Pragmatic Outsourcing

Offshore teams delivered a significant portion of the products and services for the companies I worked for. My experience in utilizing offshore whether it is measured in years, number of projects or dollars sent offshore is rather substantial. You would think that by now I should have settled on a couple partners who I use on the majority of my engagements the way most VPEs settle on DB platform, app server, language, etc. Actually that is not the case due to many reasons, the main being different needs call for different partners. There is however another reason worth serious discussion – many vendors lose their clients mainly by not doing good enough of a job of keeping them. Whether you look from the vendor’s or buyer’s side that’s a shame…

It’s a common knowledge that in the service industries the cost of a dollar earned from a new customer is substantially higher than from an existing relationship. Yet for some reason that rule is ignored with unexplainable consistency. In particular I see it common with some of my offshore vendors. All too often a relationship with an offshore vendor goes through typical stages of a bad marriage: courting, expensive wedding, honeymoon, initial struggles, mundane irritation, aggravated frustration, and bitter divorce.

It takes two to tango, and being unbiased marriage counselor I should offer my connubial advice to both sides – buyers and sellers. I will, with this post focused on the vendor’s side:

• Communication is critical element of any engagement and in particular distributed. Even two people who know each other exceptionally well and live under one roof are known to have communication problems, it’s no surprise offshore engagement fall apart due to communication problems. Communication problems have a cumulative nature, meaning that small issues accumulate and result in large scale problems. There is much to be said (and I will do that) about improving communications in offshoring engagements, for now just one critical aspect: You should establish and follow communication process. You should treat communication process as you would treat a manufacturing process. In particular consider no missed steps or other changes to the process unless you expect substantial improvement in efficiency AND the changes are agreed upon by all stakeholders. Read more »