Software Development Outsourcing to India

For over a decade technology companies around the world have been outsourcing their software development needs to Indian IT companies. This practice has made a lot of fortune 500 companies extremely successful with their software products and services by getting excellent quality, huge cost savings and faster time to market by following the Sun. Due to the evolution of this huge outsourcing market in the software industry, a lot of small to medium sized businesses have also turned towards offshore to get the similar competitive advantage that has been enjoyed by large multinational organizations for several years. The most significant challenge faced by companies stepping into the outsourcing arena is to find the right outsourcing partner.

Just like all the other business models, offshore outsourcing has its own tradeoffs. In this model the relationship between the client and the vendor is more like a strategic partnership and both the parties must understand and respect each other’s challenges. A true outsourcing model can only work if there is a solid mutual understanding of the issues involved with this business model. For a company trying to outsource its IT needs to an offshore vendor for the first time, this can become a very frustrating experience very soon if the onsite company is not fully aware of the cultural and infrastructure related challenges involved in working with Indian companies. This is where starting the relationship with the right offshore vendor is the key to maximize the potential of this business model. A good offshore vendor usually has solid experience and understanding of business practices on both sides of the world and is usually an expert in setting the expectations right from the get go.

Signing off on an offshore contract should never be a hasty decision. Finding a good vendor is an evolution and it is practical to set at least 3 months of evaluation period to narrow down on the right vendor. Finding the lowest rate is not always the best criteria to decide on the right offshore vendor. Cheaper vendors may not be able to provide the level of global project management required to make this business model work for you. Even though offshore outsourcing brings a significant amount of cost savings, the saving should always be evaluated in comparison to the cost of doing the project onsite. It is a common mistake to think of outsourcing to offshore companies as a cheap replacement of onsite workers. Offshore outsourcing is definitely cost effective but only if it is done right.

A few things to consider while choosing your offshore vendor are as follows:

1. Offshore outsourcing can be very effective if your outsourcing vendor also has an onsite presence. Outsourcing to a company with no onsite presence can be extremely challenging and the relationship is most likely to fail within a month or two. The difference in time zones makes it essential to have a local contact in your own time zone so you can discuss the day today issues and other work related stuff, at your convenience.
2. The offshore vendor must be willing and capable of providing onsite staff deployed within your facility to assist with offshore communication and help with global project management. This will usually add to your budget but is one of the most important investments you will make in an outsourcing partnership.
3. There must be a minimum commitment from the onsite company to make this work. It usually takes 3 – 6 months to develop a good working relationship with the offshore team. A good offshore vendor will communicate these minimums to you in advance. This model is cost effective only for those who have an ongoing need for software development. If you are just looking to outsource a small one-time project then this is not the right model for you. You would be better off working with a local company that has offshore ties so they can give you a lower price.
4. A good offshore vendor is open to sharing the profiles and resumes of its team members. They are also willing to open the communication channel for the client to communicate directly with the offshore team if they want.
5. There must be a timesheet reporting mechanism in place to get daily reporting of the work by the members of the offshore team. A good vendor will make this a transparent process for you and will also be willing to go for weekly approvals of these timesheets by you. This way the payments can be tied to the hours approved on the timesheets thus ensuring maximum productivity and daily accountability by the offshore staff.
6. The global project management and delivery mechanism should be a highly streamlined process and the offshore vendor should clearly be able to demonstrate the practices and processes it uses to manage globally and deliver according to the schedule of the projects. You can be sure of your vendor’s capabilities by evaluating the systems in place. A good vendor will have robust web based tools to facilitate project management, delivery tracking, testing, bug tracking etc.
7. Outsourcing relies heavily on documentation. It is difficult to manage projects in a global environment if the documentation on projects is poor. A good offshore vendor will demonstrate its documentation practices and standards used to maintain consistency of the quality of deliverables throughout the project.
8. Lastly, the cost is also a huge consideration. You must make sure that you are saving at least 50 - 60% on the cost of doing the project onsite.

“Offshore outsourcing is the best way for fulfilling long term software development needs but choosing the right company to work with is the key to your success”.