Choosing the right vendor for offshoring

The headlines about outsourcing have not been favorable facing resistance from a few quarters but the benefits of outsourcing far outweigh the criticisms. We just can’t dispense with sharing some of our work to someone competent enough to accomplish it professionally making it a win-win situation. Besides, some of the work load is better off shed and shared.

There is a misconception that outsourcing is all about shipping off ‘jobs’ to another destination [read country] where the labor cost is ‘cheap’. It can’t be further from the truth. Why outsourcing works is because of the education, expertise and accessibility of professionals at an affordable rate as opposed to expensive investment in human capital. It is a proven strategy that getting “your” job done with quality par excellence at a simplified cost is judicious.

There were indeed favorable reviews about outsourcing. A Gartner report states that the focus on lowering IT costs is accelerating the use of offshore services. A survey by CIO Magazine cited the same reasons of lower IT costs and capital expenditure as the main motivators for outsourcing.

Having made the case for outsourcing, the real challenge lies in identifying the project to outsource and equally important finding a vendor with the finest fitment. Now with vendors galore, how do you choose your outsourcing vendor? What are the criteria in judging a potential outsourcing partner?

The key criteria in vetting the veracity of a vendor’ credentials would be quality, dependability, flexibility, speed and cost, which are prime requirements. Let’s dive deeper to check other aspects that makes for the much needed criterion.

Analyze your business requirements

More often than not we miss the woods for the trees. Similarly, what can be done in-house need not be shifted outside. Hence study your requirements and do a SWOT on each of your employees. You might be surprised by the presence of the elusive expertise in your own employee, which for some reason failed to get your attention. You thought the employee was just good at Java and are shocked to learn that that the person was adept at SharePoint too. So know about yourself first, both in terms of requirements and the resources required. Only when the need arises, seek external help by outsourcing.

Screen and qualify your vendors

Hit the internet and do a search and check the results. Vendors are dime a dozen. Whom do you pick and on what basis would you select? It is like picking a needle from a haystack. Use the pre-screened, pre-qualified vendor’s strategy to cut down the size in numbers. The shortlisted vendors should be evaluated through interviews and reference checks.

Along with your check-list, include geography as a key criterion as revealed during joint study by the U.S. – Russia Technology Roundtable whose finding underscored the criticality of “resource base of the countries concerned, their education levels, degree of technology expertise and also cultural factors.” It was interesting to note that the Fortune 100 companies were considering India and Russia as a possible source of development talent.

Write a Request for Proposal (RFP) & Request for Quotation (RFQ)

To the short-listed vendors, write a RFP or RFQ. The RFP should contain the pre-requisite sections, such as, submission details, introduction and summary, overview, assumptions, selection criteria with scope to add any additional inputs.

Evaluation and selection

The submitted proposals must be evaluated based on merit by assigning weightage against each requirement, and the one with the maximum will be finalized as the vendor subject to terms and conditions. In the proposal, the cost reduction and go to market detailed as under assumes significance as they will prove to be the clincher.

Cost reduction

Outsourcing is indeed cost-effective given the advantage of superior skills at simplified cost in creating the software, and the leveraging of open source resources reduces the total cost of ownership further. So, it indeed is an advantage so long we play the cards right. Cost-cutting by using sub-standard resources is a hazard that threatens the industry. This is why thorough evaluation coupled with checks and balances will weed out the unworthy vendors.

Time to market

The time to market is as crucial and critical as the product. If not arrived at the right time, the customer doesn’t just miss the boat but fortunes in the form of prospects. So the vendors capitalize on the time-zone difference to make the most and ensure they are on time. While one half of the world sleeps, the other half remains awake providing ample time to do the code reviews and feedback for the vendor to fix the issues. In fact, during release time, the vendor’s team seldom sleeps as project commitment is paramount.

Project management

Intel used to practice the “two-in-a-box” approach, whereby Project Managers from both sides [client and vendor] discuss the progress of the project and iron out the pain points to ensure they stay on the same page and the plan runs on its course without slippage. Even if there is a derailment, suitable actions are effected so that the delay is minimal and causal analysis is conducted to avoid recurrence.

Established standards

It becomes imperative for an established vendor to follow the rule book by the letter with strict adherence to technology standards, which itself becomes a testimony for their credentials. These standards not only help in conformance of quality, but ensure that the processes are in place and best practices are followed.

Goutham Gunalan is a Project Manager at Compassites Software. He is interested in areas like people skills, content curation and business analysis. Apart from work, he is interested in books, travel, writing and mentoring. Prior to Compassites, he worked at Cranes Software. Goutham loves writing and is passionate about penning narratives such as the one above.

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