Should I Consider Off Shore Outsourcing?

If your company has ever undertaken a major IT or software development project, you know how costly, time consuming, and often frustrating the process can be.  At the conclusions of such projects, most projects are deemed as failures because they came in over budget, over schedule, and failed to meet the expectations of the customer.  Depending on the study you look at, the exact figure varies, but most estimates put failure rates between 30% and 70%.  With such massive rates of failure, the software industry has had to take a hard look at what causes these failures.   A study by PM Solutions found that 37% of their surveyed group was experiencing project failures. Through this study they found that the factors most likely to include project failure included: insufficient human resources, unreasonable expectations, poor planning, and challenges in the change management process.  This survey echoes the literature on project failure.  If the pain points are similar industry wide, it is important for the industry to tackle the problems and endeavor to create a process that is more advantageous for all concerned parties.

Enter Offshoring

Offshoring was introduced to software industry as a way to address the issues of soaring costs in development and insufficient human resources.  These two problems are inextricably linked, because the scarcity of programmers who could perform tasks leads to rising cost to pay for personnel.  The limited pool of talent stifled innovation in two ways.  First, it was increasingly expensive to produce solutions to problems.  Secondly, the limited field of programmers meant that companies were not being applied to problems.  To address this issue, software companies began to look abroad, because while you only have so many programmers, in the United States, our connected world makes it easy for people to work on a project from the furthest corners of the earth.  Furthermore, many of those programmers are vastly talented and because of lower cost of living in other countries, less expensive to hire than equally talented American programmers.  Ta-da! Your human resources problem is solved and at a considerable cost savings; or so they thought.  However, there are many challenges associated with offshore outsourcing.

Building an application is much like building a home, you must plan out every detail before you begin construction, otherwise you can run into crippling, costly delays that can easily avoided with a solid plan.    Not only do delays cost you, without proper analysis and planning in the design phase, you will find that the final product doesn’t do exactly what you intended it to do and that it doesn’t quite meet your needs.

Which is why, off shoring did not solve the problems being encountered in their software development projects and created a few new ones. One problem encountered by companies who pioneered the off shoring movement was a lack of understanding of the design process.  As noted above, program design and implementation is a multi-stage process that requires a great deal of planning and architecture before the first line of code is written.  By farming out projects directly to developers in other countries without executing this detailed planning phase, many companies have defeated themselves before they even began.  The planning phase is what helps you set the scope of the project and establish expectations for deliverables.  Without this detail program architecture you are almost certain to find yourself disappointed in the results.

 

Cultural barriers are another factor that make off shoring difficult.  While you hire operatives in a foreign country who technically speak English but, people’s accents and an incomplete grasp of the language make it difficult to communicate.  Furthermore, cultural differences make it difficult to understand the way an American customer might expect something to function.  These communication and understanding barriers can make the development process very frustrating for everyone involved.  This problem is highlighted by companies who have decided to farm out tasks to offshore companies without a detailed understanding of these barriers, the problems they can cause, and the best way to address them.  This is the origin of the idea that off shore labor is of less quality than domestic labor.

Another problem commonly experienced in offshore outsourcing business models, is the time difference.  When working with a company that is 7 hours ahead of you, communication and collaborative efforts can seriously suffer.  How do you pass on messages, inquire about updates, who can you collaborate with directly to get things done?  These are all questions that are at best difficult to answer when outsourcing is done exclusively offshore.

These problems and many others make offshoring a problematic solution to an already sticky situation. However, in truly global economy, business owners cannot afford to ignore significant pools of talent that they can utilize at a significant savings.  Throw on top of that, the very real concern that you are sending much needed American jobs overseas, and you can see why off shore outsourcing such a tough pill to swallow. This often leaves people looking for a way to keep American jobs, ensure outstanding service, and reduce the overall cost of services.   To address these concerns a new model has come into play.  This model is called hybrid offshoring.

In a traditional offshoring model, this planning phase can break down due to the challenges listed above.  In a Hybrid Model, you get the best of both worlds; a competent state side team and an incredibly talented foreign development team.  The process looks a lot like this.

  1. Envisioning Phase: During this phase the state side project management team and information architect meet with you to discuss what you want and need the finished product to do.  We spend time learning your business processes and specific pain points to develop plans for a comprehensive product that meets your needs and fills holes in your current business processes.
  2. Design Phase: The information architect and project management team go to work making the vision that you both created a reality. This where designers create mock ups and design the front end of the program.  If we were building an actual house this would be where we hammered out the blue prints until you were happy.  All design activities happen stateside to ensure effective communication and to facilitate any desired changes.
  3. Development: This is the phase in which the program actually begins to work!  For this phase programmers in other countries (in Nourtek’s case these programmers are from India) begin the work of making the features and functionalities planned and designed in the previous two steps a reality.  This portion of the process is controlled through carefully developed protocols that are a result of experience.  These protocols include change management processes, careful schedule management, communication protocols (including regular conference calls and video conferencing) between the stateside team and their foreign developers.
  4. Stabilization: In this phase, the American team takes over and tests the program to make sure that it is functional, meets the client’s expressed goals, and will handle all of the things full implementation will throw at it.  When bugs are found, the American team and the foreign development team work together to resolve issues.
  5. Deployment: This is the final stage in the development process.   In this stage the American project management team goes to work helping you implement your new program.  How much this includes depends largely on the scope of services agreed upon in the contract.  At minimum it would include help installing the program and making sure that it is working properly on your machines, and properly integrating legacy data.  More detailed contracts often include customer service support and training programs to ensure that all users know how to effectively use the new application.

So what makes hybrid off shoring models, such as those employed by Nourtek, preferable to having a whole stateside team?  Well, first off it is less costly.  Programmers abroad are less expensive to use, but have excellent skills.  When you pair this with the fact that the highly skilled information architecture is done by Americans who communicate directly and effectively with you, this solution becomes the best of both worlds.  The second big reason is a 24 hour development cycle.  A team in one location can only work for so many hours a day, and the more the longer they work the more exhausted they become effecting morale and the overall quality of the project.  With teams in multiple geographical locations, they can work around the clock producing a product quicker without compromising the quality of the product.  Furthermore, information companies who specialize in this model off shoring, work only with companies that they have a long term relationship.  The results of these long term relationships are high level communication and project management protocols that specifically address the challenges caused by involving global teams.

Ultimately, off shoring isn’t for everyone, or even for every project that comes across your desk, especially if your projects involve sensitive information like bank numbers or social security numbers.  When making decisions about your hiring a developer for a specific application, you should ask them about how they handle development work, whether or not they use off shoring, and if it is a hybrid model.  Also, regardless of whether they use hybrid or traditional methods, you should find out about their methodologies and communications protocols.  Before you chose a provider for any application you want to build, it is critical understand how your project will be handled and if that handling will mesh with your business processes, and your needs for launching your new project.

One thought on “Should I Consider Off Shore Outsourcing?

  1. Jeremy Mcpherson   said:

    Another problem commonly experienced in offshore outsourcing business models, is the time difference.

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