Fundamental Laws of Outsourcing

A while ago when answering a question on LinkedIn I suggested applying three well-known principals to managing offshore engagements. I call them Fundamental Laws of Outsourcing a.k.a. FLAWs of Outsourcing (FLOs for short). These laws in my view are as strong as the law of gravity, and as you know if you attempt to ignore it you will at best end up with your face in the dirt…

  • The first FLO is The First Murphy ’s Law: “Nothing is as easy as it looks.”
  • The second FLO is The Second Law of Thermodynamics (Entropy Always Increases)
  • And the Third FLO is the First Law of Military Communications: “If an order could be misinterpreted, it will be”.

That really sounds encouraging you may say. How can you ever consider working with offshore under these laws? Well, back to gravity – it doesn’t seem to prevent us from being ultimately successful in our lives and have fun in the process. So here are just a few basic tips…

1) To deal with FLO # 1consider a few things –

a. Starting with a stellar contract (MSA) which addresses typical offshore traps (quality benchmarks, attrition remediation, knowledge transfer / retention guarantee, etc.).

b. Setting expectations right (your management, your team, and your own). “Right” in this context means as low as possible. For example: there will be no cost savings, the work load will increase, everything that could go wrong will go wrong, things that just can’t go wrong still will, and no matter how low your set the expectations your vendor will surprise you.

c. Setting an “exit water mark”. No matter how long you march down a wrong road you will need stop and go back. In case you made a wrong decision there is a point where you are better off by cutting your losses short.

2) The second law of thermodynamics applies to any organization or project. You might remember these quotes:

The uninspected deteriorates.
– Dwight David Eisenhower

The only things that evolve by themselves in an organization are disorder, friction, and malperformance.
– Peter F. Drucker

In offshore outsourcing the second law of thermodynamic exhibits itself as consistent degradation of quality of services in absence of non-stop energy applied from the on-shore. Consider uninterrupted control from a dedicated resource on your side (make sure it’s someone you trust and who has your company – not the vendor’s – interests in heart). Everything from timesheets to hard core deliverables to be scrutinized and verified. The only way to stay ahead / prevent quality decay is to apply pressure on the vendor even when things are still going (seemingly) well.

3) The FLO # 3 applies to all aspects of communications and in particular to the project/product requirements. Any ambiguity in your documentations, specifications, processes, procedures, and especially verbal instructions will be (innocently) exploited to create maximum damage and cost increase. Consider crystal clear communications and small scope of controlled deliverables. For example, very short project phases, interim builds, etc. Work as many control / feedback points in your process (SDLC) as you can possibly afford.

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