Offshore Outsourcing delivery model

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Development
Lifecycle development
Outsourcing
There is much information about Offshoring on the web but if you go deeper there is little about hands-on experiences. Does anybody have detailed information or experience about an Offshore delivery model? What are the drawbacks and traps for the project managment, where are the differences to the common classical approach in software development or system integration? Thanks for your advice.

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I’ve participated in a couple of offshored large application maintenance projects – from the “other” side, and must say that in general processes are the same, except everything takes more time.
Most critical traps I have experienced are:
– Communication issues (if you take over existing application, have to learn existing “local” slang, probably learn new business area – takes time ~3 months, also English is different in different countries)
– Politics (employees who are loosing their jobs do not make it easier for knowledge transfer, and legacy systems are rarely documented)
– Production problems (while there is “parallel run”, call center calls old employees anyway, offshoring guys get hardly involved – thus there is lack of experience

The only effective way how to combat these issues is having extensive staff onsite during knowledge transfer period (~1/2year), and small number of people later on, who are handling communication, but are not managers, i.e., can do fixes themselves, if necessary

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  • TennPgmr
    I don't have any direct experience with offshoring development, but if the quality is anything like what I saw recently from a Capital One - India call center I would run the other way...
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  • Khilving
    I have been involved with many large scale outsourcing projects over the years. While each had its own particular set of unique issues, there are some consistent aspects to watch for. As Pauluss points out, communication is a key aspect. As with any project it is essential that all participants have a common understanding of just what the project includes, and what their responsibilities are. People issues are major. We all deal with 5 currencies - time, money, security, knowledge, and prestige. A win-win makes the aggregate of these positive for all parties. In the typical approach to outsourcing, one group of employees is facing an immediate loss of security and prestige, and might be facing a near term loss of money. The other group just picked up a significant amount of security and prestige, and are now looking to get a big knowledge input. At the individual level, you have a very poor deal. A better approach is one that addresses the 5 currencies for the individuals losing their jobs. 1) Company outsourcing the work should terminate their employees impacted by the project. Provide whatever termination package law or ethics mandate. These individuals already have lost their money, security, and prestige and nothing short of a new position will restore that. This action makes allows them to keep their time and knowledge. As one employee once told me, when there is a divorce, somebody needs to move out of the house! 2) Company gaining the work initially needs expertise. Hire these now unemployed workers as independent contractors for a fixed time frame with a potential option to extend if necessary. By hiring them as contract workers you immediately give them back prestige. They have a sense of security (this gig means gainful work for x months). They controlled their time by choosing to accept the gig, versus someone else extorting their time (participate or lose your termination benefits, for example). The money needs to reflect both salary and benefits. A small drop in the total will have less impact because the check size is larger. 3) The cost of this approach is reflected in the terms of the outsource agreement. However, the now contracted workers need to be contracted to the firm gaining the work, not their former employer. What this does is make the transition team a motivated group. What had been a losing situation is now a win-win, with everyone seeing a positive transaction in the aggregate of time, money, security, knowledge, and prestige. Most of the negative baggage associated with their former employer is neutralized - that relationship is over and they can move on. There are some collateral gains in this as well. The issue of parallel run is addressed. The former operation is closed, the employees gone. When bringing on contractors, the gaining company has the flexibility to change the mix so that their employees gain the necessary experience at all the locations for example. Knowledge transfer is accelerated because the contracted workers understand and buy into the concept that their contract is heavily dependent on such knowledge transfer. This gives them a significant gain in prestige. Former co-workers no longer enable negative feelings because that work relationship has ended. Everyone gets to move on. Documentation that didn't exist before can now be created as the gaining company defines, overcoming part of the learning curve issues.
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  • Jaydba
    Hello Offshoring is a better model for maintenance projects, but has some major draw backs. I am writing this based on my hands on experience with offshoring model for the past 8 years with one of the TOP 5 companies who primarily focus on offshoring. Any questions please feel free to write to me at indy2565@yahoo.com 1) Communication - This is one major aspect which results in failure of the project. -- The Co-ordinator at onsite needs to convey the issue in a very understandable manner so that "apples" are understood as "apples" and not as oranges. My experience with offshoring seems to be very bad in this area. People have to imagine and guess at times as to what is the requirement is? -- Cost of communication needs to be monitored as calls from onsite to offshore every day for atleast 3 hours per onsite team member is a norm. 2) Business Knowledge expert is very crucial to projects success. If the offshore team doesn't have much expertise then it needs to be developed and will take on an average 6 months for a person to understand and gain some expertise on the system. 3) Time difference is around 10.5 hours and so people at onsite need to work very long hours to have regular meetings with their counterpart at offshore. This will reduce producitivity at Onsite as he/she will be stressed out too much. 4) Normally as project overhead companies add 25 to 35% of the estimated work. So it translates into 25 to 35% of extra cost. This is always a hidden cost. 5) If the project is Time and Material (T&M) be careful with the number of people working. Normally since folks are at offshore, we don't know how many are working and are they real. So normally, billing happens for non-existing persons who are part of the estimated work force, but not working for your project. 6) Usually a PM or PL will be at offshore and will monitor the progress of work. Even if you don't need him, they will put someone to do that work. They will say he is doing project work as expected, but he will not do that work. he will do only PM work. So be aware. Well I can go on writing like this issues. But one simple rule is if you get a quote then assume they have already marked up by 25 to 35 % in terms of cost. So if you negotiate then u can always bring it down. Thks
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  • Davisty
    In my experience, it's a waste of time. Quality is generally bad and you'll be spending more(time and money) than if you hired domestic programmers. You get what you pay for, there aint no free lunches.
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  • Lriger
    I was a victim of Offshore outsourcing in June of 2003. I was very surprised when I received a call from a recruiter that was looking for former employees to be rehired to do the same jobs that they were canned from because the work could be done better and cheaper in India and Ireland. The recruiter said that the Company was totally unsatisfied with the outsource solution. I said I would come back, But I would have to have some gurarantees and a much higher salary. Recently I was emailed an article from Enterprise Systems http://www.esj.com/news/article.aspx?EditorialsID=1343 which says that there is very little gain from outsourcing. In fact It will probably cost more for the outsourcing than having your own staff or contractors on site, but Upper management does not have a clue and is throwing money at a questionable if not a loosing cause overseas outsourcing. Rich
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  • vinod007
    I'm just planning to open my own outsourcing company and i was trying to get gather more information on outsourcing and found your query. I read an beautiful article which is helped me to gain some confidence to start up my own little firm.
    • The What, Why, How of Outsourcing and Offshoring
    • Software Offshore Outsourcing: Art That Requires More Than Sitting Back and Eating Peanuts!
    • A Complete Guide for Small Software Businesses to Starting Software Outsourcing Company in India
    You can read all the above articles here: http://blog.outsourcing-partners.com/page/4/

    Ooutsourcing Partners is purely into Outsourcing services. The best part about following this company is they share almost everything what they do. So i tend to learn many things via their blog  feeds, twitter page or fb page.

    If somebody has some other referrals for me than they are most welcome to share here.
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