Outsourcing vs. Outsourcing, Part 1

IT Outsourcing is a young industry and there are many benefits along with areas for improvement. It is a comparatively new and fast growing business which means that it has some shortcomings, at least due to its fast growth. Having been in IT Outsourcing for many years I am certain that IT Outsourcing is a great tool especially if IT is not your core business or you are on a budget and looking for good quality IT services. Apart from being a professional in the provision of IT Outsourcing, I have always had a keen interest in customer satisfaction. Getting feedback from those who use the services is the key to advancing your business. In particular, receiving negative feedback, better known as ‘constructive criticism’, provides a unique opportunity to improve services and grow the business.

Here you will find an analysis of common and less common outsourcing traps based on a poll conducted among Linkedin users. As part of the analysis, I have included my suggestions and tips on how to easily take control of some issues raised. Despite the fact that most of my IT experience has been with IT Outsourcing in Eastern Europe, I believe that my experiences and ideas would be applicable to any IT Outsourcing business around the world.

Poll Results

In April 2012, I conducted a poll among Linkedin users to gather their views on IT Outsourcing, in particular what they disliked about IT outsourcing. The poll was posted on several Linkedin groups which included IT professionals who held decision making positions and professionals who were involved in IT Outsourcing (e.g. CIO; Architects; IT Managers; IT Directors etc).

The poll focused on one question, ‘What don’t you like in IT Outsourcing?’ The respondents had to choose one from five possible responses: Professional Level; Hard to Manage/Remoteness; Time Difference, Communication Barriers and Other.

The survey had more than 240 respondents. This is how they answered (refer to Chart 1).

These results show 36 per cent of the respondents see ‘Communication Barriers’ as the top issue. As Communication Barriers included 2 options, unfortunately it is hard to say whether it was more due to cultural barriers or communicational misunderstandings.

The next major issue, experienced by 21.1 per cent, was ‘Hard to Manage/Remoteness’. The idea of ‘Hard to Manage’ in relation to IT Outsourcing may involve many different aspects, however keep in mind that this poll result was focused on ‘hard to manage due to remoteness’.

The third category was ‘Other’, at 20.7 per cent. More than 60 respondents left their detailed opinions and contributed many ideas which were greatly appreciated. Thank you to everyone who made the time to share their opinions in this poll. As many ideas and issues were raised, a discussion of the comments will follow below.

“The winners” have been determined and fourth place goes to ‘Professional Level’ making up 15.3 per cent of the voices. It seems ‘Time Difference’ did not pose as a major concern with only 7.4 per cent of all the respondents expressing this as an issue.

Poll Comments – results from ‘Other’

As previously mentioned, 60 users provided their opinions and ideas in the choice of ‘Other’. Many of the issues raised amongst the comments could easily be identified, resolved or prevented. Due to the number of comments given, I have created a chart (below) to make it somewhat easier to understand and to give it some structure. The chart was created based on the manageability and type of issue raised. You will find most of the issues on the chart, but not all, as there are too many details for one picture. The same principle is going to be used to work with all the comments. We will be going through a couple of the well-known shortcomings located on Chart 2.

Below you will see that the horizontal axis goes from Technical to Human Factors. The vertical axis covers the ability to manage a potential threat – Easy Management and Difficult Management, respectively.

Some of the issues raised can be resolved easily while others present more of a challenge. Nevertheless, all issues can be resolved but it all depends on how much effort is required. I have processed several concerns which are frequently expressed when the conversation drifts to Software Development Outsourcing and here you will find my vision on solving these issues. Our busy lifestyles; the stereotypes we encounter, our emotional blocks and our sets of values filter our reception of information. Therefore this vision of mine may not match yours; however you could take it as an opportunity to consider a different point of view. What I want to do here is to share my experience from within on how to deal with these real and seeming problems.

Major Issues and Management Strategies

• IT infrastructure integrity between parties (see Chart 2)
I would say this belongs to the Technical Factors on Chart 2 and it’s an easy management issue. The most important thing here is to set up technical standards and communication channels between parties. In other words if you, as a client, have specific requirements in terms of infrastructure channels, security systems (including physical access to rooms where remote staff members work) the vendor is able to provide you with all of this. On top of this you or your authorised staff can audit your vendor’s IT infrastructure which is the best way to ensure that all requirements are arranged in accordance with your specific needs i.e. network configuration, servers and PCs etc. It’s also easy to perform remote network monitoring when needed. Creating a DMZ (Demilitarized zone) is another good way to ensure your network security and keep unauthorized users from accessing sensitive areas. One of the ideal ways is to physically go to the client’s office and set up the infrastructure as well as ensuring the ability to check the network operates remotely. It is a safe way that has been successfully used by many large companies for a very long time.

• Time Difference may influence the resolution time (see Chart 2)
It’s a technical factor too and there is a way to keep it under control by having at least one remote staff member on-site. It helps to prevent and mediate various distance problems including the time difference. If a project has more than one person the price will be reasonable and the project will go smoothly.

• Communication Barriers (see Chart 2)
It’s one of the human factors and it is possible to manage this. As mentioned, there are two issues in this: cultural barriers and communicational misunderstandings. The only way to work with the cultural barriers is to learn about the other culture(s). In the case of communicational misunderstandings, accurate reporting procedures need to be implemented and conducting regular phone/video meetings (ideally face-to-face meetings where possible).

• Offshore staff’s commitment/ Motivation (see Chart 2)
Someone passed an opinion that remote employees are not motivated about the success of projects and that the commitment can be cultivated only with internal employees. In my time as a HR Professional, in Eastern Europe IT Outsourcing, I have experienced the completely opposite attitude. Firstly, offshore professionals do care about their projects. If you have had a chance to see resumes of developers from outsourcing companies, you would notice that they have their employers’ names and clients’ names (where possible) listed for projects they have completed. Do you know why? Because they are proud of them!

There is a very simple logic behind this. If you are a developer, you want your client to be successful and satisfied with your work as this leads to the client placing more orders for more projects. In addition, the client’s growth prompts the need for more complicated solutions which means more interesting projects (from the technical point of view), which is a great motivator to IT folks. So, we have a perfect interdependent symbiosis which everyone understands.

The other interesting thing is that employees in outsourcing companies often form formal and informal groups (based on projects) and they identify them more with the client rather than with their own company. At times this may cause some problems for the employers. What I want to say is if you are ready to work with offshore professionals, they are prepared to work with you. What approach should you use? The same approach that you would use with your onsite staff.

Outsourcing can and does work if the client and outsourcer work together at all levels to make it successful.

Source: Russoft
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