the two offices. This is done through regular
meetings, task statuses and feedback correspondence.
Don’t let your project go off the budget!
Download the free budget template.
29. Status Tracking
Setting stringent milestone aids to be bit more comprehensive. These milestones can be
weekly, at a specific point of development or even arbitrary. Status tracking is an
important part of the relationship; however, it's one of the easier ways to do. There are
also litanies of platforms that allow for this.
Ask your Developer to provide you daily status in following format daily in morning and
evening:-
30. Subject- Today's Goal - Date
If I could do only 3 tasks, what would they be?
1. Task 1 - [Expected Hours - 2 hours] [Actual hours - ]
2. Task 2 - [Expected Hours - 2 hours] [Actual hours - ]
3. Task 3 - [Expected Hours - 2 hours] [Actual hours - ]
This email format has proven to be
Keep the tasks action oriented and short.
very beneficial in maximizing
Additional Tasks underwent-
resource management.
1. Task 1 - [Expected Hours - 2 hours] [Actual hours - ]
It also ensures that your project
is constantly accelerating!
2. Task 2 - [Expected Hours - 2 hours] [Actual hours - ]
Is there anything you need from your Lead today or tomorrow?
1. I need clarification on _____. XX mins meeting today would be great.
2. I need clarification on _____. XX mins meeting tomorrow would be great.
32. Scrum models allow projects to progress via a series of iterations called agile sprints. Each
sprint is typically two to four weeks, and sprint planning in the agile methodology and
Scrum process is essential.
How it works?
Agile Sprint
The main activity of Scrum project management is agile sprint. The agile methodology and
Scrum process is iterative and incremental, so the project is split into a series of consecutive
33. sprints. A sprint is usually between one week and a calendar month. During this time, the
Scrum team (product holder, development team, scrum master, managers and
stakeholders) does everything to take a small set of features from idea to coded and tested
functionality.
Sprint Review
At the end of a Scrum sprint, the team conducts a sprint review. During the sprint review,
the team demonstrates the functionality added during the sprint. The goal of this meeting is
to get feedback from the product owner or any users or other stakeholders who have been
invited to the review. This feedback may result in changes to the freshly delivered
functionality. But it may just as likely result in revising or adding items to the Scrum product
backlog.
34. Retrospection
Another activity performed at the end of each sprint is the sprint retrospective. The whole
team participates in this meeting, including the ScrumMaster and product owner. The
meeting is an opportunity to reflect on the sprint that is ending and identify opportunities
to improve in the new sprint.
Benefits of Scrum Project Management
.
Scrum project management is a key to achieving better governance, transparency and
coordination between multiple teams and stakeholders. It also enabled the client to
streamline project administration and significantly reduces the cost of managing offshore
suppliers.
Download your FREE Copy of Scrum methodology followed at Ebizon!
35. Happy Outsourcing!
Now that you know all about software
development outsourcing, you can do what's
considered Happy Outsourcing. With Happy
Outsourcing, the
company has the
ability to do much more than just
saving money. While that may be one the
most significant goal, a good software
development outsourcing relationship will also
result in quality
development at the
same time.
If all of the above advice is followed, the hiring
company will be one of the many enjoying the
fruits of great software development
outsourcing.
Outsource with confidence…
Contact Now!
36. Priyanka Jhamnani
email: priyanka@ebizontek.com
Phone: +91-971-702-0312
With an impressive background in project
management, worked and managed teams across the
world, Priyanka skillfully ensures that clients’ objectives are met
as she oversees Ebizon's web development engagements. She has been
instrumental with success of many outsourcing projects.
As Head of Client Services, Priyanka facilitates engagements with clients while proactively
collaborating with them as their main point of contact. For more than 7 years, she managed
web development projects remotely for customers based in US and Canada using ‘Agile’
methodology. Her “upfront,” “honest,” and “expert facilitation” in managing remote teams
— particularly in best practices for outsourcing projects, helping improve team's output and
manage cross-cultural differences has been appreciated by clients many times.
In 2010, Priyanka was invited by Drupal4Design Camp held at MIT, Boston to present Case
Study on "Scaling Drupal with Confidence – Tweentribune.
