Imagine! you are in your favourite Italian restaurant and see another customer ordering the “Chef’s special of the day”. The customer insists to the waiter that his dish must be cooked with all locally grown ingredients. The chef in the kitchen could have a problem, since it is impossible to make his special dish without the best imported Mediterranean olive oil and the intensely favoured Balsamic vinegar.
Adding to that, the customer insists that his wine and soft drinks, also have locally sourced ingredients. You would be quite certain that this customer is asking for trouble and very soon the owner will ask him to try another place, since it is impossible to comply these demands.
In our working lives, it’s common for many companies to do most of their IT & Back office tasks inhouse. It’s a widespread belief, that- ‘Offshoring isn’t right for every situation’. These places you will often hear Phrases like; “We’ll lose control, there are security risks, hidden costs, the quality goes down or things often get lost in translation. Adding to that, the moral dilemma, offshoring does not contribute towards their local community.
I would argue our entire life is built around offshoring. Each morning, we wake up, glance at our iPhone (which is designed in US by mostly Indian & east Asian engineers, assembled in China, importing spare parts from 40+ countries), put on our shoes & clothes (made in china or Vietnam), check the news on a Korean Samsung TV, head to work in our Japanese Nissan, grab some lunch at a Chinese takeaway and the list goes endless. Apple understands that for a superior product, its critical to access the right people, manufacturers, vendors, and suppliers, irrespective of their geography. In today’s competitive global environment, smaller companies should be questioning their inhouse strategies if they wish to stay in business.
The world in which we live today, is much structured around the principles of Adam Smith who is considered the father of modern economics. The concept about free markets emphasizing the idea of an "invisible hand", guiding the forces of supply & demand, every person looking out for themselves, creating outcomes by selling goods and services across continents & geographies. The idea of being cost efficient, meeting customer needs, as it rewards the entire supply chain without knowing the people who were involved to deliver that service.
Its needless to say, that outsourcing software and back office services is an efficient way for a company. Infact, its a fantastic way for companies to improve efficiencies, bolster their bottom line and focus on their core business.
Your core team might be fantastic at some things, but nobody is perfect at everything. Today, you can get things done a whole lot quicker and substantially improve performance by drawing skills from any country across the world. Not only will you save time and money, but your profits allow you to stay in business longer.
I also believe that most companies wish to Offshore but find it challenging to get a good offshore partner. Google to find an offshore vendor, one ends up with an endless list of companies, making it daunting to know the right one. But there is a method to the madness, and it can allow you to pick a good one much quicker.
Add to your existing checklist these pointers
1. Check if the offshore vendor has an onsite location in your home country
Though there is a wonderful opportunity to reduce costs, companies have come to realise the importance of their vendors having a nearshore presence.Vendors with an onsite office in your home country give you the benefit of local contractual arrangements, protect company IP’s with local laws and have face to face meetings.
2. Check if they have management staff in your country.
Having a local bridging office allows you to liaise with their onsite Managers during local time zones. Countries always have different cultures, and communication styles. With vendors having nearshore locations, these differences can be minimised and cultural gaps bridged.
3. Excellent English understanding
At times it’s not about low costs, but finding the right workforce who can understand communication styles. Projects are all about communication and everyday phrases we use.
“You didn’t pick-up” (didn’t answer the call), “put me through” (connect me), “get back to you later” (some other time), “pass it on” (convey to), these everyday phrases might be simple to us but they often get lost in translation overseas.
4. Technical Expertise & location: Make your checklist of all the skills needed and discuss with the vendor to evaluate their staff level & competencies. In most cases vendors tend to put their best guys forward during preliminary discussions, but you’ll notice that vendors operating in large cities like Bangalore, Mumbai, Manila and Shanghai tend to have better quality staff. They can always attract better talent, due to the sheer pool of staff availability locally. Quality staff do reduce delivery timeframes, in turn leading to lower costs.
5. Vendor travel schedules; Ask your vendor how many times, they visit your home country in a year. If they have projects running in your country, offshore managers travel international to conduct project discussions. This allows you to club meetings and insist on face to face discussion to iron out ongoing projects.
6. Is the Vendor comfortable doing transparent virtual meetings with offshore staff. In this day and age of technology, its extremely easy to know the people you are working with and have regular virtual conversations. Putting a face to all your discussions greatly eliminates writing long emails
7. Subject matter expertise: Domain knowledge is very critical in speeding up the overall process. If you operate in niche sectors or generic industries, the vendors ability to get the right people on board matters
8. Changing project staff: Good vendors can give you the option to replace staff working on your project. Often, the vendors intent is to provide the right person for the project, but at times the best people might not be the right fit. In such situations, your choice to replace project staff greatly allows you to try a different option to fit your corporate environment.
Once you’ve done your homework, starting small allows you to do a test run. Often good vendors put in the needed time and commitment if they have visibility of your long-term plan. Also, its important you give them some serious work, define project goals and be ready to communicate often with offshore teams. It’s important you have a planned budget along with an open mindset towards cultural differences and communications required at different time zones.
Think beforhand, Fixed cost or Time & Material
Try and understand that, a fixed price quote usually includes a decent mark-up percentage (%) of risks built in for scope creeps and uncertainties. Also, it becomes difficult for the vendor to estimate Agile projects where requirements change or get determined as things progress.
If you have a long-term plan, stress this to the vendor. Time & materials certainty to the vendor allows you to negotiate better rates, pick specific skills staff & experience level, define quality standards, and you will know exactly what you are paying for. Besides, the flexibility in a Time & Material project, is different to Fixed cost as you don’t negotiate prices during each change.
Tools & documentation
Collaboration tools and documentations make offshore tasks more process driven and convenient. Lengthy emails often get lost over time and its an outdated method of project management. Offshore teams are usually process driven, hence comfortable with project management tools including Slack, Jira, Trello, Salesforce etc. Most importantly tools are a great reference points to track timesheets, tasks and team progress, leading to everyone getting involved in discussions, commenting, and planning next steps.
Check for hidden costs and unforeseen charges
Its always good to see if the pricing quoted includes taxes, infrastructure costs, setup costs, software licencing or other expenses. For vendors registered in your local country, the procedures of claiming back GST or VAT is much simpler.
The lowest quote is usually not the best
You get what you pay for. When deciding on a project, consider the skills that the vendor will need to deploy to execute your project, how much resource might be required and the quality standards you expect from the staff to execute the project. Some companies try to lower prices since they plan to outsource your work to lower skilled freelancers locally, at cheaper rates and execute the project outside their office, thus lowering quality standards.
Insist for a warranty period
Vendors who provide a warranty will always execute their projects inhouse. Additionally they have processes in place to maintain quality of their products or services.
it takes time for a new employee to settle in your team, and the same is true for an offshore partner. Successful projects tend to have good Project Managers with coordination skills to ensure all teams remain on track and adhere to short delivery deadlines. Offshore teams are trained in a way, to think they’re an extension of your organisation based overseas, hence treat them like your employees. A good PM creates an enjoyable working environment, allowing teams to be autonomous, encourage difference of views, and compliments contributions made to the project. Although projects tend to be challenging many a times, the results can be extremely fruitful with patience and the right approach.