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IT Leadership // IT Strategy

How To Select An Indian Outsourcing Partner

Straight talk and tips on improving the offshore Indian vendor selection process from IT management consultant Dustin Walling.

Finding someone with an India offshore horror story is a little like trying to find fireworks on the Fourth of July. They're everywhere.

Dustin Walling

That's odd, frankly. Because to believe the mantra of "Brand India," offshoring buyers get superior East Indian technical training coupled with the best available processes, resulting in far superior results than you can achieve on your own. "We're better than you" -- that's supposed to be the value.

But something is going wrong, because brand India's bravado-bordering-on-hubris isn't borne out by current trends. Witness 20% of the InformationWeek 500 pulling offshore work back in-house in the year prior to November 2007. Add in the results of a Robert Half Technology survey of 1,400 CIOs. Of those who canceled offshore projects, the top three reasons were:

  1. Need for excessive management/oversight;
  2. Unrealized savings; and
  3. Work quality.

Finish with a recent survey by the Washington Information Technology Alliance of area venture firms, 71% of whom predict no significant use of offshoring in the coming quarter by portfolio companies.

The value proposition is often unrealized. Why?

The reason is simple, though hard to fix. Many companies go into offshoring with unrealistic expectations. Often offshore vendors don't understand what's expected, either. Finally, we tend to ask the wrong questions and make decisions on the basis an incomplete reality.

Make no mistake: I'm not here to hold court on whether offshoring is "good" or "bad," nor am I here to defend anyone. Simply, part of my role as a management adviser is to help my clients do fewer dumb things, less often. And blowing it on misguided relationships is not only dumb, it kills stakeholder value.

This is about selecting better relationships for better reasons. And the process begins with you.

A Passage To Self Selection

For many, the offshore vendor selection process should be remarkably short: You, the buyer, don't have what it takes. So don't do it.

The prototypical offshore relationship works best for companies with an IS/IT group featuring

  • A culture of accountability,
  • Discipline to produce deliberate, detailed specifications (preparation),
  • The desire to intelligently and affordably expand existing capacity and capabilities (motivation), and
  • Acumen for cross-cultural issues.

Accountability-based organizations do not struggle with deadlines. Be brutally honest: Do you have the teeth, processes, and contractual backing to enforce performance? Especially if you're adopting the resource/retainer model, how will you tie monthly value to monthly payment?

Regarding motivation, crises like tight deadlines or budget cuts don't work. Similarly, using offshoring to make up for the lack of good internal project management, effective enterprise-wide application planning, and effective testing and acceptance procedures also doesn't work. If you're not getting things right internally, you're not going to get them right with a multinational virtual team.

That's also the point of preparation. In a report on offshoring, Forrester Research notes that decreased satisfaction often stems from unrealistic expectations, and that companies are finding the benefits from tooling themselves to optimize internal IT are prerequisites when managing offshore.

Arguably the least valuable -- yet prototypical -- offshore relationship requires clients to supply vendors with complete, exceptionally precise specifications. This is one of the most critical factors when working with most offshore teams and lies at the heart of the mismatch in expectations, often owing to cultural differences in management style. Finally, the cultural question. Indian culture is rich and beautiful but carries a very different set of norms from those found in the West, including a strong need to preserve harmony and to please, often at the cost of personal sacrifices, which in our culture we wouldn't contemplate.

Seek professional help to understand the culture and prevent miscommunication. At the very least, read a book -- Speaking of India by Craig Storti is an exceptional self-study course on bridging the cultural divide (Intercultural Press; 2007).

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