Outsource Software

Success of a project when developed by an offshore provider is largely dependent on the way the project is remotely managed from the client’s side. If you hope to make a project successful with very little input from your end as a customer, it is unlikely that the project will achieve success in the long term. The basic reason is very simple: you know your business requirements best. Software services companies working in another part of the world can only develop a solution based on the input provided by you.

Fairly large projects have a dedicated project manager who interacts with the offshore team and acts as a virtual bridge between the business and the software developers. If your project does not have dedicated personnel for it, there is no need to despair. You can follow some simple tips mentioned below and manage your project quite successfully.

Define the goal every week: The complete lifecycle of the software development process can be divided into smaller goals which can then be communicated to the team via email or by phone. It is a good idea to have a call with the entire team on Monday morning and run through the list of weekly goals that need to be achieved and then call again at the end of the week to evaluate if they have been achieved or not and what type of roadblocks were faced by them.

Manage the time difference: Time difference is one of the factors in offshore software development projects which can become a pro or a con depending on how it is managed. It is imperative that a “common” time zone is mutually agreed on by you and the offshore vendor. This time should be used for communication and ironing out issues faced by the development team. Though it might take some time to get used to getting in to the office at 7 AM, it pays good dividends in the long run.

If there are issues, alert everyone in time: It is advisable that you keep a look out for early warning signals and warn the team up front rather than wait for things to correct themselves. Ninety percent of the time, the issue is not self-correcting but goes on to become a real pain to the entire team before additional effort is exerted to get it on track.

If someone in the offshore team is doing well, comment on it: Encouragement and motivation are required even when you have hired a team with an offshore service provider. Motivating team members with an encouraging email along with occasional gifts sent to them on regional festivals creates camaraderie as well as doing wonders for the project. At the end of the day remember that developers are human beings and they do need an occasional pat on the back.

Although a number of onsite project managers feel that project management tools are advantageous to the flow of a project, the core driver in a successful project will always be good project and human resource management skills.

US can learn from the German and Japanese experience. In the middle 1980s, German industries lost its cost advantage and its high value and production capabilities could not even stop the outflow of jobs to offshore. The same scenario was repeated in the Japanese corporate scene in the 1980s. The rocket high escalation of the Japanese Yen forced many Japanese companies to outsource their manufacturing plants to S E Asia.

The Germans and Japanese have allowed their respective industries to be sharpened by competition by moving out to low cost and efficient offshore operations. This painful transformation took place despite the much less flexible labour law and less performance oriented corporate culture and sluggish economic growth as compared with the United States. Today, the German and Japanese companies are able to remain very competitive without any significant loss in market share as compared to their United States counterpart.

Mr Behravesh, Global Insight chief economist and Lawrence Klein of Nobel Iaureate conducted a study and found that contrary to conventional belief, 90,000 net jobs were created rather than lost in the United States as a result of moving high-tech work offshore.

The report indicated that the lower costs from using offshore resources keeps inflation in check, increases productivity and keeps interest rates low. Furthermore, the benefits of global sourcing added US$ 33.6 billion in 2003 to the real gross domestic product in the United States. The report added that overall GDP is expected to be US $124.2 billion higher than without outsourcing.

Outsourcing is not the only way to create a “virtually unbeatable’ organisation. Retaining some key functions in-house may sometimes still offer the organisation the most flexibility. However, a company is trapped when it has a strong bias for doing everything in-house. Laura Ashley, for example, languished behind competitors by insisting on manufacturing all products in Wales, long after others had moved their production offshore.

After recognising the benefit of outsourcing, they still took a while to do so. Laura Ashley managers maintained expensive production facilities in Wales out of loyalty or corporate responsibility and protecting the jobs of the staff. As a result, the loss-making Laura Ashley group was bought in 1998 by the Malayan United Industries and since closed the five factories in Wales, pulling out of clothing manufacture altogether.

The advantage when you have no fixed overheads is the flexibility and nimbleness to make swift changes. This is particularly useful in industries plagued with fickle demand.

You merely switch and find new contract manufacturers or call centres when the need arises, without being tied down to your in-house resources. This frees up valuable management time and energy that can be better deployed on tactical and strategic planning. Management is not bogged down with non-core and low value activities. It is truly the accountant’s nirvana when the company without the fixed costs is able to generate profits.

A reader sent me reference to this book. I’m intrigued. Has anyone read it? Share your thoughts in the comments of the post.

Millions of Americans are preoccupied with the outsourcing of American jobs and the threat of global economic competition. From boardrooms to classrooms to kitchen tables and water coolers, globalization has become a hot topic of discussion and debate everywhere –including a best-selling book by a famous journalist. However, Thomas Friedman’s runaway bestseller, The World is Flat, is dangerous. Friedman makes “arguments by assertion,” assertions based not on documented facts, but on stories from friends and elite CEOs he visits –not even one footnote reference. Yet his book influences business and government leaders around the globe. By what it leaves out, it does nothing more than misinform the American people and our leaders.

Aronica and Ramdoo show that the world isn’t flat; it’s tilted in favor of unfettered global corporations that exploit cheap labor in China, India and beyond. This concise monograph brings clarity to many of Friedman’s misconceptions, and explores nine key issues that Friedman largely ignores, including the hollowing out of America’s debt-ridden middle class. To create a fair and balanced exploration of globalization, the authors cite the work of experts that Friedman fails to incorporate, including Nobel laureate and former Chief Economist at the World Bank, Dr. Joseph Stiglitz.

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