Because technology is so integral to business, IT outsourcing is no longer the CIO’s challenge alone. When asked the right questions, in the right context and with the proper long-term vision, the CFO plays an amazingly valid and important role in policy and direction. However, if the recommendations or decisions are based on assumptions and preconceptions about outsourcing, the outcomes can cripple a company. If decisions are based solely on numbers, a second series of issues emerges. Balance and understanding are crucial for successful outsourcing and company growth.
The talent shortage in the US and the abundance of engineering talent in Asian countries force CIOs to take a long and serious look at global talent acquisition strategies. Global acquisition has proven time and time again to bring value to companies in the long run. However, it is important to balance and evaluate two critical areas: risk mitigation and cost savings.
Risk mitigation:
The idea of looking for software talent outside the border can be a very intimidating consideration. Many companies that have tried to fill the talent gap looking overseas have been underwhelmed by the results, or in the worst cases, have experienced dismal failure. I believe that these failures are due to selecting the wrong business model and/or partner. Here are some key questions that are critical to ask a potential vendor.
- Are you a US-owned company?
- Will I be able to hand-pick my team? (and will my team ever change?)
- Do I have to change my development processes to work with you?
- What level of control do I maintain?
After these initial questions have been answered, you can look to building a constructive relationship by doing the things on this list:
- Build your relationship on trust and open communication
- Work collaboratively
- Remember, cooperation, not domination
- Aim for mutual understanding, despite cultural differences
- Foster realistic expectations
(Here’s another good resource for achieving successful outsourcing)
Cost Savings:
Some CFOs are naturally drawn to the idea of offshore outsourcing because of the staggering cost savings claimed by many outsourcing vendors. Unfortunately, many of those promised savings can be quickly swallowed up if the wrong business model is selected or unplanned inefficiencies and miscommunication emerge.
Don’t choose a vendor based solely on price. There’s a reason some places are cheap, and some places are expensive. If pricing falls too far one way or another, be skeptical of the vendor, and ask the questions above. Choosing a vendor just based on price will inevitably lead to a failed engagement.
Offshore development can provide significant value–under the right conditions. After all, there’s a reason why the largest software companies, such as IBM and Microsoft, continue to expand their engineering talent pool by investing billions in their own development centers in India. It’s just that midmarket ISVs have had no offshore solution that would allow them to exert the control that large ISVs enjoy at that scale. EC Group’s model provides just what midmarket ISVs have been looking for along with a legitimate 60% cost savings and a transparent model to ensure that savings makes it to the bottom line.
Armed with this information your CFO can capture the vision of successful outsourcing, but it all starts with asking the right questions.
