Friday, November 16, 2007

Offshore Software Development: How to Select Projects That Will Succeed

The central issue for a company in offshore software development is to decide the projects to be offshore. Company cannot just offshore any project, for the reason that the employees in developed countries desire to operate on fresh project development. This matter has to be cautiously thought .Offshore software development requires subsequent guidelines to be followed:

1. Company goal: It’s often said that goal are easy to make but hard to accomplish. Therefore, make certain that you identify your goals for offshore outsourcing well. Be clear on the factors that are attracting you towards offshore business. Is it cost only, or do you want to develop custom software rather than general software. Different reasons will give you different list of projects to be off shored.


2. Sufficient resource talent offshore: This reason basically depends on the technologies you use; you have to make sure that there is a tremendous resource talent. Struggle for the appropriate resources in countries like India is extreme; if you are in a narrow position and require spending hefty training dollars to get highly trained staff, you have to give a thought on how you can preserve your employees. This is because competition in the market is so high in terms of salaries that employees can easily leave your company for other if they are offered good salaries.


3. Deliverables and level of interface with the U.S. team: You should be capable enough to provide the adequate information to the companies you are dealing with. This will enhance the chances of success & will earn you huge income the next step involves the level of interface. How much interaction does the offshore team require to do with the U.S. team? This depends on the need of the offshore teams but it will take considerable management effort to make it profitable.


4. Specialized equipment or tools: If your development atmosphere involves specialized tools and equipment, it can affect monetary viability and schedules; it is also necessary to consider the time it will take to create the required environment offshore.


5. Cultural fit: Is it feasible to teach offshore employees within a rational time frame? For instance, projects that deal with user interfaces are harder to transfer because of the need to recognize the cultural issues in U.S.

6. Attracting and preserving offshore genius: If you are doing new development or you are in a strong technology area, this will work in your favor. If you are allowing for dated or proprietary technology with inadequate market demand or supporting energy, this will work against you.

Thursday, November 15, 2007

Offshore Web Development India

The internet & the World Wide Web have become an integral part of our world. In approximately a decade the web has grown from a theoretical concept to a daily part of our lives. Most for-profit companies, non profit organizations, schools & universities either currently have web sites or plan to create them. The web has truly become the presence at all levels of society.

Offshore website development in India is growing very rapidly as web developers come up with better customer satisfaction. A day does not pass without a newspaper report about yet another company that has started outsourcing technology or other business processes to India. Why do companies go for web design and development outsourcing? The reasons can be the following:

India provides best quality services at low salaries. India possesses highly professional web developers which develop websites at much lower rates as compared to that of UK or US. India has a lot of scope for offshore web development. Companies can save a huge sum of money as salaries offer to an Indian professional is 5-10 times lesser than what is given to an US employee. Security is the biggest issue for any company but in India all security measures are taken to provide the services at best.

Following strategy should be helpful in offshore web development:

Good communication level: English is the language that is spoken by every country. Make sure that language spoken is understandable by the vendor & the requirements are clearly listed. This will prove beneficial when the final delivery is to be done.

Provide references: Give developers some links so that they can have an idea as to what kind of work you are expecting from them. Practical help is better than verbal aid.

Conduct meetings: Just outsourcing your project will not give you enough results. You should try to have meetings often or maybe some telephonic conversation to show how important the projects.

Feedback: Regular feedback helps to have better idea about the project work. Web design requires a lot of work to be done again & again .Its design is difficult to be finalized at one attempt.

Wednesday, November 14, 2007

Do You Need Back Office Outsourcing?

Business world is growing at a very fast pace these days. Companies are facing high competition, regular technological & market changes. So, they have to come up with the best products & services. Good services at the low costs are the mantra of success these days. But carrying support services in house may not yield you with the best results. So there comes the need for back office outsourcing.

The first question arises is -What is back office support?

These are the services which include internal administration activities & supplier relationships, involving human resources, procurement, warehouse management payroll activities & some other financial processes.

The next question which will immediately come into your mind is whether to opt for back office outsourcing or not?

Well the choice is completely depends on the company. Today, companies have to be completely efficient in delivering best services. Spending time on these non core activities may harm your production as a lot of paper work is required for back office which is time consuming.

So, going for back office support outsourcing is a good business deal. It takes care of your non core activities like payroll, human resources, data entry etc. It offers your services which meet the international standards at low cost & at the same time best quality. You can further increase the quality of services received by keeping an eye on these business process outsourcing vendors. In back office outsourcing the employees gives their 100% to achieve the targets of best services with improved quality & that too at lower salaries.

Back office outsourcing may include services like simple query solutions, managing orders or providing technical support. Though, there are many advantages of outsourcing but there are certain issues which a company must consider before that. Get a detailed enquiry of the company which you are choosing for outsourcing-its status, annual revenue, projects completed & clients .Consider the security measures to protect your data.

We may conclude that doing back office work in-house will lead to the reduction of profits. So, outsourcing is a better idea for high production & result oriented profits.

Monday, November 12, 2007

Domestic Work or Offshore Outsourcing

Best quality & time management are the two hot topics in the market. The companies are rarely interested in spending time on non core activities. A huge sum of money has to be invested for domestic work.

People believe that software development is easy. One can easily gain the understanding of the problem that needs to be addressed by talking with the people familiar with that technology & then design a solution to meet those needs & deploy it in the customer’s environment. But along with that there are certain issues related to the software development that the companies have to resolve.

Company must meet the following needs if it is not interested in outsourcing:

1. Search for qualified talent

2. Conduct training programmers for the employees.

3. Pay employee salaries & incentives.

4. Provide the employee with best infrastructure.

5. Conduct regular meetings

6. Provide them holidays.

All the factors mentioned above require a lot of money & wastage of time. To make sure that the company gets the right talent, it has to form a recruitment team for selecting employees. As a result of which many experienced people have to leave the work which may result in poor production. So many companies in US & UK today go for outsourcing.

Companies opting for outsourcing have to pay 15 times less salaries to the employees in India as compared to American employees which are a sure benefit & at the same time they get the best quality product. Outsourcing to India provides companies with a pool of talent which are already trained as various colleges are conducting campus connect programmers to train the students with the latest techniques.

For companies abroad outsourcing is better idea, they don’t have to waste their human resources; the only things they are concerned with is search the best-quality service provider & pay him for his work. Thus, the tension & wastage of resources is reduced for them & they concentrate only on core activities. Outsourcing has proved boon for these companies.

Friday, October 19, 2007

Need of Offshore Outsourcing

Offshore outsourcing continues to gain momentum in India. Though there are certain issues like security threats related to outsourcing, still companies are doing this business because they are impressed by the quality of work, results & offshore outsourcing initiatives taken by these countries. There are many reasons why companies continue to outsource. Some of them can be:

1. Capacity: Outsourcing priories an external source of capacity. Outsourcing proves to be a feasible solution when there is increase of work load & temporary sources of capacity are not sufficient. Offshore Outsourcing to India is preferable because it overcomes this shortcoming by the availability of highly talented professionals.

2. Know-how: Outsourcing may be necessary when the organization does not possess the technological know-how & a substantial investment is required to develop knowledge. IT government policies are very flexible in this regard which contributes a lot in outsourcing to India.

3. Cost & volume: When the cost of in house manufacturing is too high, or the volume of demand for a given part or service is too low to justify the initial investment in facilities, machines & training of the workforce, outsourcing is considered as a way to improve cost based competition. India, China, Russia & Philippines provide lower cost workforce for software development so companies find them as better place to outsource.

4. Demand Pattern: Companies go for outsourcing when the demand for the service is widely fluctuating or seasonal, in house manufacturing may not be justified especially if it requires investment in special equipment & facilities that might be idle for substantial part of the time.

5. Time Factor: One of the important reasons to outsource is time factor. Companies are not interested in spending their time in non-core activities. In such cases, outsourcing may enhance the time based competitiveness of the organization.

6. Quality: When the quality available from the software outsource vendor is better than the quality that can be obtained in house, then why do companies find any harm in software outsourcing. Recent surveys in North America have revealed the fact that quality obtain by outsourcing to India is the best till date.

7. Control: Since control is an essential tool in fighting uncertainty & poor planning, the reliability of suppliers as well as integration with the suppliers planning process are significant considerations in the make or buy decisions. Consequently, when outsourcing is used as a part of the order fulfillment process, proper supplier's management is an important task of the order of the fulfillment team.

8. Feasibility: Some companies have outsourcing as the only option. For example raw materials available only in foreign countries have to be purchased from outside sources & imported.

Wednesday, October 10, 2007

Seven Stages of Outsourcing Process

The first stage in outsourcing is planning initiative. As with any significant new initiative planning activities, including project management issues are important. Typically, cross functional terms are formed to study & implement outsourcing initiatives so team member & leader selection come into play. The project team assesses the risks & the resources information & management skills needed to mitigate those risks. Tem objectives deliverables & timetables should be set & management buy in must be achieved. After the planning initiatives, next step is strategic implications.

Strategic Implications: Outsourcing can be a powerful tool. To harness its power, however includes asking fundamental questions regarding outsourcing's relevance to organizations:

  • Vision of future
  • Current & future structures
  • Current & future competencies
  • Current & future costs
  • Current & future performance
  • Current & future competitive advantages

By exploring the answers to these questions the project team is better able to understand how outsourcing can fit within the organization's strategy.

Analyzing Cost & Performance is the next stage. The offshore outsourcing project team conducts activity-based analyses in order to understand the costs of the activities that might be outsourced & those that are staying. To this are added the cost of investment capital & the estimates costs of poor performance. Further having gathered activity based costs for existing activities the team makes reasonable projections of future costs of these activities. It estimates which costs do not disappear with outsourcing & what new costs will be incurred as a result of outsourcing.

The next stage is Selecting Providers. The project team lists the criteria for a qualified provider based on the reasons to outsource. Potential providers are identified & preliminary investigations are made to determine their qualifications & confirm their interest in transaction. Their qualifications are then compared to the criteria & a decision is made on whether they should be invited to purpose. RFPs are prepared & delivered to the targeted provider's list. Further discussions are held by senior management & finally a prime candidate is selected & negotiations can be planned.

The negotiations begin with a term sheet, which is used to convert the RFP & resulting proposal into an informal contract summary. To do this the parties negotiate the terms & reach the final agreement on the major issues. The term sheet leads to the detailed negotiations, which enables the lawyers to draft the contract document.

When the deal is done, it is time to begin the transition of resources. The human resources issues are carefully addresses & with sensitivity. The other factors of production such as equipment, facilities, software, & third parties agreement may then be transferred to the provider.

The last stage of outsourcing is relationship management. To build the relationship effectively, the relationship manager & the organization should be active in monitoring & evaluating the performance. If this doesn’t occur, the provider's performance is likely to suffer

Tuesday, October 9, 2007

History of Offshore Software Outsourcing

Outsourcing is a term discovered by the information systems trade press in late 1980s.It was coined to describe the growing trend of large companies transferring their information systems to providers. Offshore outsourcing & software development took a pace due to the competition among the various companies. Earlier manufacturers in automobile industry have made component parts that were unique but when they became commodities the manufacturing units started outsourcing components to the offshore outsourcing services providers. In recent years, companies have been actively outsourcing information systems & technology, telecommunications, Management services & more. The list goes on. But it has proved more beneficial for IT & ITES sectors.

Outsourcing is the act of transferring some of the organization's recurring internal activities & decision rights to outside providers, as set forth in contract. As a matter of practice, not only are the activities transferred but the factors of production & decision rights often are too.

Outsourcing has proved beneficial for both the service providers& buyers as it is a way for an organization to increase its effective capacity without investing capital in facilities, machines & training. It may also be thought of a way to enhance the organization’s competitive edge in the areas of cost, time, quality & flexibility by selecting the best sources & by developing long lasting relationship with selected suppliers.

India has become the largest destination for offshore outsourcing. This is due to the reason that India has well talented professionals who are also ready to work at low prices. All the BPOs, KPOs are doing exceptionally well in this. The reason behind this is the active actions taken by the legislature upon the breach of policies. Indian law of court provides the foreign country with an advantage of choosing the law of court. India is going to make a remarkable mark in the history if continues to work with the same pace in IT, finance, accounting & other sectors.

Thursday, October 4, 2007

Outsourcing to India & Legal Aspects

Outsourcing has brought a revolution in the field of IT sector. Today every company is thinking of going for offshore outsourcing. If yours company is the one then following tips will help you before or while entering in it:

1. Contracts can change so ensure companies defines a clear detailed set of rules for changing the contract during it life.

2. It is important to include lawyers in earlier stages of outsourcing. The relationship's structure & the fundamental terms that affect the parties' contractual rights are often settled early & not during the formal contract negotiations. This will help the organization to have a victorious contact.

3. Companies must be clear from the stage of planning initiation that the contracts can be terminated or extended as per the performance delivered to avoid disputes.

4. If the countries are not the same take the help of the local council before drafting or signing any contract. The local knowledge will prove extremely valuable.

5. Information transfers across borders can be tricky in some companies, so ensure you are aware of the legal position regarding outsourcing of your sensitive data.

6. Where the chosen Law is Indian Law and if Indian Jurisdiction is to be applied on any foreign country, ensure that the foreign country has a similar law as per Section 44A of the Indian Civil Procedure Code.

Offshore outsourcing to India is getting pace day by day. India has become the destination for outsourcing .Companies has to follow some legal rules while selecting India as its destination

1. When contracts are handled between two countries then the law of only one country is not sufficient to handle the whole contract. At that point of time, the rules of Private International Law comes into play. The best way solution for the two parties is to choose a particular law for the contract. This law is called the "Proper Law of the Contract".

2. According to law court of India, it’s not compulsory that India will always have the contract & jurisdiction. It’s the intention of the two parties which will decide which country will have the contract & which foreign court will handle the jurisdiction.

Wednesday, September 26, 2007

Different Forms of Outsourcing in IT World

IT outsourcing began to evolve in early 1960's, largely in response to cost saving opportunities. In 1963, EDS signed an agreement with Blue Cross of Pennsylvania for handling its data processing services. This was the first time a large business had turned its entire data processing department to a third party. Following the trends, Kodak also outsourced its mainframes, telecommunications & software development & maintenance services to IBM. More companies are now joining in hands to outsource its business. Most of the deals formed earlier were single vendor total outsourcing contracts but as outsourcing went on global level different types of outsourcing arrangements have emerged like BPO, application service providers(ASP), KPO.

Business Process Outsourcing has become a strategic business choice that can be leveraged for competitive advantage. It enables client to focus on their primary business operations & to achieve a combination of lower costs, improved productivity & flexible staffing options. IBM BPO services include human resources & customer relationship management. There is also business application outsourcing which helps companies to control software development costs keeping up with the latest market changes. To benefit businesses, companies hire consultancies for their software development applications. IBM hires Salix Resources for the same purpose.

After seeing the profits that are earned through BPOs, companies have now started outsourcing knowledge as well. KPO is now emerging as the biggest opportunity in the coming years & has brought a revolution in all fields. Hewitt Associates is the best example in this regard. KPOs provide with the best infrastructure facilities, staff & latest technologies as well. Cost saving through KPOs is enormous. The future of KPO is encouraging for all the people of all fields .Let it be business or employment. KPO will provide massive employment to the talented professionals in the coming years. India will be the largest KPO sector by 2010 followed by China, Russia & others as reported by NASSCOM. Studies reveal that KPO will not be limited to IT or ITES sector only but in the coming years prove its mark in Business Research and Analytics, Legal Processes Outsourcing, web application development, Consultancy, accounting etc

Thursday, September 20, 2007

Trends in Offshore Outsoucing 2007

Outsourcing is a rapidly growing phenomenon among primarily US and European companies to offshore work to third party vendors at highly reduced costs. The intention is to take benefit of the lower wages & costs in countries like China, India, Philippines & Russia. Offshore outsourcing ranges from contract manufacturing, IT, Software Development, Manpower Training, etc. The choice of a nation for offshoring depends on factors like language & education of the local work force, transportation systems. For Example countries like India & china, are educating high numbers of skilled engineers & scientists from their universities -thus enabling these nations to attract massive engineering, research & development contracts.

Today in the IT world, offshoring has proved a boon not only for the job seekers but the also for the many offshore outsourcing companies. As companies strive for ever more extreme competitive advantage in today's economy, more companies in developed countries are looking for wider markets to expand their business & the same trend can be followed in 2007.As the world's largest software industry, US continues to outsource its software development globally .It has become the largest software outsourcing client in the world. Outsourcing software development has become a prominent business practice

According to the news release the Business Process Outsourcing (BPO) sector in India has seen a down fall in its business in first quarter of 2007.The number of contracts signed in 2007 are less as compared to that of the first quarter of 2002 .The trend is more likely to be inclined towards Knowledge Process outsourcing (KPO) now as companies have started graduating from BPO towards KPO Hewitt Associates is the best example in this regard. Although it’s a US based company it growing its roots in India as well very quickly o take advantage of the developing KPO scenario.

In 2007, companies will look for enhancing the security and confidentiality of data. Services like outsourced payroll management, accounts management, client information management like credit card processing, insurance claim processing etc. need to be handle with tight security by capable outsourcing service providers. This will help in achieving better client satisfaction.

Being fluent in English doesn’t take the business around the globe. For better results, fluency in other languages & technologies is going to play a vital role in offshore outsourcing to obtain more profits. Outsourcing from non English speaking nations like Germany, Mexico, etc. has huge untapped potential.

Wednesday, September 19, 2007

9 mistakes to avoid while deciding to outsource

1. Improper selection of Outsourcing partner: Negotiating an outsourcing contract involves a significant investment of time from beginning to end. At the stage of selecting the service provider it is sensible to enter the process with an aim of helping each vendor to put forward the best, most relevant offer possible which is within their capability. The vendor will put forward the best possible offer if he sees opportunity for future revenue growth. You can negotiate better deal if the vendor is impressed with the potential of your operations. It is pertinent that vendor is taken in confidence with your vision about the outsourcing assignment and where the deal will head in future.

2. Not monitoring the execution of the Outsourced deal:

Selecting the right service provider doesn’t mean that the company put the entire burden on them. They shouldn’t overlook the work load & try to involve with your IT support provider. When you stop being involved with your IT support provider, requirements not clearly explained and problems are more likely to arise. You must involve in the regular meetings, setting goals & expectations otherwise it may lead to the sufferings in business .Regular meetings are important when you have multiple technology vendors

3. Ambiguous Scope of work: The linchpin of the outsourcing contract is a description of the nature of the work being outsourced, often referred to as the "scope of work”. The project scope must be well defined & understood at both the ends. The service provider must understand the business model. A service provider who sees the bigger picture of the business is always a better choice.

4. Conflicts among parties: Sometimes, there are conflicts between the two parties on certain work issues. If the dispute cannot be resolved through joint problem solving & negotiation, then they must involve a third party. It is more about correcting and preventing mistakes within shortest possible time and moving ahead rather than holding on to an issue. Be open to resolving conflicts.

5. Miscalculation of Costs: Unfortunately, most companies capture costs on a cost element basis (such as salaries, benefits, rent & depreciation) as opposed to activity basis. The outsourcing team must conduct activity based analyses in order to understand the cost of activities. Further, having gathered these costs; the team should make reasonable projections of future costs for these activities. These costs must be added to the provider's pricing. Maximizing these activities will yield more profits & help in making buying & selling decision.

6. Not following the Outsourcing agreement: The concepts in an outsourcing agreement are hard to follow exactly, they generally require a transparency. It is not unusual to come across situations where a concept is well defined in the terms of rules & regulations, but they require a lot of management to complete it .The parties should never make any verbal statements which can bring bad name to their work & status .The solution to this is to ensure that your lawyers talk to the service delivery people

7. Poor Planning in an unplanned manner will surely be a disaster. Proper responsibility and authority should be delegated to the concerned parties to manage the structure. Proper terms need to be drafted to ensure smooth flow of specifications in case of Offshore Software outsourcing. Simultaneously, proper feedback and reporting routines need to be set up.

8. Thinking Outsourcing as the only solution: Most organizations consider IT outsourcing as the only solution because they don’t want to waste their time in non core activities. While outsourcing can indeed ease some operational sore spots, this should not be the main reason for employing the strategy.

9. Not listening to the markets: Companies should never forget that market changes can alter the relative value that outsourcing can offer completely. It is advisable that the management should keep itself updated with the latest market trends so that they do not have to suffer any loss.

Tuesday, September 18, 2007

Selecting Outsourcing Partner

The Outsourcing partner selection & identification process has a life cycle of its own, beginning with scouting the Internet, Company databases and personal contacts to identify potential partners. The partner identification & selection phase of the BPO & IT sector life cycle demands a meticulous approach. There are undoubtedly qualitative factors in selection of partner, but the process can also be conducted systematically & with rigor. Software Development Companies that pioneer BPO have well documented approaches for identifying & selecting outsourcing partners.


Choosing the right offshore partner to outsource all the jobs to is not easy. It is not possible that one single company will satisfy all our needs. When looking to outsource routine jobs one should be careful in identifying the basic issues in outsourcing. We must not forget to evaluate the offshore outsourcing company for its goals, achievements and capability. When selecting the software development outsourcing partner, one must cross check it’s existing client base, the service level, the management and most importantly the infrastructure and scalability. Get an idea of the projects that the company has handled before & its success rate in those projects. One should give due consideration to a company with highly trained work force, low costs & proven procedures and policies.


Today, every company is assuring to provide the best offshore outsourcing services but only few are capable to cope up with the changing trends in the market & survive. So, it’s very important to evaluate the company in each & every sphere of work. It’s not always the brand that works. The workforce, Management and the zeal to deliver along with proper policies and procedures are a must to get the best out of an Offshore Outsourcing deal.

Tuesday, June 26, 2007

Tips for successful Outsourcing

Do it right & Offshore Outsourcing can be powerful tool for achieving competitive advantage. Do it wrong & it can easily turn out to be a forgettable investment. To ensure success, outsourcing must be a strategic decision. Few points that can make your Software Development Outsourcing or BPO initiative a boon to your existing setup are listed below:

1. Planning initiatives: Form a multi functional team to study & implement the outsourcing options. The team should be able to access the impact of Outsourcing a function to an external party on different functional areas of business.

2. Explore strategic implications: Determine how software development outsourcing fits in with the company's long term strategies. Outsourcing can be very powerful. To harness its power, however includes asking fundamental questions regarding outsourcing's relevance to the organization’s:

-Vision of its future
-Current & Future Structures
-Current & future core competencies
-Current & future costs
-Current & future performance

By exploring the answers to these queries, the project team is able to estimate better how Business Process Outsourcing can fit within the organization's strategies

3. Selecting Providers: The project team must list the criteria for a qualified service provider. When potential service providers are identified, investigation should be made to determine their qualifications & confirm their interest in the transaction. Considering all these factors, one or multiple providers can be selected.

4. Finalizing Terms: The parties must negotiate and finalize all terms & culminate the discussions in the form of a written agreement. Discussions can be aimed at arriving at a mutually acceptable:


-Scope of service

-SLA(Service Level Agreement)

-IP and data security framework

-Management, Reporting, Deadlines and Control policy

-Pricing and payment structure


This term sheet leads to the detailed negotiation which enables the lawyers to draft a contract document. This brings a great assistance in successful outsourcing.

5. Managing Relationships: Success of outsourcing largely depends upon how both the parties while developing a new relationship will monitor performance evaluate the results & resolve problems. If the relationship is handled in a proactive manner, it will defiantly lead to better reward for both the parties involved. A healthy association can lead to repeat business and lasting relationship in between the two parties.