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Face-off for outsourcing and offshoring

Axel Winter | April 3, 2009
What are the factors to take into account in the offshoring and outsourcing model?

In the course of my work, I had to quickly come to terms with different IT delivery models, which meant to leverage a set of well-known offshoring providers in India and China, which are embedded into a set of master service agreements, with commercially focused evaluation systems.  The content has been around application development and maintenance, system maintenance, and data centre services.

In this kind of framework, the technology skills are seen as a commodity and the commercial approach to negotiate with Indian or Chinese providers, or in future Vietnamese or South African, are key considerations.

The first trip led me to a set of different typical offshoring cities including Hyderabad (India). I visited several different business parks and found that most companies are co-located in the same campuses. During lunch time, I realised some formal meetings taking place in an otherwise casual environment. I asked my companions about it and found that these are recruiters and head-hunters.

It seems many people worked for different service providers (Indian, US or European) in the same campus. During internal meetings later on, many of the staff members gave a review of their prior employers and again, a large selection of local and foreign IT services companies was mentioned by almost every single person.

Intellectual property

That was an interesting finding and my first thought was about intellectual property. Some people admitted taking all useful documents along to their new employers. Some seemed to have developed a method of circulating in different companies in a short time, in order to push their careers. This is not unique to a country or a company, but appears to be a trade of this industry.

Furthermore, I found that in many projects, the resources offered are entirely junior and more experienced resources are just participating in key meetings or conference calls, leaving the actual work to teams with only basic knowledge. To validate some of these findings on the skills and to better understand the quality delivered, I did a set of quick source code reviews and the result was not at all encouraging.

Technical excellence, as defined in a higher degree of reusability, stability, scalability, inter-dependence of specific vendor solutions, maintainability, ability to be extended by different developers and importantly enough security concerns (for example, internal fraud), needs to be a generic and important requirement, to enable companies building longer-term IT solutions.

Based on that experience, the following question comes up: How can we evolve the offshoring and outsourcing model in general to ensure improved quality and to build the appropriate technology and services platforms?

The first step was to ensure all stakeholders are more closely involved and are accountable for their deliverables. The introduction of a system delivery life cycle (SDLCs) is a key tool, to teach business, IT, and service providers which artifacts and design work need to be generated, before anyone starts coding or setting up systems.


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