Software Offshoring – Keeping It Right

When pursuing offshoring or outsourcing endeavors, it is crucial to make decisions based on context.  Determine  with certainty your reason for offshoring the software development process. While there is always going to be an uncertainty factor, contextual decision-making in offshoring will help drive better results.

When offshoring, there are three factors that you have to get right:

• the right software offshoring process and
• the right software offshoring partner and
• the right offshoring partner within the right business context.

Your decision-making process should take two key components into consideration: context and the uncertainty factor. Let’s consider an example here. You are about to go on a holiday to a country you’ve never been before. You are considering hiring a tour guide to ensure that you hit all the right spots. When making this hiring decision, you would consider the context because your interests may vary from wanting to visit museums and historical sites to beaches or perhaps, you want to go trekking on the mountains. Your choice of a tour guide would depend on both his/her expertise and whether or not it aligns with your own interests.

This logic also applies to software offshoring. Decision-making has to be extremely contextual because while there is going to be a certain level of uncertainty; you can ensure that your decision will drive results by implementing it in the right context.

If your company is looking to rapidly increase headcount to meet time-to-market demands, your solution would be different from if you were looking for break-through innovation in a certain business area. Applying the same solution in different contexts does not necessarily produce the same results.

Your context for offshoring is also determined by factors such as a lack of talent in-house, difficulties in hiring the right talent, time to market necessity, growth of the company or achieving the same results (or more) with less time and effort. The context is also going to vary for a services based organization as opposed to an organisation that is focusing on developing and selling software products. It is crucial for a company to have the context defined and shared with the partner to be able to establish a perfect working relationship.

When pursuing offshoring endeavors, focus on the following basic principles:

Right software offshoring partner

As an innovative ISV, your company would have expertise in a business or technology area that is so distinct that others may not fully know about it. This is where your guidance and mentoring would add immense value to your partner’s productivity and efficiency. As you help them understand your business better, they can bring you closer to your goals. Often quantity is confused with quality. It is not about how many people are available who can perform a particular aspect of work; rather it is about how many people there are that are already doing the work. Numbers can be deceptive. It isn’t just about the knowledge anymore, it is about application. The true spirit of partnership can be experienced when both parties are willing to stick their neck out and go out of their way to make the endeavor successful. This go-getter spirit goes beyond mere purchase orders and invoices.

The most effective indicators of how successful your partnership will be are:

• Capability of the partner in the eyes of his or her existing relations
• Past experience and maturity of the leadership team
• How the partner conducts his or her business

Steering mechanism

Establishing a governance mechanism is a very important step in the offshoring process. Organisations often mistake the governance to be progress reporting. While progress reporting is part of a project, governance has a wider jurisdiction over the contract and relationship.

In order for a relationship to yield right results, a formal governance structure and process will be of great help. Here is an indication of how such a structure and process could be setup

• Ensure the purpose is met: people expect information to be shared and decisions to be made in a governance process!
• Executives from both sides, who hold accountability for the results of the partnership should be part of the governance board
• Identify a few critical milestones and goals of the partnership that must be met; make those goals agenda items for the governance process
• Identify key elements in the contract and ensure that there is an emphasis on them; this will help prevent surprises (often what’s written in the contract is forgotten until an issue surfaces)
• Establish the frequency of the meeting; most ideal is once-a-month and a willingness to meet about an escalation within one-day notice
• Plan to meet in person at least once or twice a year

There may be several companies and people who claim the know-how, but as a company, if you want to ensure that your results are a resounding success, look for do-how people!