Monday, November 16, 2009

Panchatantra - 5 keys to Offshoring success

20 years and thousands of outsourcing engagements into it, one would think that Cos would have lesser struggles when starting a new outsourcing engagement. It surprises that even today many Cos that are embarking on new outsourcing programs still struggle with some of the basics in those critical first 6-12 months. It's certainly not due to lack of experience but a certain sense of resignation/complacency or bravado that prevents someone from learning and drawing from the experience of the many that have tread the same path before. It's easy for people to get carried away or distracted by the fanciness of the outsourcing terms, but one cannot ignore the moorings. Get the basics right and then you can shoot for glory. This article aims to shear through the complexities and keep it to a set of simple and succinct keys to the success of an outsourcing engagement from a CIO's perspective.

Here are 5 keys to success in outsourcing/offshoring - proven tips that are universally applicable to most outsourcing engagements:

1. Accountability - Be willing to relinquish control , trust and delegate responsibility to vendor but know that you're as accountable for the final quality of services as the vendor.
- Clients should be willing to 'let go' and put the onus on the vendor to deliver.
- Know that the IT leads are finally accountable for the services to the IT customers puts emphasis on trusting and delegating but staying engaged enough to stay on top of the situation.
- Don't micro-manage. You don't want to pay the premium for a top-tier vendor and treat them like a tier-3 staffing group. Not good for your goals, not good for the motivation of your suppliers. Motivate them to take ownership and be a solution provider than a transactional service provider

How does one achieve this level of alignment between customer and vendor? How can a client lead effectively manage the quality without getting into the trenches? How does one strike the balance? All these are questions that will translate into the other following best practices.

2. Process over People

The key is for the customer to be managing their partners to the input and output
- Robust processes provide the ability to independently verify and monitor
-There is a propensity to attribute all issues and success to 'people'. People come and go but processes live and deliver.
- When people leave, you lose tribal knowledge and special capabilities. That's where processes come in. They give you predictability and repeatability and make the operations people independent (to the extent possible)
- The strength of the processes is a true measure of the risk management in the engagement.

3. Tool based process and reporting

Having a good process is one thing. Having reliable data and reporting is another. The reliability and verifiability of reporting is a common problem clients encounter. How many times have you spent a status meeting debating about the status of the project or the accuracy of the service levels.

- Reporting needs to be objective. Have a single source of data- traceable, centralized, and transparent
- The reports need to be generated from 'actual data' that flows through processes and tools that ensure the accuracy of the data . Anytime anyone needs to monitor the health of a process or system, one needs to be able to access an objective and transparent report from a reliable tool that manages that process
- If there are contentions with the data, one should be able to audit and trace the data easily

Data and metrics should aid conflict resolution not become a bone of contention. The best way to achieve this is through strong processes and integrated tools.

4. Knowledge Management
In a market where loyalty lasts as long as a hotdog on the Pink's stands, prepare for unplanned people movement. The best time to prepare for rainy days is when the sun is out, but it's never too late to patch the roof.
- Having a centralized engagement portal with a knowledge repository is a worthy investment
- Make it a way of life for people to keep documentation up-to-date and save it centrally
- Host forums for cross-functional knowledge sharing between different groups

Something about the human brain relishes SILOes. Let's break it shall we...

5. Partner not Vendor
Finally, we expect the vendors to take accountability, invest in the relationship, go the extra mile when we need them to and basically act as partners. The question is do we treat them as one?
It's very common to see the us vs them attitude on both sides at the start of the engagement. It's the prerogative of the leadership to nip it in the bud and set a culture by which both the customer and vendor are aligned to the same goals and one cannot be successful at the expense of the other.

Each of these topics can and has spawned off many books dedicated to them, so there's no dearth of recommendations and best practices there. As I mentioned at the beginning of this article, it just boils down to reminding and re-assessing ourselves on the basics and keep it simple.

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