Scott & Dilbert always crack me UP! It does address a lot of common questions I have encountered selling IT services to a large number of companies across the globe.
It has become very common for start-ups to begin their entire product development by leveraging companies offshore. From being a long haul possibility for large corporations with deep pockets, offshore outsourcing is accepted as a natural phenomenon of business strategy for even the smallest of companies. Industry reports assess the offshore outsourcing to touch $300 Billion in 2020, of which at least 20% will be contributed by start-ups in product engineering and specialized outsourcing services.
There are a lot of pertinent questions to ask before choosing an outsourcing partner. There could be many reasons why outsourcing is the right answer for your firm but is mostly avoided. I will take a shot at answering the7 most pertinent questions on outsourced product development you always had but didn’t know whom to ask!
1. I am used to my team working under close supervision. How can I depend on a remote team?
This question can be addressed only by taking small steps and continuous improvement. It is always a great idea, to begin with, outsourcing much smaller and non-strategic components and “over-managing” that process. This enables all the stakeholders to identify what works for them and what does not. The earlier the teams on each side feel the camaraderie, the sooner they will trust each other. At first glance, this “over management” may seem to cause some productivity issues. The operational problems may even seem complex when compared to a team that is sitting next to each other. A seasoned outsourcing partner who has successfully worked with numerous client development environments will be able to recommend solutions to these operational problems.
2. I cannot identify a clear outsource-able piece? Can I still outsource product development?
If using outsourced product development is a strategic priority but there is no identifiable piece that can be outsourced, consider with remote team augmentation. Ask your outsourcing partner if they can dedicate team members to support the development of specific portions of the code or work on an independent module. Ensure that the outsourcing partner team dedicated to your work is managed by a team lead that is responsible for administrative management, so deadlines are met promptly. Once a couple of successful projects is under the belt in this staff augmentation mode, the outsourcing engagement can evolve to a hybrid approach. Some finite work can be outsourced to a team that has been working on your project for a while, whereas any additional work could be executed in a staff augmentation model.
Such a hybrid model will give you confidence in the outsourcing relationship to ensure a seamless transition. Yet another successful approach is to start small with maintenance-oriented activities. As you build better communication and trust with your outsourcing partner, specific project opportunities will present itself.
3. What kind of extra documentation overhead would be involved?
This is an important criterion when selecting your outsourcing partner. Some outsourcing firms specialize in product development outsourcing while others are IT generalist outsourcers. IT generalist firms would be more prone to needing complete specifications before starting their work, whereas product specialists would be willing and able to start work with skeletal specifications, which could be changed several times during the project. These product specialists can get your specs overall informal channels such as phone, chat teleconference, etc. and document their understanding into a spec, which could be used in the future.
4. How will I manage my communications with my partner team?
Effective two-way communication with the outsourced team can make a difference between a wildly successful outsourcing relationship and a floundering engagement. Some items to think through include:
Tools & Practices:
· Communication channels: Email, Phone, IM, Web/Tele/Video-conference
· Continuously updated contact information
· Wikis for requirements, specifications and constant comments/questions
· Web-based project management tool completely updated
· Common web-based development environment and bug tracking system
People & Processes:
Communication that often happens through informal discussions and “overhearing” when team members are onsite has to be consciously communicated to the off-site team members. This can be accomplished by encouraging Adhoc daily communications or daily team tie-in meeting sessions held at either the beginning or at the end of the days. Communications should be encouraged at a “peer-to-peer” level as illustrated below. Further, insist on weekly project meetings and monthly business review meetings.
Weekly meetings can bring milestones, schedules, issues, changes, and goals at a tactical level in front of the project teams, while the monthly meetings can focus on large issues like company goals, directions, and plans. These help glue the offsite and onsite teams more effectively especially if you can enable a video conference and meet up virtually.
Ask your outsourcing partner on your team. Work closely with your outsourcing partner during this critical period discussing and resolving issues promptly. Make sure that communications training is received by their staff and also share the best practices that have worked for you in the past. Plan on a “start-up phase” or a pilot project where you can determine what worked best for your team. Work closely with your outsourcing partner during this critical period discussing and resolving issues promptly.
5. However one plans, timely product delivery invariably involves last-minute superhuman efforts. How will this be done?
In my experience, outsourced development teams can be almost equally dedicated as your local teams giving an arm and a leg to make the product launches successfully. I have seen this accomplished by consciously working with the outsourced team members as if they are members of your teams and thereby building the level of ownership in them. Some simple steps include;
Tools & Practices:
· Treat them as an extension of your team and not as a vendor. Work with every team member to get more done through careful communication and understanding individual motivations.
· In the monthly reviews outlined previously, share other business updates that can boost morale, give a sense of project/ product ownership to the outsourced team members.
· Share your sales cycles with them so that they feel like a part of the winning team.
When you go through these steps, your outsourced team members will be motivated to put in those superhuman efforts.
6. How can I protect our intellectual property when the work is being outsourced outside the US?
Your intellectual property is one of your most important assets and you need to take extra precautions to ensure that your outsourcing partner has similar values and policies. The first step is to understand the corporate structure of the outsourcing organization to ensure that they are governed by US laws. Ask to see typical employment contracts and confirm if they include intellectual property assignment and non-disclosure clauses similar to what your employees would sign in the US. Ensure that these are adequately covered in the client contractor agreement as well. Ask the potential outsourcing partner about their information security policy and supporting infrastructure. Once you have these materials ready for review, consult with your company legal counsel.
7. How do I select the right product development outsourcing company to outsource my work?
The selection of a product development outsourcing partner is a crucial business decision. Eventually, this has to be with people you are comfortable working with and the following checklist will help you review all factors that can impact the long term success of the partnership.
Mark your goals and set standards:
Depending on your product-to-market plan, it will help to evaluate goals and standards for the vendor to achieve, within set frames. This gives both parties the right level of commitment.
· Does the prospective partner meet your intellectual property protection criteria?
· Do they have an acceptable security policy?
· Do they have a product development focus or are they an IT generalist?
· Does this team have the capability to put in superhuman effort when needed?
· Do they have the experience and understand the importance and nuances of communication in outsourcing relationships?
· Is the partner flexible to provide the range of engagement models that can be needed to ensure success?
· Do they have the financial strength and stability?
· Do they have prior experience with the product development outsourcing methodologies that have worked well?
These are just seven of the many questions I have been asked many times before across several outsourcing engagements in the last 10 years or so. I firmly believe these will add value and steer you in the right direction ultimately assisting your business in elevating to the next level.
Outsourcing is certainly a means to help your business but only if you know how to go about it and we ensure that you do it the right way!
Also published on LinkedIn Pulse.