* One outsourcing customer shares his research into potential service providers
Yesterday, I had a very interesting conversation with the vice president of Development for a software company that recently conducted extensive research into outsourced development shops in a number of countries including India, Russia, Vietnam, and South America (Argentina and Uruguay). After submitting 15 RFPs and actually traveling to those countries in December 2004, this vice president, who asked that he and his company remain anonymous, was kind enough to share his results with me. I applaud the effort that was made to visit the finalists in their own offices to see what they were really like.
One of the key decision criteria for this company was that the outsourced development shop be able to support the Agile software development methodology, which emphasizes:
* Individuals and interactions over processes and tools.
* Working software over comprehensive documentation.
* Customer collaboration over contract negotiation.
* Responding to change over following a plan.
(More information on Agile development can be found at http://www.agilealliance.org)
Following each visit, the software company scored each candidate based on 10 different criteria, including:
* Business profile (business model, stability, expertise).
* Customer base (history, type of companies, size of base).
* Management (maturity, sense of role, common theme, escalation).
* People (fit, escalation, training, cost/experience, language).
* Process (attention, quality, certifications, experience, and capacity to support agile development).
* Infrastructure (facilities, voice, data, and backup).
* Security (protection of intellectual property, procedures, ratings).
* Delivery (reporting, assignment, anticipated performance, hassle solving overhead).
* Operations (assurance of making deliveries, risk of shortfall).
* Chemistry (synchronization with management, working team, and environment).
After summarizing all the findings, the following conclusions were drawn:
* Talent interviewed in India was generally below their expectations.
* Management themes varied with one being outstanding in its strong, demonstrated dedication to people and their working environment
* Attention to Agile development varied among companies. Certainly most are experimenting with this development process, but the interpretation varies. The company believes that most organizations out there have much to discover in the efficient application of this process technology.
* The difference in education focus between Russia and India was apparent. The Russian engineers that they spoke with were equipped with a broad math, sciences, and engineering base vs. the narrower IT-focused background that they found with most companies in India, which was consistent with analyst reports comparing the two education systems – India’s system is more like trade school, vs. a full university-type system in Russia.
* The software company believes that realizing a high efficient, agile offshore operation will require considerable time investment at the provider’s site. Its modeling, driven by product roadmap and assignment forecasts, estimates the need for 18 trips to the provider’s site in 2005.
* All providers face growth, merger, and other challenges in 2005 that could be erosive to solid provisioning.
* The software company was able to collect independent information regarding the salary costs of engineering talent in Russia and India. Building on knowledge of how efficient U.S. service providers spend funds in overhead and operating costs, their calculations indicated that Indian companies are posting pre-tax profits twice greater than anything that they have seen domestically. (This probably accounts for some of the turnover that’s being reported.)
* Work with all providers will require more management and engineering attention than originally thought.
Based on the software company’s extensive analysis of the offshore providers, it decided to go with a Russian outsourcer. It will be interesting to see how its outsourcing project plays out throughout the year, and I will pass along the company’s experiences as they are relayed to me.
As always, I welcome your ideas, suggestions and comments on the subjects of outsourcing and information security; my e-mail address is below. Thanks for reading.
