Disposable Outsourcing: Caveat Emptor

As any other outsourcing model Disposable Outsourcing has its pros and cons and there are a few caveats worth discussing. Probably the most important one is a role of intermediary.

First, intermediary is not mandatory it is one of the best practices. There are a few tangible benefits that middleman offers here, the most important being isolation: Establishing working relationship with each vendor is a unique process, take for example MSA, the likelihood is it will be dramatically different from one vendor to another, and even if you use your own template the chances are you would have to negotiate on different clauses. There are plenty of other activities such as setting up environment, associate interviewing / screening, security, etc. that would require a significant investment. Using intermediary shields you from many of those. Isn’t it very similar to using some of well-known design patterns (adapter, façade)?

Another important reason for having the intermediary is a conflict of interests: It is unreasonable to expect that a vendor would make itself dispensable, as a matter of fact most of outsourcing companies are known for being extremely skilled in making themselves indispensable. Intermediary specifically charged with a task of enabling DOM has a responsibility and vested interest in making it happened.

There are more reasons I’ll mention just one more– intermediary is critical in supporting you through the offshore enablement and transition. These activities even with help of the third party are very challenging. In many cases that support alone justifies using a third party.

Now back to the caveat: Finding a good intermediary is absolutely critical for making DOM work and it is not at all easy. There are a few big names in the industry which play this role, in particular IBM that offers resources from smaller companies all over the world via its outsourcing wing. In a large degree it appears to be the best possible combination, unfortunately it comes with IBM price tag, as well as with many liabilities of a large company. Finding a properly sized, reliable and competent intermediary is the most significant challenge of the model.

In case you can not find a good intermediary the best approach is to build the intermediary team in-house. That could be less expensive than using 3rd party. The main challenge would be finding people with appropriate skill set, experience and knowledge. Another challenge would be setting up the group in a way that it has the authority and flexibility to do the right thing.

Another caveat of the model is a very significant challenge of creating the processes and procedures that would enable DOM. That is especially serious challenge for small to mid-sized companies and companies with low maturity of the processes in CMMI or ISO sense. I will cover the main dimensions and steps of what it mean “get it right” in a separate post. To some degree the intermediary can be a great help in this process yet still the bulk of the load falls on the customer.

One more important caveat or should I say trap associated with DOM is complacency. As I mentioned running DOM creates positive energy, has many benefits, and gets vendor to perform better. So inevitably you see the vendor as a solid partner, not someone who ever needs to be replaced… and the model starts to deteriorate: cutting corners gets more aggressive, little issues accumulate (entropy always increases), and before you know you are tethered to the vendor and eventually at their mercy. The disposability is gone along with its benefits and the only thing you have left is a higher cost of the resources that you could have got in the first place. Again, to some degree the intermediary can be a great help in preventing this from happening yet still the bulk of the load falls on you.

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