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in project management today.
Managing IT Projects Offshore
Today, many organisations have decided to move their IT development offshore to reduce costs and increase competitiveness. Work is sent to places such as India, China and Russia. The cost savings in these countries is significant, but the headline saving is only a small part of the equation. Running projects offshore is different to running them at home. Having spoken to many project managers over the past year, it has become clear the same issues are arising time and again. Understanding these before you start an offshore project will help you be better prepared. These are six key areas to consider, and where most of the issues lie when offshore outsourcing.
Understanding the Culture
This is the most complex area and takes time to understand. Western norms of doing business cannot be applied in places such as India and China. Without a good understanding of the culture, it's easy for things to go wrong. This is where it is useful to go on a cultural training course. A good course will tell you what to expect, how to react and plan strategies to deal with different ways of working.
Selecting the Right Projects to Go Offshore
Some companies are taking a blanket approach to their offshore adventure, expecting to dispense with their internal IT development. The problem is that not all projects lend themselves to offshore development. Good candidates for going offshore are typically those projects that are either well-defined, with little change expected, or repetitive work. Projects that need large amounts of customer involvement, or are likely to have many changes during development are not suitable.
Defining the Scope
Offshore projects need to be defined in more detail than those run at home. You will get exactly what you ask for, including any mistakes and errors, whether obvious or not. Make sure everything is written down, and never make assumptions about what is obvious or implied. A spin off benefit many companies have experienced in this area, is an improvement in the quality of their functional and technical specifications.
Getting What You Pay For
It is important to check whether the people and services you pay for are being delivered. There is a tendency to provide cheaper solutions. Agree what you are buying in advance and check regularly what you are getting. Ask to see peoples CVs and check they have the relevant qualifications and experience. Make regular visits to check the working environment and equipment is as expected.
Effective Communication
This is the single most important part of offshore working. Plenty of effort should be invested in setting up a good communications structure. It cannot be assumed the correct information will always be passed to the right people. It is important for you to make sure it is, avoiding problems later. One solution is to have a company manager offshore, at least initially, to ensure everything runs smoothly.
Monitoring Progress
The terms "offshore development" and "black box" should not be heard in the same sentence. This is an idea that will not work. Offshore projects need managing, or at least monitoring. It is important to have short milestones and frequent deliverables in any offshore project, so it's easier to monitor progress, quality and take timely corrective action. The onus is on the customer to monitor progress because the offshore company will seldom mention problems to save face.
Common Pitfalls
- Not a quick fix budget cut. It takes from three months to a year to transfer work to an offshore partner, and during this time costs will rise, therefore don't assume cost savings for this period.
- Employing arms and legs rather than brains. It is common place to find that you will be given a qualified and experienced developer, and several inexperienced trainees or students. The developer is expected to coach and guide the inexperienced staff to deliver packages of work. These people are usually unable to make sound technical decisions, and in some of the worst examples, have only a rudimentary knowledge of the technology they are working with. This can lead to poor quality and extended lead times.
- Lack of accountability. It is important to have a single point of contact that can make decisions and get you what you need. All too often, the person in this role has no power, and is only there as a token to keep the customer happy.
- Onshore experience. Do not rely on telephone and e-mail communication alone. It is necessary for key staff from the offshore partner to work onshore, so they can understand the company culture and what is expected of them. This can typically last between three and six months.
Anecdotal evidence from companies with two or more years experience in offshore outsourcing is that given time it can work; savings can be made, but be prepared for the years of effort and a large investment up front.
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Apart from this there is another important issue to be considered before outsourcing work to offshore partner. The company should consider the security of real data and knowledge that is to be transferred to the offshore partner.