by Mike Batta
There are four basic steps in designing and implementing an outsourcing strategy. These help the management of small and medium enterprises to derive the benefits of outsourcing while avoiding the pitfalls and legal wrangles that can undo the advantages of outsourcing.
The key to any success is ability to seek and get help from the experts. As a beginner you might not be experienced in the intricacies of outsourcing. All you need to do is to hire an experienced consultant to lead you through the process. There are many accounting firms and outsourcing service providers who can give dependable support. However, if you do choose to manage the outsourcing decision process on your own, there are four stages of project management that you can rely on.
a.) Needs Analysis
b.) Evaluation of alternatives
c.) Implementation
d.) Review of results - change of tactics
Once you have identified the areas where you can outsource your activities, follow these steps to decide if outsourcing is the real solution to the challenges faced by your organization.
Needs Analysis: The purpose of this exercise is to crystallize your company's core business and to short list high cost - low performance secondary, support functions that can be outsourced.
Identify the absolutely critical products and services that are the main stay of your company and must be managed by your own people. Then list out the supporting functions to analyze which of these are not core business, are mainly high cost centers and currently not delivering results. These functions are the first off functions to be outsourced. You must quantify the cost of "time" in fire fighting or damage control of a particular function if the same is to be carried out in-house. It is good to remember that even the smallest of problems takes the time of your staff and that time equals money.
Evaluate the options: At this stage you will match the needs of the short listed functions with the services provided by the outsourcing agencies.
Initially, you must logically sort out the key functions of a department into major component structural parts and major functions. A chart showing the department name function, the work product and resources required can be made. This chart can be made for "as is" status and also "how it should be" requirement. This is the written summary of the objectives of the department or function.
At this stage, you must identify outsourcing agencies either local or offshore and get a Non Disclosure Agreement (NDA) signed by them. You can send them your base document outlining the needs. The outsourcing provider is bound to ask many questions and you need to respond with simple answers and guidelines. You will also send out a RFQ - request for quote or a Request for Proposal that contains your needs analysis requesting the provider to quote for a solution. You can also ask for a draft copy of the contract from the outsourcing provider so that you can review the same.
Next, you will do a comparative analysis of the providers who have responded to your RFQ. Also carry out an NPV (net present value) analysis to see if the project makes any economic sense. It is important not to get carried away by numbers. You must make a balanced decision after weighing both the quantifiable as well as the qualitative aspects of the outsourcing service providers.
Implementing the plan: This is crucial because it involves transfer of data and knowledge to the outsourcing provider, gathering inputs from them on best practices. Then you commence operations using the new practices.
The key to successful implementation is defining the step-by-step project plan with clearly identified actions, deliverables, time lines. Ensure that a weekly review process is in place that identifies and resolves problems as they occur. At this stage, there is no scope for dilly dallying on decisions or waiting for a post mortem analysis when things go wrong. Ensure that the outsourcing partner provides with a clearly traceable project plan with key milestones, mentions penalties if the milestones are not met. If your plan involves relocating of staff, you need to prepare them for this as well as any staff reductions. Depending on the structure of your company the new outsourcing program can be just accessing the outsourcing company's system and entering data or it could stretch to committing an entire division of your company to the complex task.
Review of progress and results: A good leader always reviews the progress at regular interviews. You must set up an ongoing system that tracks the progress and performance of both your own staff as well as your outsourcing partner. Only then you will be able to assess the impact of the outsourcing decision.
There is a saying - "What gets measured, gets done". You must make this as the mantra for your team if you want good results from the outsourcing effort. Set up specific service level agreements (SLAs) that define the time bound targets. If you adopt the policy of pay for results you can expect big improvements in the quality of the services provided by your outsourcing partners.
1/05/2007
Outsourcing Helps in More Ways than One, finds Study
With the sensitivities surrounding Business Process Outsourcing (BPO) and its delivery offshore displacing employment opportunities from the local economic system, IDC examines and dispels some popular myths associated with this contentious issue in its recent report, 'Does Business Process Outsourcing Reduce IT Jobs in Asia/Pacific (Excluding Japan)?’
"As with any contentious issue, the rise of global delivery has been used and abused by vested interests for several years now. Clearly, whilst there are cases of poor management, it is a reality of business that global delivery also provides significant benefits," says Phil Hassey, Research Director for IDC's Asia Pacific Services Research.
The study answers the question of whether or not BPOs reduce jobs locally? It said because everything gets moved offshore, it is inevitable that not every individual will benefit directly or immediately as economies and industries change. This is also akin to higher-cost countries in APEJ that need to look at new ways of operating more efficiently andcompetitively in a global economy. In the realm of BPO, operating on a global basis is a means to ensure that services like finance, HR, or IT are delivered in the most cost-effective and efficient manner. As a result, a group of individuals may need assistance to find alternative employment opportunities and not feel like a 'sacrificial lamb' for the broader economy. While it is unfortunate that some people do get retrenched, the reality is, more people also get employed and more opportunities exist than before as the economy grows.
According to the study, the BPO industry is often accused of running sweat shops in low-cost countries and exploiting labor in these countries to derive maximum benefits. One may compare the large salary difference between a call centre agent in India versus a call centre agent in Australia. However, the salaries paid to offshore workers in low-cost countries are often many times higher than what a worker in these countries would earn in other traditional sectors. Many gain the opportunity to own more consumer goods, live a middle-class life and break out of the poverty cycle. Therein also lies the risk of exploitation, which needs to be addressed by the appropriate authorities to ensure that the BPO industry does not suffer an image perception, which has befallen other industries such as the apparel industry.
When it comes to outsourcing, will the companies choose to offshore everything if they could? IDC researchers replied saying that offshoring is not necessarily a panacea for all of a company's cost issues and strategies. It boils down to whether the offshoring model aligns with the company's business objectives and meeting their customers' needs. It also depends on whether companies are ready to take on offshoring as part of their operating model. It is important to note that not every business function can be offshored, and often times, strategic areas such as corporate strategies, sales, governance, and policies still need to be retained in-house. Rather, BPO presents companies with the option to outsource non-core business activities so that efforts are focused on their core business. Offshoring, in fact, does not necessarily mean outsourcing and many companies do maintain shared services in another location, yet still have that service retained in-house.
"As with any contentious issue, the rise of global delivery has been used and abused by vested interests for several years now. Clearly, whilst there are cases of poor management, it is a reality of business that global delivery also provides significant benefits," says Phil Hassey, Research Director for IDC's Asia Pacific Services Research.
The study answers the question of whether or not BPOs reduce jobs locally? It said because everything gets moved offshore, it is inevitable that not every individual will benefit directly or immediately as economies and industries change. This is also akin to higher-cost countries in APEJ that need to look at new ways of operating more efficiently andcompetitively in a global economy. In the realm of BPO, operating on a global basis is a means to ensure that services like finance, HR, or IT are delivered in the most cost-effective and efficient manner. As a result, a group of individuals may need assistance to find alternative employment opportunities and not feel like a 'sacrificial lamb' for the broader economy. While it is unfortunate that some people do get retrenched, the reality is, more people also get employed and more opportunities exist than before as the economy grows.
According to the study, the BPO industry is often accused of running sweat shops in low-cost countries and exploiting labor in these countries to derive maximum benefits. One may compare the large salary difference between a call centre agent in India versus a call centre agent in Australia. However, the salaries paid to offshore workers in low-cost countries are often many times higher than what a worker in these countries would earn in other traditional sectors. Many gain the opportunity to own more consumer goods, live a middle-class life and break out of the poverty cycle. Therein also lies the risk of exploitation, which needs to be addressed by the appropriate authorities to ensure that the BPO industry does not suffer an image perception, which has befallen other industries such as the apparel industry.
When it comes to outsourcing, will the companies choose to offshore everything if they could? IDC researchers replied saying that offshoring is not necessarily a panacea for all of a company's cost issues and strategies. It boils down to whether the offshoring model aligns with the company's business objectives and meeting their customers' needs. It also depends on whether companies are ready to take on offshoring as part of their operating model. It is important to note that not every business function can be offshored, and often times, strategic areas such as corporate strategies, sales, governance, and policies still need to be retained in-house. Rather, BPO presents companies with the option to outsource non-core business activities so that efforts are focused on their core business. Offshoring, in fact, does not necessarily mean outsourcing and many companies do maintain shared services in another location, yet still have that service retained in-house.
Why Outsourcing Takes Your Business to a Higher Level
Outsourcing is a term used in business and it is gaining popularity on the net as millions of web site owners discover they do not have all the tools and skills necessary to handle each and every portion of their businesses.
Unlike having to find, interview, and hire an employee - and thus incur the tax liability of a new employee - often savvy business owners turn to outside companies. Outsourcing services take on the tasks underlying a business leaving the owner more free time to pursue the front-end of his or her business.
Wikipedia states:
“Outsourcing” involves transferring or sharing management control and/or decision-making of a business function to an outside supplier, which involves a degree of two-way information exchange, coordination and trust between the outsourcer and its client.”
Outsourcing, therefore, becomes an integrated part of your business. The importance is to determine what should be outsourced, why it should be outsourced, and who will provide your outsourcing services.
Business segments typically outsourced include:
* Information technology
* Human resources
* Facilities
* Real estate management
* Accounting
* Direct Online Marketing and SEO
In addition, many companies also outsource their customer support and rely on call center functions.
Using the Know How of Others
The business owner must be able to step back and make an honest evaluation of his or her talents. We are not all created equal. We all have different strengths. One surefire strength for business success that a business owner must cultivate is the ability to delegate responsibilty through the use of outsourcing. That’s how a well-run, profit-pulling online business accomplishes its goals.
Today’s businesses - large and small - gain immense benefits by finding other companies outside their own arena who possess the technological know how to analyze, plan, and implement target objectives.
In the case of the smaller web site owner looking to gain greater footing with the hot market of search engine results, finding an outsourcing service to handle marketing (and a small portion of advertising) is one such effective strategic move.
Traditional approaches to search engine marketing have, for decades, focused primarily around a web site’s meta tags, firming up web page content, and then submitting the site on a regular basis to the search engines. From a purely advertising basis, other companies will insist that just driving “targeted traffic” to a site is “enough.”
While both of these methods are viable, a good outsourcing company often adds these two methods at low cost or no cost - just bonuses while the real work of marketing is underway.
Choosing the Right Outsourcing Company
As an online business owner it is easy to become frozen in place trying to keep up on all the possible, working, methods for marketing online. Even if one could find the time to read everything and devise a plan, putting that plan into action becomes cumbersome. Doing even the “smallest” of tasks can literally take hours of your week away from you. Hours better spent on web site enhancements and new products, mailing list contacts, and just being there for your web site visitors. Unless the web site owner is willing to give up some control, the grind of working the foundation of marketing too often must supercede the human approach to being there for your customers.
While we all love to do our initial digging online, pick up a phone and call or send email inquiries or submit forms for call back when choosing an outsourcing service. Make sure your questions are addressed intelligently and at a level of understanding that you feel most comfortable with. Avoid listening to prescripted sales pitches where all they want to do is monopolize the phone and beat you down to the point where you really don’t know what they can or cannot do. Take control of the conversation, then turn that conversation into an effective two-way street of open communication. Any company not willing to do that - or vague in their explanations of how - should be moved to the bottom of your list as you locate the best outsourcing company to work with you and your website.
Finding a company that understands and weeds out fad flash-in-the-pan methods, and builds your marketing business on solid, proven methods of web site promotion should be your goal. Find that company and establish a two-way street of information and trust in order to work effectively together.
How to Incorporate Outsourcing Into Your Business
“Prior to the contract development of any outsourcing agreement, the outsourcing company develops a request for proposal (RFP) document which highlights the major requirements and scope of the project which is to be outsourced.”
Through a bid-like process, or the acceptance of agreed upon stated services at given costs, the recipient company has an actual proposal of services in hand. They know what they are getting, what timeframe to expect, and projected results from this outsourced service.
By outsourcing, the owner understands what the benefits to the service(s) are, but the strategizing, planning, and implementating can be safely placed into more knowledgeable and efficient hands to get the job done.
In Summary
Outsourcing is not just for the “big guy.” Overall outsourcing is viewed by many organizations as a strong business tactic that ultimately is a superior economical approach to developing products and services.
Simply put, don’t try to do everything yourself. You may have many fine strong points, but running your online internet business single-handly should not be one of them. Learn when and delegating responsibility can actually make your business grow by leaps and bounds. Then find an outsourcing service you can work with - one with a complete understanding of your web site - one that is willing to go extra miles to make your business a success.
Unlike having to find, interview, and hire an employee - and thus incur the tax liability of a new employee - often savvy business owners turn to outside companies. Outsourcing services take on the tasks underlying a business leaving the owner more free time to pursue the front-end of his or her business.
Wikipedia states:
“Outsourcing” involves transferring or sharing management control and/or decision-making of a business function to an outside supplier, which involves a degree of two-way information exchange, coordination and trust between the outsourcer and its client.”
Outsourcing, therefore, becomes an integrated part of your business. The importance is to determine what should be outsourced, why it should be outsourced, and who will provide your outsourcing services.
Business segments typically outsourced include:
* Information technology
* Human resources
* Facilities
* Real estate management
* Accounting
* Direct Online Marketing and SEO
In addition, many companies also outsource their customer support and rely on call center functions.
Using the Know How of Others
The business owner must be able to step back and make an honest evaluation of his or her talents. We are not all created equal. We all have different strengths. One surefire strength for business success that a business owner must cultivate is the ability to delegate responsibilty through the use of outsourcing. That’s how a well-run, profit-pulling online business accomplishes its goals.
Today’s businesses - large and small - gain immense benefits by finding other companies outside their own arena who possess the technological know how to analyze, plan, and implement target objectives.
In the case of the smaller web site owner looking to gain greater footing with the hot market of search engine results, finding an outsourcing service to handle marketing (and a small portion of advertising) is one such effective strategic move.
Traditional approaches to search engine marketing have, for decades, focused primarily around a web site’s meta tags, firming up web page content, and then submitting the site on a regular basis to the search engines. From a purely advertising basis, other companies will insist that just driving “targeted traffic” to a site is “enough.”
While both of these methods are viable, a good outsourcing company often adds these two methods at low cost or no cost - just bonuses while the real work of marketing is underway.
Choosing the Right Outsourcing Company
As an online business owner it is easy to become frozen in place trying to keep up on all the possible, working, methods for marketing online. Even if one could find the time to read everything and devise a plan, putting that plan into action becomes cumbersome. Doing even the “smallest” of tasks can literally take hours of your week away from you. Hours better spent on web site enhancements and new products, mailing list contacts, and just being there for your web site visitors. Unless the web site owner is willing to give up some control, the grind of working the foundation of marketing too often must supercede the human approach to being there for your customers.
While we all love to do our initial digging online, pick up a phone and call or send email inquiries or submit forms for call back when choosing an outsourcing service. Make sure your questions are addressed intelligently and at a level of understanding that you feel most comfortable with. Avoid listening to prescripted sales pitches where all they want to do is monopolize the phone and beat you down to the point where you really don’t know what they can or cannot do. Take control of the conversation, then turn that conversation into an effective two-way street of open communication. Any company not willing to do that - or vague in their explanations of how - should be moved to the bottom of your list as you locate the best outsourcing company to work with you and your website.
Finding a company that understands and weeds out fad flash-in-the-pan methods, and builds your marketing business on solid, proven methods of web site promotion should be your goal. Find that company and establish a two-way street of information and trust in order to work effectively together.
How to Incorporate Outsourcing Into Your Business
“Prior to the contract development of any outsourcing agreement, the outsourcing company develops a request for proposal (RFP) document which highlights the major requirements and scope of the project which is to be outsourced.”
Through a bid-like process, or the acceptance of agreed upon stated services at given costs, the recipient company has an actual proposal of services in hand. They know what they are getting, what timeframe to expect, and projected results from this outsourced service.
By outsourcing, the owner understands what the benefits to the service(s) are, but the strategizing, planning, and implementating can be safely placed into more knowledgeable and efficient hands to get the job done.
In Summary
Outsourcing is not just for the “big guy.” Overall outsourcing is viewed by many organizations as a strong business tactic that ultimately is a superior economical approach to developing products and services.
Simply put, don’t try to do everything yourself. You may have many fine strong points, but running your online internet business single-handly should not be one of them. Learn when and delegating responsibility can actually make your business grow by leaps and bounds. Then find an outsourcing service you can work with - one with a complete understanding of your web site - one that is willing to go extra miles to make your business a success.
Indian companies help lower the Great Wall of China
In the last six years, India Inc's approach to China has changed for the better. From bitterly contesting the entry of Chinese products like tyres, toys, and consumer electronics in the country on the grounds of being cheap, lacking in quality and threatening domestic industry, several corporates have today set up shop in China, are major exporters to that country and are actively sourcing from there.
That’s not all. Corporate India today admires the way China conducts business and often exhorts the Indian government to emulate its practices. The single biggest factor which Indian companies like about China is the fast clearances accorded in that country for setting up business establishments.
Further, there are hardly any labour problems. The country means business and that's the reason China is ahead of India on almost all parameters. Though its non-democratic set-up is often cited as a handicap, where India scores, privately many Indian enterprises do not mind the political structure so long as business runs smoothly and offers good returns.
Over the years, the Aditya Birla group, Sundaram Fasteners, Essel Packaging, and Reliance Industries, among others, have set up base in China. For Indian steel companies, China is a major export destination, contributing to turning their fortunes for the better in 2003. Apart from having a base in China and exporting to that country, there are companies like Videocon, Onida, Tube Investments, Nitco, Apollo Tyres, JK Tyres, Aegis Safety, TVS Motors, United Phosphorous, Hero Cycles, and Bajaj Electricals, which source from there.
All major IT companies like Infosys, TCS, Satyam and Wipro have launched operations in China. TCS, which was the first IT firm to launch operations on Chinese soil, has about 500 people there at present.
Infosys Technologies (Shanghai) Company Ltd (ITSCo), is a fully-owned subsidiary of Infosys Technologies Ltd., located in Shanghai, China. Infosys has invested an initial capital of $5 million to start up this subsidiary. A 200-people development centre has been taken up in a 20,000-square ft office in the Shanghai Pudong Software Park in China. It will serve as an alternate delivery hub for Infosys in the Asia-Pacific region.
One of the reasons for Indian companies setting up shop in China in the areas of IT, bio-tech, drugs and pharmaceuticals is because China offers huge incentives for investment in these sectors, including tax holidays, reduced land rentals and lower import duties.
The experience of these companies is also quite positive.
For instance, Evalueserve chief operating officer Ashish Gupta, who opened his high-end KPO (business analytics and research) centre in Shanghai, is gung-ho about the fast approvals. "We went there to serve the Chinese, Korean and Japanese language markets. Approvals have been very fast. The experience has been very comfortable in Shanghai," Gupta said.
India's largest BPO Genpact's president and CEO Pramod Bhasin also seconded the widely held view. "Everything is based on single-window clearance and approvals are smoother than in India," said Bhasin.
Based in Dalian (Liaoning province) and Changchun (Jilin province) in China, Genpact Asia has been recognised for its cutting-edge quality and employee training programmes. Genpact's Dalian operation was established in June 2000. Commenting on the growth of China as an outsourcing destination, Bhasin said: "I have told my employees in India that the day China gets cheaper, we are shipping work out."
Currently, Genpact has a headcount of 1,700 at its China centre in Dalian, which it plans to double by 2007. The Dalian centre was established by Genpact's India team. "We faced some difficulty in translating Chinese into Japanese, Chinese into English and Japanese into English and vice-versa to start operations. But it was quite fun," Bhasin had said earlier this year at the Oracle Open World in Mumbai.
According to AL Rao, Wipro Tech COO, "The quality of IT talent is also good. We haven't found any difficulty in talent for both our centres in Beijing and Shanghai. We are servicing global clients from our Chinese centres. After gaining experience we will look at the domestic market along with Korean and Japanese markets. The government response has also been good. But as a centre, costs come are at par with India."
Though Indian pharmaceutical companies have adopted an open arm towards China and are looking up to the country as a major manufacturing destination, they are treading cautiously. The reason being that though entry in China is easy, exit is quite tough. "China is emerging as a good destination to source cost-effective APIs (Active Pharmaceutical Ingredients) and intermediates which will allow companies like Ranbaxy to economise its cost of production," executive director, Ranbaxy, Ramesh Adige said.
There are also some voices stating that the China advantage can be easily replicated in India if the government increases support to the industry. "They do have cost advantage over us. If the Indian government increases support to the pharma industry, it can compete with Chinese companies in the global market," an Indian Drug Manufacturers’ Association (IDMA) office-bearer told FE.
In the automotive segment, the country's largest tractor manufacturer, Mahindra & Mahindra, is also quite upbeat on its foray into the Chinese tractor market. After setting up a joint venture, Mahindra (China) Tractor Co Ltd, to assemble tractors in China for domestic as well as export market the company is now eyeing the Chinese auto component market. M&M is now in talks with a Chinese component manufacturer for acquisition. "We are planning to increase our presence in China to get access to high quality customers and technology. We are looking at the market to enhance our managerial competitiveness also," vice-chairman and managing director Anand Mahindra said. For Mahindra, the developed infrastructure, cheaper land and cheaper finance have been the motivating factors behind the foray into China.
A major factor behind automotive companies going to China is they can source cheaper components from there. Players like Bajaj Auto are also planning to enter the Chinese market to manufacture and sell bikes. Clearly, the Chinese wall between Indian and Chinese businessmen, which was quite formidable until 2000, is much lower now.
That’s not all. Corporate India today admires the way China conducts business and often exhorts the Indian government to emulate its practices. The single biggest factor which Indian companies like about China is the fast clearances accorded in that country for setting up business establishments.
Further, there are hardly any labour problems. The country means business and that's the reason China is ahead of India on almost all parameters. Though its non-democratic set-up is often cited as a handicap, where India scores, privately many Indian enterprises do not mind the political structure so long as business runs smoothly and offers good returns.
Over the years, the Aditya Birla group, Sundaram Fasteners, Essel Packaging, and Reliance Industries, among others, have set up base in China. For Indian steel companies, China is a major export destination, contributing to turning their fortunes for the better in 2003. Apart from having a base in China and exporting to that country, there are companies like Videocon, Onida, Tube Investments, Nitco, Apollo Tyres, JK Tyres, Aegis Safety, TVS Motors, United Phosphorous, Hero Cycles, and Bajaj Electricals, which source from there.
All major IT companies like Infosys, TCS, Satyam and Wipro have launched operations in China. TCS, which was the first IT firm to launch operations on Chinese soil, has about 500 people there at present.
Infosys Technologies (Shanghai) Company Ltd (ITSCo), is a fully-owned subsidiary of Infosys Technologies Ltd., located in Shanghai, China. Infosys has invested an initial capital of $5 million to start up this subsidiary. A 200-people development centre has been taken up in a 20,000-square ft office in the Shanghai Pudong Software Park in China. It will serve as an alternate delivery hub for Infosys in the Asia-Pacific region.
One of the reasons for Indian companies setting up shop in China in the areas of IT, bio-tech, drugs and pharmaceuticals is because China offers huge incentives for investment in these sectors, including tax holidays, reduced land rentals and lower import duties.
The experience of these companies is also quite positive.
For instance, Evalueserve chief operating officer Ashish Gupta, who opened his high-end KPO (business analytics and research) centre in Shanghai, is gung-ho about the fast approvals. "We went there to serve the Chinese, Korean and Japanese language markets. Approvals have been very fast. The experience has been very comfortable in Shanghai," Gupta said.
India's largest BPO Genpact's president and CEO Pramod Bhasin also seconded the widely held view. "Everything is based on single-window clearance and approvals are smoother than in India," said Bhasin.
Based in Dalian (Liaoning province) and Changchun (Jilin province) in China, Genpact Asia has been recognised for its cutting-edge quality and employee training programmes. Genpact's Dalian operation was established in June 2000. Commenting on the growth of China as an outsourcing destination, Bhasin said: "I have told my employees in India that the day China gets cheaper, we are shipping work out."
Currently, Genpact has a headcount of 1,700 at its China centre in Dalian, which it plans to double by 2007. The Dalian centre was established by Genpact's India team. "We faced some difficulty in translating Chinese into Japanese, Chinese into English and Japanese into English and vice-versa to start operations. But it was quite fun," Bhasin had said earlier this year at the Oracle Open World in Mumbai.
According to AL Rao, Wipro Tech COO, "The quality of IT talent is also good. We haven't found any difficulty in talent for both our centres in Beijing and Shanghai. We are servicing global clients from our Chinese centres. After gaining experience we will look at the domestic market along with Korean and Japanese markets. The government response has also been good. But as a centre, costs come are at par with India."
Though Indian pharmaceutical companies have adopted an open arm towards China and are looking up to the country as a major manufacturing destination, they are treading cautiously. The reason being that though entry in China is easy, exit is quite tough. "China is emerging as a good destination to source cost-effective APIs (Active Pharmaceutical Ingredients) and intermediates which will allow companies like Ranbaxy to economise its cost of production," executive director, Ranbaxy, Ramesh Adige said.
There are also some voices stating that the China advantage can be easily replicated in India if the government increases support to the industry. "They do have cost advantage over us. If the Indian government increases support to the pharma industry, it can compete with Chinese companies in the global market," an Indian Drug Manufacturers’ Association (IDMA) office-bearer told FE.
In the automotive segment, the country's largest tractor manufacturer, Mahindra & Mahindra, is also quite upbeat on its foray into the Chinese tractor market. After setting up a joint venture, Mahindra (China) Tractor Co Ltd, to assemble tractors in China for domestic as well as export market the company is now eyeing the Chinese auto component market. M&M is now in talks with a Chinese component manufacturer for acquisition. "We are planning to increase our presence in China to get access to high quality customers and technology. We are looking at the market to enhance our managerial competitiveness also," vice-chairman and managing director Anand Mahindra said. For Mahindra, the developed infrastructure, cheaper land and cheaper finance have been the motivating factors behind the foray into China.
A major factor behind automotive companies going to China is they can source cheaper components from there. Players like Bajaj Auto are also planning to enter the Chinese market to manufacture and sell bikes. Clearly, the Chinese wall between Indian and Chinese businessmen, which was quite formidable until 2000, is much lower now.
Offshore Software Development rules the World
lobal Information Technology trend clearly indicates that Offshore Software Development rules the world. By this way of business process one gets maximum outcomes with the lowest inputs and this is the main reason that process of Offshore Outsourcing is getting highly accepted globally. In current competitive world, maximum outcome with the lowest investment has been the bottom line for any of the businesses. Offshore Software Development is the service that offers the combination of higher output with the minimum efforts. Sending work to overseas service providers also offers great flexibilities at every stage of the development life cycle along with lower cost advantage.
It is really very difficult to work single handedly if the load of the work is high. It also proves very costly. Again management of the project at every stage also becomes difficult. At this point of time cost effective services comes into the picture and again if one is looking for lower cost and good quality solution, sending development work to the overseas destination is the ultimate solution. Such overseas service provider companies extend there services and offers in different business ventures. It is also noticed that any assistance or services taken from the outsourcing services providers also prove beneficial in every way. It helps an organization to save its time & efforts, maintain good quality of work and in lesser cost.
Offshore Software Development Services
There is lot many countries that offer the best quality and lower cost Offshore Software Development Services. In this list of the providers of Offshore Outsourcing services in Information Technology services India rules the globe by providing highly cost effective and best quality services. India is also becoming more demanded for call-center/BPO services. China is another destination that is famous for Offshore Software Development services, but the main problem is the language barrier in China. Almost 70% to 80% of the investment in the overseas development takes place in these two countries in Information Technology Industry.
In such types of business dealings the service providers or countries might be far away from the clients. The shift towards Offshore Outsourcing in software services industry is really altering the geography of the globe, similarly to what happened in manufacturing industry almost decades ago. Manufacturing Industry also faced the same boom that is taking place as a part of Offshore Software Development services. By this way of dealing business with the companies that are located at any corner of the world is really bringing the globe very closer to each other. We can say that Offshore Software Development has brought the global IT Industry very close to each other.
Globally the trend of the overseas development is increasing rapidly. Even service providers also come up with the different offers and ideas to make the deals of Offshore Software Development better.
It is really very difficult to work single handedly if the load of the work is high. It also proves very costly. Again management of the project at every stage also becomes difficult. At this point of time cost effective services comes into the picture and again if one is looking for lower cost and good quality solution, sending development work to the overseas destination is the ultimate solution. Such overseas service provider companies extend there services and offers in different business ventures. It is also noticed that any assistance or services taken from the outsourcing services providers also prove beneficial in every way. It helps an organization to save its time & efforts, maintain good quality of work and in lesser cost.
Offshore Software Development Services
There is lot many countries that offer the best quality and lower cost Offshore Software Development Services. In this list of the providers of Offshore Outsourcing services in Information Technology services India rules the globe by providing highly cost effective and best quality services. India is also becoming more demanded for call-center/BPO services. China is another destination that is famous for Offshore Software Development services, but the main problem is the language barrier in China. Almost 70% to 80% of the investment in the overseas development takes place in these two countries in Information Technology Industry.
In such types of business dealings the service providers or countries might be far away from the clients. The shift towards Offshore Outsourcing in software services industry is really altering the geography of the globe, similarly to what happened in manufacturing industry almost decades ago. Manufacturing Industry also faced the same boom that is taking place as a part of Offshore Software Development services. By this way of dealing business with the companies that are located at any corner of the world is really bringing the globe very closer to each other. We can say that Offshore Software Development has brought the global IT Industry very close to each other.
Globally the trend of the overseas development is increasing rapidly. Even service providers also come up with the different offers and ideas to make the deals of Offshore Software Development better.
Factors Influencing the Outsourcing Decision
Offshore Outsourcing is viewed as a key tool to reduce costs. The basic advantages are the reduction in project timelines and savings on account of lower labor costs. There are some new challenges associated with the outsourcing that face a company when embarking on this process. Additional costs on vendor selection, legal costs, transition costs are sure to be incurred. Therefore, in spite of the obvious savings that can be realized, not many outsourcing vendors have been able to establish their ability to provide positive ROI to their clients, especially so in complex projects.
Any business has to conduct a thorough analysis of its vision, strategy and goals before deciding to outsource any part of their activities. Some key driving factors in this decision to outsource are:
Absence of specialists or experts: In case of many companies this is the sole driver that forces them to outsource. Complex process oriented projects demand expertise that may not be present in a company. At the same time, the requirement may not be full-time. Hence a via media solution is to get the job outsourced. The Outsourcing Institute has rightly said: “Outsourcing is a clever alternative to hiring”.
Irregular demand for personnel: Large projects comprise of many smaller parts that need specialist intervention. But this need is intermittent and the company does not see value in hiring a full time (read costly) specialist. For example, a project that will get completed in a year or two hardly requires a full time person on the rolls of the company. It is wiser to outsource that part of the project to an offshore vendor and accrue gains to the company by saving the permanent cost on an employee.
High risk factor: Usually companies involved in high risk industries prefer to insure their risk by handing over the job to an offshore vendor who has advanced expertise in the subject. However, it is unreasonable to shift all the responsibility to the outsourcing partner because that takes away the “ownership” of the project from the company senior staff. Hiring experienced specialists who have the necessary hands on experience is a viable alternative in the long term.
Emphasis on perfect processes: The key strength of the vendors who take up the outsourcing projects is their ability to standardize their internal processes. The evolution of chaotic and ad hoc processes to mature, reliable software is a classic example of this perfection of management process. In many a case, this has a positive rub off on the client organization as they can absorb some of the standardized best practices from their outsourcing vendors.
Savings in management time: Time is literally money when it you consider the management’s involvement in routine, secondary work in an organization. The management can concentrate on their key focus areas that demand intelligent, path breaking ideas and give their attention to top priority processes by outsourcing the mundane, repetitive activity to outside vendors.
Achieving and maintaining objectivity: Over time, the workers of a company become inert and impervious to new ideas and thoughts. They may cling to their age old beliefs saying “this is the way things are done here”. And hence are not able to think up new solutions to get optimum results. It is a well known fact that old knowledge stops acquisition of new knowledge. Therefore, new ideas can be infused into the company by seeking the help of outside, impassionate experts who can suggest the right solutions keeping only the business needs in mind. This avoids playing the corporate politics by the incumbents within the company and is the true advantage of outsourcing.
It is important for the company to list out all reasons for the decision to outsource and also rank them in order of priority. All concerned subject matter experts within the company should be consulted, their requirements noted and a coordinated plan for outsourcing should be developed based on these discussions. If this is not done, wrong vendor might get selected or worse wrong processes may be outsourced resulting in loss of valuable time and money for the company.
While there could be any number of reasons for outsourcing, the main ones can be listed as:
1.) Achieving economies of production 2.) Developing the technological advances and manufacturing processes. 3.) Improving the customer service delivery processes 4.) Focusing on and improving core competency areas 5.) Outsourcing due to lack of trained, qualified manpower.
Editor’s Note: The next paragraph should not be taken too lightly.
One must realize that outsourcing is not the panacea to all the problems ailing a company. A company cannot wish away its problems by outsourcing them. Any internal problem has to be studied with utmost care and concern. The aim of the management should be to identify the root cause of the problems and not treat the symptoms through outsourcing. If the causes are more deeply rooted with more historic background it will be unwise to expect an outsourcing vendor to solve them. Therefore, root cause analysis has to be done thoroughly and then option of outsourcing considered keeping in mind the long term strategic objectives of the company.
Any business has to conduct a thorough analysis of its vision, strategy and goals before deciding to outsource any part of their activities. Some key driving factors in this decision to outsource are:
Absence of specialists or experts: In case of many companies this is the sole driver that forces them to outsource. Complex process oriented projects demand expertise that may not be present in a company. At the same time, the requirement may not be full-time. Hence a via media solution is to get the job outsourced. The Outsourcing Institute has rightly said: “Outsourcing is a clever alternative to hiring”.
Irregular demand for personnel: Large projects comprise of many smaller parts that need specialist intervention. But this need is intermittent and the company does not see value in hiring a full time (read costly) specialist. For example, a project that will get completed in a year or two hardly requires a full time person on the rolls of the company. It is wiser to outsource that part of the project to an offshore vendor and accrue gains to the company by saving the permanent cost on an employee.
High risk factor: Usually companies involved in high risk industries prefer to insure their risk by handing over the job to an offshore vendor who has advanced expertise in the subject. However, it is unreasonable to shift all the responsibility to the outsourcing partner because that takes away the “ownership” of the project from the company senior staff. Hiring experienced specialists who have the necessary hands on experience is a viable alternative in the long term.
Emphasis on perfect processes: The key strength of the vendors who take up the outsourcing projects is their ability to standardize their internal processes. The evolution of chaotic and ad hoc processes to mature, reliable software is a classic example of this perfection of management process. In many a case, this has a positive rub off on the client organization as they can absorb some of the standardized best practices from their outsourcing vendors.
Savings in management time: Time is literally money when it you consider the management’s involvement in routine, secondary work in an organization. The management can concentrate on their key focus areas that demand intelligent, path breaking ideas and give their attention to top priority processes by outsourcing the mundane, repetitive activity to outside vendors.
Achieving and maintaining objectivity: Over time, the workers of a company become inert and impervious to new ideas and thoughts. They may cling to their age old beliefs saying “this is the way things are done here”. And hence are not able to think up new solutions to get optimum results. It is a well known fact that old knowledge stops acquisition of new knowledge. Therefore, new ideas can be infused into the company by seeking the help of outside, impassionate experts who can suggest the right solutions keeping only the business needs in mind. This avoids playing the corporate politics by the incumbents within the company and is the true advantage of outsourcing.
It is important for the company to list out all reasons for the decision to outsource and also rank them in order of priority. All concerned subject matter experts within the company should be consulted, their requirements noted and a coordinated plan for outsourcing should be developed based on these discussions. If this is not done, wrong vendor might get selected or worse wrong processes may be outsourced resulting in loss of valuable time and money for the company.
While there could be any number of reasons for outsourcing, the main ones can be listed as:
1.) Achieving economies of production 2.) Developing the technological advances and manufacturing processes. 3.) Improving the customer service delivery processes 4.) Focusing on and improving core competency areas 5.) Outsourcing due to lack of trained, qualified manpower.
Editor’s Note: The next paragraph should not be taken too lightly.
One must realize that outsourcing is not the panacea to all the problems ailing a company. A company cannot wish away its problems by outsourcing them. Any internal problem has to be studied with utmost care and concern. The aim of the management should be to identify the root cause of the problems and not treat the symptoms through outsourcing. If the causes are more deeply rooted with more historic background it will be unwise to expect an outsourcing vendor to solve them. Therefore, root cause analysis has to be done thoroughly and then option of outsourcing considered keeping in mind the long term strategic objectives of the company.
Secrets of outsourcing success
Outsourcing failures can be harmful to a firm in terms of cost, as well as reputation and therefore custom.
How can you avoid failure? Thorough due diligence can help to ensure success for both supplier and end user by making sure they are fully prepared and capable of handling the programme.
Due diligence is a two-way process. When undertaking the process, it is absolutely crucial that the focus is not purely on the supplier to do all the work.
Both parties have to be happy throughout the research, planning and implementation stages of the outsourcing contract; therefore, both parties need to contribute from as early a stage in the process as possible, as due diligence forms one of the first stages in building the relationship between users and supplier.
Due diligence normally leads to best and final offers, or Bafo, a stage which, if carried out correctly, allows all parties – as there may be two or more suppliers still competing – to understand what is actually being delivered, and therefore to set a price more realistically than, perhaps, sales-led pricing.
Part of the two-way due diligence process is to ensure that there are no hidden surprises after the contract has been signed. Operating joint teams will ensure that each party knows exactly where they stand and provide the basis for a healthy relationship.
By providing the supplier with all the resources they need, including user staff, the user is allowing proper prior knowledge and contributing to the later healthiness of the relationship.
The period of due diligence is not short. It may take four to 12 weeks – even longer on large outsourcing deals – and it is important that neither party is scared to ask for a longer period, more resources, or further clarification if needed.
Users should also look for the due diligence period to test the cultural fit of the supplier. Look for areas of conflict and see how the supplier deals with them. If you do not like the way they work, then you might want to think again.
When committing to any agreement it is essential that all the necessary considerations have been made, but when outsourcing deals often run into millions or even tens of millions of pounds, it is a decision that cannot be taken lightly.
Sometimes companies that are well aware of the escalating costs will try to rein in expenses. After all, most outsourcing deals are conceived on cost savings. But it is paramount that companies ensure that they do not cut corners in the wrong places and end up paying for it tenfold later.
Proper due diligence before an outsourcing deal is essential. Do not fall into the trap of doing it later.
Defining requirements
Many organisations, suppliers and end users have discovered, once a contract is under way, that the initial requirements have changed. It is imperative that a thorough needs analysis is conducted before the programme begins, so that the project can be scoped accordingly.
It is also important that the contract is structured in a flexible way, so that it can accommodate potential change. The due diligence process should be constructed to demonstrate your potential supplier’s flexibility towards change in the confines of the proposed contract.
Supplier selection
From cultural compatibility to work ethics, it is important that the customer selects a supplier they can work alongside easily. Outsourcing is not simply handing your process over to a supplier; close collaboration and sound communication is key to the success of the relationship.
The due diligence process should allow the user to confirm that the culture, work ethic and practice of the potential supplier matches their own.
No rose-coloured spectacles
It is important that end users approach outsourcing from a realistic perspective: predicting how the relationship and programme will pan out and wha t problems could arise is difficult.
This is why the due diligence stage is so crucially important: it both tests your relationship with potential suppliers, and helps to establish the foundations for the service thereafter.
As mentioned previously, there is often pressure on users to cut down due diligence, usually because other stages have not been estimated well and the programme is running behind schedule.
But although it is often described as just something to do, due diligence carried out correctly can be at the heart of a successful outsourcing agreement, as well as the acid test of one potential supplier against another.
Martyn Hart is chairman of the National Outsourcing Association
Starbucks signs global outsourcing deal
www.computing.co.uk/2167640
Top dos and don’ts of due diligence
Do be realistic
Unrealistic expectations of the supplier carrying out due diligence will cause disappointment and frustration further down the line.
Do allow for changes
Over time outsourcing changes, and the due diligence needs to test this change process.
Do consider everyone
Outsourcing deals often have far-reaching consequences and every stakeholder needs to be covered.
Do make sure that the supplier is right for you
A similar work ethic and corporate culture will create the most harmonious outsourcing deal.
Do be thorough
If corners are cut, this often leads to problems later. Meticulous due diligence will lead to unity between the two parties as they will be singing from the same song sheet.
Don’t rush
Due diligence is a process that cannot be rushed. There may be a temptation for firms to do it as quickly as possible to get on with the real part of the outsourcing contract, but in reality the due diligence lays the foundations and cannot be ignored.
Don’t stop talking
Communication is key at the due diligence stage. When supplier and end user talk through everything right from the start there is a much greater chance of the deal being successful.
Don’t hold back information
If you keep back any kind of information, there is always a danger that it will come up at a later stage and cause a rift in the outsourcing relationship.
Don’t stop reviewing
Due diligence often establishes the benchmarks at the start of the contract, but these benchmarks will need to be reviewed constantly throughout the lifetime of the agreement.
Don’t worry
There will always be advice available on outsourcing contracts. If you feel that something is not right at the due diligence stage, it is important that you seek this advice.
How can you avoid failure? Thorough due diligence can help to ensure success for both supplier and end user by making sure they are fully prepared and capable of handling the programme.
Due diligence is a two-way process. When undertaking the process, it is absolutely crucial that the focus is not purely on the supplier to do all the work.
Both parties have to be happy throughout the research, planning and implementation stages of the outsourcing contract; therefore, both parties need to contribute from as early a stage in the process as possible, as due diligence forms one of the first stages in building the relationship between users and supplier.
Due diligence normally leads to best and final offers, or Bafo, a stage which, if carried out correctly, allows all parties – as there may be two or more suppliers still competing – to understand what is actually being delivered, and therefore to set a price more realistically than, perhaps, sales-led pricing.
Part of the two-way due diligence process is to ensure that there are no hidden surprises after the contract has been signed. Operating joint teams will ensure that each party knows exactly where they stand and provide the basis for a healthy relationship.
By providing the supplier with all the resources they need, including user staff, the user is allowing proper prior knowledge and contributing to the later healthiness of the relationship.
The period of due diligence is not short. It may take four to 12 weeks – even longer on large outsourcing deals – and it is important that neither party is scared to ask for a longer period, more resources, or further clarification if needed.
Users should also look for the due diligence period to test the cultural fit of the supplier. Look for areas of conflict and see how the supplier deals with them. If you do not like the way they work, then you might want to think again.
When committing to any agreement it is essential that all the necessary considerations have been made, but when outsourcing deals often run into millions or even tens of millions of pounds, it is a decision that cannot be taken lightly.
Sometimes companies that are well aware of the escalating costs will try to rein in expenses. After all, most outsourcing deals are conceived on cost savings. But it is paramount that companies ensure that they do not cut corners in the wrong places and end up paying for it tenfold later.
Proper due diligence before an outsourcing deal is essential. Do not fall into the trap of doing it later.
Defining requirements
Many organisations, suppliers and end users have discovered, once a contract is under way, that the initial requirements have changed. It is imperative that a thorough needs analysis is conducted before the programme begins, so that the project can be scoped accordingly.
It is also important that the contract is structured in a flexible way, so that it can accommodate potential change. The due diligence process should be constructed to demonstrate your potential supplier’s flexibility towards change in the confines of the proposed contract.
Supplier selection
From cultural compatibility to work ethics, it is important that the customer selects a supplier they can work alongside easily. Outsourcing is not simply handing your process over to a supplier; close collaboration and sound communication is key to the success of the relationship.
The due diligence process should allow the user to confirm that the culture, work ethic and practice of the potential supplier matches their own.
No rose-coloured spectacles
It is important that end users approach outsourcing from a realistic perspective: predicting how the relationship and programme will pan out and wha t problems could arise is difficult.
This is why the due diligence stage is so crucially important: it both tests your relationship with potential suppliers, and helps to establish the foundations for the service thereafter.
As mentioned previously, there is often pressure on users to cut down due diligence, usually because other stages have not been estimated well and the programme is running behind schedule.
But although it is often described as just something to do, due diligence carried out correctly can be at the heart of a successful outsourcing agreement, as well as the acid test of one potential supplier against another.
Martyn Hart is chairman of the National Outsourcing Association
Starbucks signs global outsourcing deal
www.computing.co.uk/2167640
Top dos and don’ts of due diligence
Do be realistic
Unrealistic expectations of the supplier carrying out due diligence will cause disappointment and frustration further down the line.
Do allow for changes
Over time outsourcing changes, and the due diligence needs to test this change process.
Do consider everyone
Outsourcing deals often have far-reaching consequences and every stakeholder needs to be covered.
Do make sure that the supplier is right for you
A similar work ethic and corporate culture will create the most harmonious outsourcing deal.
Do be thorough
If corners are cut, this often leads to problems later. Meticulous due diligence will lead to unity between the two parties as they will be singing from the same song sheet.
Don’t rush
Due diligence is a process that cannot be rushed. There may be a temptation for firms to do it as quickly as possible to get on with the real part of the outsourcing contract, but in reality the due diligence lays the foundations and cannot be ignored.
Don’t stop talking
Communication is key at the due diligence stage. When supplier and end user talk through everything right from the start there is a much greater chance of the deal being successful.
Don’t hold back information
If you keep back any kind of information, there is always a danger that it will come up at a later stage and cause a rift in the outsourcing relationship.
Don’t stop reviewing
Due diligence often establishes the benchmarks at the start of the contract, but these benchmarks will need to be reviewed constantly throughout the lifetime of the agreement.
Don’t worry
There will always be advice available on outsourcing contracts. If you feel that something is not right at the due diligence stage, it is important that you seek this advice.
Complete Software Outsourcing Project on Schedule
In areas of China and the Asia Pacific, most of software outsourcing projects are accounted at a fixed rate, and this contract mode brings a mistaken concept to firms that it will cause inconvenience but have no effect on project investment because of this project delay. In fact, any delay of project not only causes inconvenience but also affect operation and benefit of firms. If a new business can’t be put out into marker by reasons of not ready for its software or information related, and others occupy the opportunity, how it will affect the firm. Or a project is developed for simplify internal workflow and improve work efficiency, then delays of the project will prolong the operational choke point and increase operational costs. All these affect a lot on benefits of company directly or indirectly, not merely on the matter if investment will increase or reduce。
However, in Europe and America, outsourcing projects are mainly accounted by actual numbers of work days, so it will impel to overspend if project is delayed.In this case, to avoid project delay is an important target to judge management capability of project manager. Project managers have to monitor schedules and risks of outsourcing project effectively to avoid delay of project and extra development charges. We can learn this management idea to manage outsourcing projects in China to guarantee that project can be achieved before deadline;
1. Establish Our Own Project Plan As a project manager, you can not adopt project plan of outsourcing provider completely and chuckle to yourself to pass over project planning. Even if it is an outsourcing project, you have to make a full project plan by yourself, then you will know exactly about the whole workloads, evaluate the price to negotiate with outsourcing provider, ensure technicians who will be involved, judge if outsourcing provider can provide sufficient resources and if the promised time is feasible. Having made the project plan, firms should require outsourcing provider to provide a full development plan before starting the project. In order to avoid numerous paperwork, some outsourcing provider usually claim that the plan provided before signing contract is the whole project plan. This tell us that they have no system of integrity on development management and project management，and their project manager is not suitable for his job. Any employable project manager should realize that the preliminary plan for delivering the project made in period of contract negotiation can’t be all-around, and it needs modification to be a feasible plan according to actual contents of the contract, add actual workloads, assignment of resources, and time required. After getting the project plan from outsourcing provider, we need compare and check it with our own plan carefully to understand if it tallies with requirements of the project, that is workflow of the whole project, contents, estimated workloads and arrangement of resources. It is necessary to clarify timely and make it acceptable to each other if there are obvious difference. The project will be started formally after the project plan of outsourcing provider has been confirmed, and now it’s time to monitor the project.
2.Concerned On Evaluating the Schedule Outsourcing contract should ask outsourcing provider to provide schedule reports regularly. I have seen many project schedule reports, and they are different a lot in contents, however, most of them explain definitely which parts have been completed, which parts are going on, which parts will be taken up in next report period, and whether the work has been completed on time or not, even more, some use different colors such as red, yellow and green to show status of progress.Basically speaking, all these information can only allow directors to see the project roughly，but can’t make the project manager hold the schedule of the project in hand. In my opinion, the best way is that we should know how many tasks have not been finished, how long they will be complete, which parts have not start and will they start as scheduled, and is there any change on planned resources. If answers are different from original plan, we are supposed to question ourselves immediately, find out main reasons why the task haven’t been finished or why not start according to the schedule. Consequently we can discuss it with outsourcing provider, how to bring the project into normal schedule. Such finished tasks have become history to us and they have little effect on the schedule of the project. The parts haven’t been completed or haven’t start are the key of project, and they are in need of monitoring in particular We need confirm the schedule reports offered by outsourcing provider to make sure if tasks have been actually finished as planned. The best way is when each program module is finished, we need let outsourcing provider to list original codes and testing results of the program. And let technicians and user representatives check the results to confirm that work provided by outsourcing provider has been finished in fact. This procedure of confirmation doesn’t mean we do not trust outsourcing provider. We simply want to confirm if the schedules of the project have been finished as planned, and ensures the person in charge is able to report to boss about the accurate status of the schedule.
3.Closely Associated When Checking and Accepting The biggest risk of the software outsourcing project is not in development progress, but appears after the project has been finished.Many of them often turn up problems in program logic or editing range of data entry during checking and accepting period, which result in differences between testing result and real requirement, outsourcing provider cannot but modify a lot to result in project delay. Sometimes, outsourcing provider complains that it ’s not their fault. Avoiding these risks, you’d better check and accept the project at the same time of developing, but not to do it until tasks have been closed. It is not a proper idea that some firms put it as a last work to check and accept. Checking and accepting of project should be on it’s way, begins and ends at the same time of project development, and then can make sure the final procedure of checking and accepting successful. Another mistake in software development is to ask developer to create testing data for module testing and system testing. Technician have limited knowledge of business operation, and only users know ranges of these datas and what information of the data is accurate. Therefore, an experienced project manager usually asks user representatives to assist its module and system testing in project process, and establish testing data for technician testing. Testing data of every module are offered by users. To prevent us from disputing, outsourcing project is suggested to test with this method. When outsourcing provider delivers original codes list and testing report of each module, users and technicians of firm check it together, and guarantee the results consistency between testing and users’ data, and at last check and accept the system successfully, and cause no fatal delay.
4.Distributing Time in Reason It is more complicated to manage an outsourcing project than develop it internal, and more milestones are necessary to be established to monitor the schedule of the project. More communication and negotiation are needed; firm members should cooperate with the schedule of outsourcing provider constantly and supply with data needed for testing, all these will be handled in extra time. Generally speaking, it supposes that an internal project will be completed in 500 workdays, 50~75 workdays are for project management, about 10%~15% of the entire workloads. And the same 500 workdays of outsourcing project needs another 75~110 extra days to manage this project. In other words, it takes 15%~22% of workloads for firms to manage outsourcing provider. Certainly, these data are only for reference for software development outsourcing projects, every project and outsourcing provider have difference management requirements. However, it is an unchangeable rule of project management, we can not think that outsourcing allows us have no management requirement.
However, in Europe and America, outsourcing projects are mainly accounted by actual numbers of work days, so it will impel to overspend if project is delayed.In this case, to avoid project delay is an important target to judge management capability of project manager. Project managers have to monitor schedules and risks of outsourcing project effectively to avoid delay of project and extra development charges. We can learn this management idea to manage outsourcing projects in China to guarantee that project can be achieved before deadline;
1. Establish Our Own Project Plan As a project manager, you can not adopt project plan of outsourcing provider completely and chuckle to yourself to pass over project planning. Even if it is an outsourcing project, you have to make a full project plan by yourself, then you will know exactly about the whole workloads, evaluate the price to negotiate with outsourcing provider, ensure technicians who will be involved, judge if outsourcing provider can provide sufficient resources and if the promised time is feasible. Having made the project plan, firms should require outsourcing provider to provide a full development plan before starting the project. In order to avoid numerous paperwork, some outsourcing provider usually claim that the plan provided before signing contract is the whole project plan. This tell us that they have no system of integrity on development management and project management，and their project manager is not suitable for his job. Any employable project manager should realize that the preliminary plan for delivering the project made in period of contract negotiation can’t be all-around, and it needs modification to be a feasible plan according to actual contents of the contract, add actual workloads, assignment of resources, and time required. After getting the project plan from outsourcing provider, we need compare and check it with our own plan carefully to understand if it tallies with requirements of the project, that is workflow of the whole project, contents, estimated workloads and arrangement of resources. It is necessary to clarify timely and make it acceptable to each other if there are obvious difference. The project will be started formally after the project plan of outsourcing provider has been confirmed, and now it’s time to monitor the project.
2.Concerned On Evaluating the Schedule Outsourcing contract should ask outsourcing provider to provide schedule reports regularly. I have seen many project schedule reports, and they are different a lot in contents, however, most of them explain definitely which parts have been completed, which parts are going on, which parts will be taken up in next report period, and whether the work has been completed on time or not, even more, some use different colors such as red, yellow and green to show status of progress.Basically speaking, all these information can only allow directors to see the project roughly，but can’t make the project manager hold the schedule of the project in hand. In my opinion, the best way is that we should know how many tasks have not been finished, how long they will be complete, which parts have not start and will they start as scheduled, and is there any change on planned resources. If answers are different from original plan, we are supposed to question ourselves immediately, find out main reasons why the task haven’t been finished or why not start according to the schedule. Consequently we can discuss it with outsourcing provider, how to bring the project into normal schedule. Such finished tasks have become history to us and they have little effect on the schedule of the project. The parts haven’t been completed or haven’t start are the key of project, and they are in need of monitoring in particular We need confirm the schedule reports offered by outsourcing provider to make sure if tasks have been actually finished as planned. The best way is when each program module is finished, we need let outsourcing provider to list original codes and testing results of the program. And let technicians and user representatives check the results to confirm that work provided by outsourcing provider has been finished in fact. This procedure of confirmation doesn’t mean we do not trust outsourcing provider. We simply want to confirm if the schedules of the project have been finished as planned, and ensures the person in charge is able to report to boss about the accurate status of the schedule.
3.Closely Associated When Checking and Accepting The biggest risk of the software outsourcing project is not in development progress, but appears after the project has been finished.Many of them often turn up problems in program logic or editing range of data entry during checking and accepting period, which result in differences between testing result and real requirement, outsourcing provider cannot but modify a lot to result in project delay. Sometimes, outsourcing provider complains that it ’s not their fault. Avoiding these risks, you’d better check and accept the project at the same time of developing, but not to do it until tasks have been closed. It is not a proper idea that some firms put it as a last work to check and accept. Checking and accepting of project should be on it’s way, begins and ends at the same time of project development, and then can make sure the final procedure of checking and accepting successful. Another mistake in software development is to ask developer to create testing data for module testing and system testing. Technician have limited knowledge of business operation, and only users know ranges of these datas and what information of the data is accurate. Therefore, an experienced project manager usually asks user representatives to assist its module and system testing in project process, and establish testing data for technician testing. Testing data of every module are offered by users. To prevent us from disputing, outsourcing project is suggested to test with this method. When outsourcing provider delivers original codes list and testing report of each module, users and technicians of firm check it together, and guarantee the results consistency between testing and users’ data, and at last check and accept the system successfully, and cause no fatal delay.
4.Distributing Time in Reason It is more complicated to manage an outsourcing project than develop it internal, and more milestones are necessary to be established to monitor the schedule of the project. More communication and negotiation are needed; firm members should cooperate with the schedule of outsourcing provider constantly and supply with data needed for testing, all these will be handled in extra time. Generally speaking, it supposes that an internal project will be completed in 500 workdays, 50~75 workdays are for project management, about 10%~15% of the entire workloads. And the same 500 workdays of outsourcing project needs another 75~110 extra days to manage this project. In other words, it takes 15%~22% of workloads for firms to manage outsourcing provider. Certainly, these data are only for reference for software development outsourcing projects, every project and outsourcing provider have difference management requirements. However, it is an unchangeable rule of project management, we can not think that outsourcing allows us have no management requirement.
Complete Software Outsourcing Project on Schedule
In areas of China and the Asia Pacific, most of software outsourcing projects are accounted at a fixed rate, and this contract mode brings a mistaken concept to firms that it will cause inconvenience but have no effect on project investment because of this project delay. In fact, any delay of project not only causes inconvenience but also affect operation and benefit of firms. If a new business can’t be put out into marker by reasons of not ready for its software or information related, and others occupy the opportunity, how it will affect the firm. Or a project is developed for simplify internal workflow and improve work efficiency, then delays of the project will prolong the operational choke point and increase operational costs. All these affect a lot on benefits of company directly or indirectly, not merely on the matter if investment will increase or reduce。
However, in Europe and America, outsourcing projects are mainly accounted by actual numbers of work days, so it will impel to overspend if project is delayed.In this case, to avoid project delay is an important target to judge management capability of project manager. Project managers have to monitor schedules and risks of outsourcing project effectively to avoid delay of project and extra development charges. We can learn this management idea to manage outsourcing projects in China to guarantee that project can be achieved before deadline;
1. Establish Our Own Project Plan As a project manager, you can not adopt project plan of outsourcing provider completely and chuckle to yourself to pass over project planning. Even if it is an outsourcing project, you have to make a full project plan by yourself, then you will know exactly about the whole workloads, evaluate the price to negotiate with outsourcing provider, ensure technicians who will be involved, judge if outsourcing provider can provide sufficient resources and if the promised time is feasible. Having made the project plan, firms should require outsourcing provider to provide a full development plan before starting the project. In order to avoid numerous paperwork, some outsourcing provider usually claim that the plan provided before signing contract is the whole project plan. This tell us that they have no system of integrity on development management and project management，and their project manager is not suitable for his job. Any employable project manager should realize that the preliminary plan for delivering the project made in period of contract negotiation can’t be all-around, and it needs modification to be a feasible plan according to actual contents of the contract, add actual workloads, assignment of resources, and time required. After getting the project plan from outsourcing provider, we need compare and check it with our own plan carefully to understand if it tallies with requirements of the project, that is workflow of the whole project, contents, estimated workloads and arrangement of resources. It is necessary to clarify timely and make it acceptable to each other if there are obvious difference. The project will be started formally after the project plan of outsourcing provider has been confirmed, and now it’s time to monitor the project.
2.Concerned On Evaluating the Schedule Outsourcing contract should ask outsourcing provider to provide schedule reports regularly. I have seen many project schedule reports, and they are different a lot in contents, however, most of them explain definitely which parts have been completed, which parts are going on, which parts will be taken up in next report period, and whether the work has been completed on time or not, even more, some use different colors such as red, yellow and green to show status of progress.Basically speaking, all these information can only allow directors to see the project roughly，but can’t make the project manager hold the schedule of the project in hand. In my opinion, the best way is that we should know how many tasks have not been finished, how long they will be complete, which parts have not start and will they start as scheduled, and is there any change on planned resources. If answers are different from original plan, we are supposed to question ourselves immediately, find out main reasons why the task haven’t been finished or why not start according to the schedule. Consequently we can discuss it with outsourcing provider, how to bring the project into normal schedule. Such finished tasks have become history to us and they have little effect on the schedule of the project. The parts haven’t been completed or haven’t start are the key of project, and they are in need of monitoring in particular We need confirm the schedule reports offered by outsourcing provider to make sure if tasks have been actually finished as planned. The best way is when each program module is finished, we need let outsourcing provider to list original codes and testing results of the program. And let technicians and user representatives check the results to confirm that work provided by outsourcing provider has been finished in fact. This procedure of confirmation doesn’t mean we do not trust outsourcing provider. We simply want to confirm if the schedules of the project have been finished as planned, and ensures the person in charge is able to report to boss about the accurate status of the schedule.
3.Closely Associated When Checking and Accepting The biggest risk of the software outsourcing project is not in development progress, but appears after the project has been finished.Many of them often turn up problems in program logic or editing range of data entry during checking and accepting period, which result in differences between testing result and real requirement, outsourcing provider cannot but modify a lot to result in project delay. Sometimes, outsourcing provider complains that it ’s not their fault. Avoiding these risks, you’d better check and accept the project at the same time of developing, but not to do it until tasks have been closed. It is not a proper idea that some firms put it as a last work to check and accept. Checking and accepting of project should be on it’s way, begins and ends at the same time of project development, and then can make sure the final procedure of checking and accepting successful. Another mistake in software development is to ask developer to create testing data for module testing and system testing. Technician have limited knowledge of business operation, and only users know ranges of these datas and what information of the data is accurate. Therefore, an experienced project manager usually asks user representatives to assist its module and system testing in project process, and establish testing data for technician testing. Testing data of every module are offered by users. To prevent us from disputing, outsourcing project is suggested to test with this method. When outsourcing provider delivers original codes list and testing report of each module, users and technicians of firm check it together, and guarantee the results consistency between testing and users’ data, and at last check and accept the system successfully, and cause no fatal delay.
4.Distributing Time in Reason It is more complicated to manage an outsourcing project than develop it internal, and more milestones are necessary to be established to monitor the schedule of the project. More communication and negotiation are needed; firm members should cooperate with the schedule of outsourcing provider constantly and supply with data needed for testing, all these will be handled in extra time. Generally speaking, it supposes that an internal project will be completed in 500 workdays, 50~75 workdays are for project management, about 10%~15% of the entire workloads. And the same 500 workdays of outsourcing project needs another 75~110 extra days to manage this project. In other words, it takes 15%~22% of workloads for firms to manage outsourcing provider. Certainly, these data are only for reference for software development outsourcing projects, every project and outsourcing provider have difference management requirements. However, it is an unchangeable rule of project management, we can not think that outsourcing allows us have no management requirement.
However, in Europe and America, outsourcing projects are mainly accounted by actual numbers of work days, so it will impel to overspend if project is delayed.In this case, to avoid project delay is an important target to judge management capability of project manager. Project managers have to monitor schedules and risks of outsourcing project effectively to avoid delay of project and extra development charges. We can learn this management idea to manage outsourcing projects in China to guarantee that project can be achieved before deadline;
1. Establish Our Own Project Plan As a project manager, you can not adopt project plan of outsourcing provider completely and chuckle to yourself to pass over project planning. Even if it is an outsourcing project, you have to make a full project plan by yourself, then you will know exactly about the whole workloads, evaluate the price to negotiate with outsourcing provider, ensure technicians who will be involved, judge if outsourcing provider can provide sufficient resources and if the promised time is feasible. Having made the project plan, firms should require outsourcing provider to provide a full development plan before starting the project. In order to avoid numerous paperwork, some outsourcing provider usually claim that the plan provided before signing contract is the whole project plan. This tell us that they have no system of integrity on development management and project management，and their project manager is not suitable for his job. Any employable project manager should realize that the preliminary plan for delivering the project made in period of contract negotiation can’t be all-around, and it needs modification to be a feasible plan according to actual contents of the contract, add actual workloads, assignment of resources, and time required. After getting the project plan from outsourcing provider, we need compare and check it with our own plan carefully to understand if it tallies with requirements of the project, that is workflow of the whole project, contents, estimated workloads and arrangement of resources. It is necessary to clarify timely and make it acceptable to each other if there are obvious difference. The project will be started formally after the project plan of outsourcing provider has been confirmed, and now it’s time to monitor the project.
2.Concerned On Evaluating the Schedule Outsourcing contract should ask outsourcing provider to provide schedule reports regularly. I have seen many project schedule reports, and they are different a lot in contents, however, most of them explain definitely which parts have been completed, which parts are going on, which parts will be taken up in next report period, and whether the work has been completed on time or not, even more, some use different colors such as red, yellow and green to show status of progress.Basically speaking, all these information can only allow directors to see the project roughly，but can’t make the project manager hold the schedule of the project in hand. In my opinion, the best way is that we should know how many tasks have not been finished, how long they will be complete, which parts have not start and will they start as scheduled, and is there any change on planned resources. If answers are different from original plan, we are supposed to question ourselves immediately, find out main reasons why the task haven’t been finished or why not start according to the schedule. Consequently we can discuss it with outsourcing provider, how to bring the project into normal schedule. Such finished tasks have become history to us and they have little effect on the schedule of the project. The parts haven’t been completed or haven’t start are the key of project, and they are in need of monitoring in particular We need confirm the schedule reports offered by outsourcing provider to make sure if tasks have been actually finished as planned. The best way is when each program module is finished, we need let outsourcing provider to list original codes and testing results of the program. And let technicians and user representatives check the results to confirm that work provided by outsourcing provider has been finished in fact. This procedure of confirmation doesn’t mean we do not trust outsourcing provider. We simply want to confirm if the schedules of the project have been finished as planned, and ensures the person in charge is able to report to boss about the accurate status of the schedule.
3.Closely Associated When Checking and Accepting The biggest risk of the software outsourcing project is not in development progress, but appears after the project has been finished.Many of them often turn up problems in program logic or editing range of data entry during checking and accepting period, which result in differences between testing result and real requirement, outsourcing provider cannot but modify a lot to result in project delay. Sometimes, outsourcing provider complains that it ’s not their fault. Avoiding these risks, you’d better check and accept the project at the same time of developing, but not to do it until tasks have been closed. It is not a proper idea that some firms put it as a last work to check and accept. Checking and accepting of project should be on it’s way, begins and ends at the same time of project development, and then can make sure the final procedure of checking and accepting successful. Another mistake in software development is to ask developer to create testing data for module testing and system testing. Technician have limited knowledge of business operation, and only users know ranges of these datas and what information of the data is accurate. Therefore, an experienced project manager usually asks user representatives to assist its module and system testing in project process, and establish testing data for technician testing. Testing data of every module are offered by users. To prevent us from disputing, outsourcing project is suggested to test with this method. When outsourcing provider delivers original codes list and testing report of each module, users and technicians of firm check it together, and guarantee the results consistency between testing and users’ data, and at last check and accept the system successfully, and cause no fatal delay.
4.Distributing Time in Reason It is more complicated to manage an outsourcing project than develop it internal, and more milestones are necessary to be established to monitor the schedule of the project. More communication and negotiation are needed; firm members should cooperate with the schedule of outsourcing provider constantly and supply with data needed for testing, all these will be handled in extra time. Generally speaking, it supposes that an internal project will be completed in 500 workdays, 50~75 workdays are for project management, about 10%~15% of the entire workloads. And the same 500 workdays of outsourcing project needs another 75~110 extra days to manage this project. In other words, it takes 15%~22% of workloads for firms to manage outsourcing provider. Certainly, these data are only for reference for software development outsourcing projects, every project and outsourcing provider have difference management requirements. However, it is an unchangeable rule of project management, we can not think that outsourcing allows us have no management requirement.
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