Friday, November 23, 2007

CC Project 7 - Research your Topic - Offshoring - not just a quick fix


CC Project - 7: Research your Topic
July 7, 2007


How many of you have dealt with (or) dealing with offshore teams? Raise your hands.

Wow! Almost everyone in this room

I polled some of my friends to find out why their companies offshore the work? They all had the same reason - To Save Money

Well, Offshoring is not as easy as we all might think. Off shoring is not a quick fix for all the problems that companies have. Coming up with an offshore strategy and choosing the right vendor requires a lot of research and planning. Today, I am going to talk about "5 things to consider before you offshore the work".

Also read: Competent Communicator Speeches (Projects 1 - 10)

Does vendor have a customer engagement methodology?

What does that mean? Does your vendor understand your needs? Do they treat you well? Do they keep you informed? Do they maintain integrity in their work? How do you find out these things before you offshore the work? Well, do a few pilot projects before you choose a vendor.

You can find several offshore vendors with quality certifications like ISO, CMM, and Six Sigma. However, many of them do not invest in building "Customer Engagement Methodologies".

Research has shown that the probability of success is dependant on both "Quality Certifications" and "Customer Engagement methodology". As you can see from this chart, firms with good customer engagement methodologies are found to be producing more happy customers.

Can you get the right people?

You may think that it is easy to hire people in the offshore team. But, how easy is to get the "right" people?

I was asked to build an offshore team in my previous job. I spent nearly 3 months to fill just one position. It takes a lot of time to train your offshore recruiter to understand your requirements & send "high quality resumes". I spent several nights doing phone screens & interviewing candidates. Building a team with the "right" set of people is not an easy task.

Can the offshore employees be retained?

You would have spent a lot of your energy in building a team with "right" people. But that is not the end of the story. Will you be able to retain them?

You pay a lot in terms of $$$s to your offshore vendor. However, your offshore vendor may in-turn pay only a small piece of the pie to their employees. So, employees don't feel motivated. They start to look around for other jobs.

Offshore firms normally bill their customers based on "head counts". So, they don't care even if a "star" performer decides to leave. They can just replace him/her with another person and continue to get the same amount of money from you. However, the one who is going to suffer is YOU. You may not get the same level of performance & quality from the new joinee.

Are the contracts flexible enough?

Having a well-defined contract is GOOD. But, it may not be always true in the case of off shoring projects. I'm not saying that you shouldn't have any signed contracts at all. But, keep your contracts somewhat flexible. (ie.,) Your business needs and priorities may change over a period of time. Your offshore vendor should be able to adapt to your changing needs & priorities. So, have provisions in your contract to take care of those.

Can you really save money?

Last but not the least, can you really save some money?

Research shows that only 5% of the companies that offshored their business were able to save > 40%. About 50% of the companies had "No savings at all" or they spent more money than they would spend here to expand the business onshore.

The objective of this presentation was not to drive you away from your offshore business. But, to help you to make conscious offshoring decisions. Many of us think that "Offshoring is just a quick fix". But the reality is different. So, before you offshore your business consider these things:

Check if the vendor has a customer engagement methodology?
See if you can you get the right people?
Make sure that you can retain your offshore employees
Keep your contracts flexible enough to take care of your change in needs and priorities.
And finally, do some math to calculate your savings.

Always, keep in mind "Offshoring is not just a quick fix".

Also read: Competent Communicator Speeches (Projects 1 - 10)
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