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The forecast for Offshoring remains very strong for as far into the future as analysts can see. Why? Certainly there are lots of reasons (most of which we’ll be covering here today), but the most prominent reason was well stated by Lance Travis, lead analyst from Gartner on outsourcing, just a few month ago when he noted that…. The cost savings from offshoring are too compelling to ignore.
Due to our time limitations today, I won’t go into the details of the specific results right now, but am happy to review these findings in detail in a separate call together and / or will be happy to forward this presentation. For our purposes here, though, effectively all of these root causes of failure have one thing in common: Poor Alignment. Poor alignment between the software company and the vendor, between the software company and the 8 sourcing methods, between the SDLC methodologies of the company and the vendor, etc., etc. If this is the cause, “What specific areas of alignment are key to success?” Good questions. DETAILS: 1. Client Preparation and Execution The leading cause of offshore strategy failure is the lack of preparation or execution by the client team (28%). Prior to moving offshore, you need to do your homework and prepare your organization. Once you begin the process, you (the managing Executive) need to set the high standard in performance and detail. You need to ensure that if you engage an offshore outsourcing vendor, you verify every detail is recorded, reviewed and planned. As a rule of thumb, you should be the one pushing for greater clarity throughout the entire engagement and not wait for the vendor to ask for you to step up. 2. Joint Client-Vendor Planning The second leading cause of failure in offshore outsourcing engagements are problems relating to the extent and quality of the client-vendor planning sessions prior to commencing the engagement (21%). Often, offshore outsourcing vendors steamroll the initial engagement process, trying to get signed contracts as fast as possible, and the client does not demand clarity in roles, responsibilities, expectations, joint operations, deliverables, short-term team plans, performance metrics, etc. In the end, the two parties have not formed an effective team and fight on misperceptions and missed expectations. Prior to signing contracts, mandate a complete and comprehensive plan outlining the first six months of your engagement. In this comprehensive plan, specifically cover roles, responsibilities, deliverables, how you and the vendor will work together, expectations and standards. ventoro Page 19 3. “Offshore” is the Wrong Answer 14% of the time offshore outsourcing engagements fail, “offshore outsourcing” simply was not the best answer to the business problem. We routinely found instances where the Executive stated a sound business objective but failed when prescribing “ offshore outsourcing” as the solution, specifically when: · There are better options · Moving the item offshore simply will not solve the root problem In each case reviewed, the company spent a significant amount of money offshore and never achieved their end objective ROI. Prior to moving offshore, take time to identify the root of your problem and establish if an offshore solution is the best solution . 4. Client Employee Morale and Support There is a significant issue with maintaining the support of your internal team during your offshore outsourcing engagement. It is a fact offshore strategies are difficult and will require your employees to be active participants willing to help address issues as you implement the offshore strategy. If your employees do not support the move and you can't maintain their morale, you will not be able to get your organization to successfully adopt the offshore fulfillment model. 5. Miscommunication and Cultural Issues Contrary to the marketing efforts of a few offshore outsourcing vendors, communication and cultural issues still have an impact on the overall success of offshore strategies. We found 9% of the time an offshore strategy fails, it is directly due to cultural or communication issues between the onshore and offshore teams. 6. Vendor Team Performance Slightly over 15% of the time offshore outsourcing engagements fail, the fault falls squarely on the shoulders of the offshore vendor. We routinely found issues such as: · Failure to execute as planned · Non-compliance with SLA, SOW or MSA