Once again on outsourcing

Every time I read an article about outsourcing, I can ‘t stop myself from writing yet another blog or an article on the subject. I know that these blogs may not change the big picture, but at least they may draw some attention of selected CIO or CTO. So I “ll keep stirring the outsourcing pot.

Information Week Magazine published an article “Outsourcing to Win: 4 steps to An Effective Strategy rdquo;.

They write, “Campbell says most companies lack the necessary management structure to effectively manage a team of outsourcers. With businesses spreading work around to more and more external contractors, they need to elevate vendor management to the executive level and hire the equivalent of a chief sourcing officer, she says. “There are not a lot of individuals within a company that have the multidisciplinary skills required for that sort of role. ” This is probably the only useful advise that the article gives ndash; the rest is a typical gibberish of standard phrases taken out of the real world context.

Liaz Campbell hit the nail on the head. In my opinion, the lack of management is one of the two MOST IMPORTANT things make the outsourcing fail (I “ll mention the second one a bit later). Of course the roots of this lack of proper management issue lay in the fact that in many cases the project manager has no say in WHO is their outsourcing partners. They are given from above and have roots in the golf courses and fancy restaurants.

OK, the project with outsourcing begins, the project managers quickly understand that the low Bangalore hourly rates is a joke, given the fact that because of the typical corporate infrastructure issues (here in the USA), an offshore team of five $20p/h spent two weeks doing nothing but exchanging emails trying to get access to the proper servers. Let “s do the math: 5*$20*8*10 = $8000. These money just evaporated from the project budget during these two weeks of doing nothing.

Interestingly enough, the upper management will never know about it because hellip;and here comes the second main reason of why outsourcing is much more costly ndash; CONSPIRACY. Project managers will cover up such losses because they do not want to disappoint their managers ndash; their own yearly reviews and bonuses depend on success of their projects, so they “ll quietly absorb these losses by asking their local team members to work more and tie up loose ends. The local team members have their own reviews too, so they “ll work a bit harder as well. For a more details coverage of this use case read my article “What CIO should know about outsourcing rdquo;.

The article suggests to get familiar with the contract laws and religious adherence to standards. This does not come from the real world.

The next advise of this article is to move team-based outsourcing projects. I think it “s dead wrong. Eighty percent of any team (local or overseas team) do not produce much. My advice is to work with the individuals that your team leaders personally pick. If they do not deliver, cut the cord and take the losses in the early stages of the project. Find someone else. Introduce the competition within the Bangalore firm. Provide PERSONAL incentives for individuals. Today “s Bangalore team is a sand castle. People there can easily quit their jobs is someone would extend them an offer with 2% salary increase.

Make sure that you know each and every person who work for you ndash; do not pay for dead souls .

And if your outsourced project failed, stop blaming Indians ndash; just look at the roots of this failure at home.

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