Information Technology Reference
In-Depth Information
remote locations. You may have to thoroughly explain the benefits of
this model and how the onshore
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offshore model will work. One more
important task is to align your processes to match processes followed by
your customer. Even if you are a CMM5-level company, aligning your
processes is a big challenge for you.
Concern 3: When teams work from remote locations and belong to different
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organizations (especially in the customer-partner environment), a lot of docu-
mentation is needed about the product to be developed and the process to be
followed. This leads to more costs and labor. To keep costs in check, most of
the customers decide to restrict the project size by cutting the development
of many features. This situation also leads to reduced discussion on further
development of these features.
Mitigation strategy:
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There will be initial costs involved in any outsourcing
deal such as additional documentation costs. But these costs are paid off in
the long term. Offshoring can save costs more than 70% over a 3-year period
and even more in the longer run. Nowadays most of the outsourcers have
very flexible processes that can be changed easily, so switching from one out-
sourcer to another is easy. It is very important for you to convince your cus-
tomer that offshoring benefits are gained only in the long term. Benefits also
result when a proper transitioning approach including a piloting phase and
knowledge transfer is done properly.
11.1.1.3
Legal Concerns
Concern 1: The customer and the outsourcing partner may lack prior con-
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tracting experience, which may result in lopsided or impractical contracting
agreements.
Mitigation strategy:
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Lack of contracting experience from any side defi-
nitely poses a serious threat to the project. To mitigate the risk, the
contracting should start at a small scale. Once contracting experience
increases and the confidence level of all parties increases, bigger contracts
can be looked at.
Concern 2: Many outsourcing companies try to promise too much in order
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to bag the contract. Sometimes this could also be due to cultural differences
in presentation and self-perception of expertise.
Mitigation strategy:
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The best measure to find out if the outsourcer is
promising too much is to dig through your schedules for previous proj-
ects and extrapolate to find out if schedules made by your outsourcer are
realistic. Better yet, engage an impartial consultant who can evaluate and
judge if schedules are realistic.
Concern 3: Customers have strong reservations against potential for secu-
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rity leaks, loss of intellectual property rights, conflicts of interest, and so on.
These reservations are further exacerbated by cultural differences.
