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5 Tips for IT Outsourcing Success

The best companies outsource to win, not to shrink.
-- Thomas L. Friedman, The World is Flat

Surviving today's business environment has become more challenging than ever. Business owners across the world are reassessing their strategy to thrive in these difficult times and be well prepared for the upturn when it comes. It is no wonder then that offshore IT outsourcing has seen record increase in the past couple of years as more and more small to mid-sized businesses begin to recognize it's value. Here are some simple steps you can take to ensure that your outsourced venture becomes a success.
Find a vendor with US presence
US based offshore outsourcing companies offer the best of both worlds. You get the offshore delivery model benefits like competitive costs and faster time to market, without any of the quality, communication or security issues that might be associated with engaging teams on the other side of the planet.

One of the great advantages of engaging a company based in US is that that company is held accountable by US law to same business ethics standards as any other American business. Any NDA's or other IP protection agreements you sign are fully enforceable, so you are eliminating a major chunk of the project risk upfront.

Secondly, companies with US presence are better aware of the work ethic and standard of quality expected out of them by their clients since they are a part of the same business ecosystem. Most of them are able to operate 24/7 and leverage the time zone differences to your advantage by establishing solid project tracking and work delivery frameworks.

Lastly, having a local company representative that speaks your language and that you can call anytime is invaluable. You can call it the "throat to choke" factor.
Stay away from 'Yes men'
It is not hard to find stories of offshore software development firms over-promising and under-delivering. With increasing competition among offshore vendors, some of the companies would go to any length to land contracts. In a desperate attempt to keep up the volume of work, they tend to start telling the clients exactly what the clients want to hear, all the time. They end up saying Yes to everything that comes their way. 'Can you deliver this project in half the time this other company quoted?' - Yes. 'Do you work on web 3.0?' - Yes. 'Can you build a facebook clone? In a week?' - Yes.

The ability to say 'No' is a sign of maturity. You need to look for a partner that can be honest with you from the get go, even if it means that they lose your business. Setting up realistic expectations is critical to building a long and fruitful vendor-client relationship. Moreover, software development is a vast field and no single company can be an expert at everything. It is always better to look for companies that are focused on doing a few things and doing them well.
Get involved, stay engaged
Some people still think that you can put a bunch of software developers in a room, feed them project specifications, pizza and soda, and the complete product magically appears in a few weeks or month, only to discover upon delivery that project has gone way off-track. Not being passionately involved with your offshore team is a recipe for failure. Your team is not addressing a technology challenge; they are addressing your business challenge using technology. And no one knows your business and your vision better than you. So you should be actively involved with your team on a day-to-day basis. The developers should look for your feedback and criticism at every step of the process, and you should demand regular work updates from them.

Large corporations address this challenge by setting up their own offshore development centers, but small businesses can't do that. So the trick is to find a mature and reliable team, then nurture it until it becomes an extension of your business operations.
Communication is key
It's easy to underestimate this, but communication failures are the biggest IT project killers; whether they are onsite or offshore. Putting good communication frameworks in place is ever more critical while working with global teams. One of the most important things you should do is to demand a seasoned project manager located offshore who works directly with the developers. This person should manage all communication since developers are not the best communicators and should provide you daily status reports. It is also very helpful if some of his/her office hours can overlap with your working hours. One of the ways to leverage the time zone difference is to use the day time in US to review the work done overnight, and provide feedback and task lists for the following night to the technical team.

The offshore development center should also have reliable infrastructure like uninterrupted power supply and fail-safe Internet connection. Your team should make active use of IM messaging (skype, jabber, gtalk, etc.) and they should have access to a VOIP line with a US based telephone number that you can call anytime. Make sure that your development team is prompt with the email responses. There is nothing more frustrating than to work with a team that takes forever to respond and is hard to reach.
Do your homework and document well
Offshore teams are best trained to develop robust software applications based on elaborate business requirements documents. But most clients tend to engage developers pretty early in the process with a vague project concept in mind, and assume that the developers would know exactly what they want. There is no substitute for a clearly documented project vision that should come from you. For this reason it is extremely beneficial to create a project initiation document or RFP (Request For Proposal) before you engage an offshore team. It doesn't hurt to do extensive domain research, competitor analysis and interface research and include it in this document. The development team should use this information received from you to create an technical FRD (Functional Requirements Document) before starting with the development.

No doubt, offshore software development has made its mark in the industry and itís safe to say that itís here to stay. Outsourcing is not a buzzword anymore, but an integral part of any growth conscious business strategy. Just like any other business process initiative, offshore IT outsourcing requires significant planning upfront and constant monitoring and improvement throughout until you get it right; and once you do, it is one of the best things that can happen to the bottom line of your business.