Outsourcing Tips

How to outsourcing your software properly? These outsourcing tips might help you in finding the perfect outsourcing strategy for your business.

Cybersecurity has come a long way. First introduced in the 70’s and 80’s, when computer security threats were still fairly easy to spot, cybersecurity became a demand as technology became more common in the 90’s.

Why? The internet.

For the first time, the general public was posting their personal information online, exposing themselves to viruses, data breaches and scams. This led to the creation of firewalls and antivirus software.

Another landmark moment was the creation of The Computer Misuse Act passed in the United Kingdom, which made it illegal to access a computer system without authorization.

"How to evaluate a country for outsourcing?"

How to evaluate a country for outsourcing?

When you choose to outsource one or more business functions, you should try to minimize the socio-political differences between the country where your business is located and the country where the work will take place. The best way to do this is to carefully consider the following three factors for the country where the offshore company is based.

Country-Specific Outsourcing Concerns

When you choose to outsource one or more business functions, you should try to minimize the socio-political differences between the country where your business is located and the country where the work will take place. The best way to do this is to carefully consider the following three factors for the country where the offshore company is based.

  • Economic and Political Considerations
  • Security and Available Infrastructure
  • Other Factors

Conduct research about the current socio-economic and political environment. Consider whether other companies that you are familiar with are already operating there. Be familiar with the trade environment, incentives for foreign businesses, laws regarding exports and imports, economic growth over time, child labor laws, occupational safety laws, and the available protection for confidential information and trademarked products. Also, be confident that the country has a judicial system that will adequately protect your company’s rights should problems arise in the outsourcing relationship.

Even though your company won’t have a physical presence in the country, it is important to understand the level of security and the type of infrastructure that is available to the offshore development company. Some things to examine include Internet access, telephone coverage, the real estate market, the supply of electricity, the cost of living, and transportation options.

Depending on the specific needs of your company, other factors will be important. For example, you may be concerned about the difference in time zones or the physical distance and/or convenience of traveling between the two countries. The frequency and likelihood of natural disasters also merits country-specific consideration.

How to Conduct the Research Effectively?

If you own a relatively small business, this level of research may seem overwhelming, but many independent services can provide objective ratings of these and other country-specific factors. These indicators can give you a wide perspective about the country’s current status and likely future direction, and then you can delve into more detail on topics of special interest to you.

"How to Conduct the Research Effectively?"

How to evaluate an outsourcing vendor?

Most businesses know that in order to outsource successfully, they must know exactly what products and services they are outsourcing, and why, so that they can appropriate allocate their resources to the projects and ensure that they contribute to the business’s goals. But occasionally an equally critical component of outsourcing, careful evaluation of offshore providers prior to selection, is overlooked, much to the organizations’ detriment.

How to Select Your Offshore Providers?

Most businesses know that in order to outsource successfully, they must know exactly what products and services they are outsourcing, and why, so that they can appropriate allocate their resources to the projects and ensure that they contribute to the business’s goals. But occasionally an equally critical component of outsourcing, careful evaluation of offshore providers prior to selection, is overlooked, much to the organizations’ detriment.

When choosing an offshore provider, it is important to conduct a thorough search for appropriate overseas vendors, contact those vendors for preliminary information, use that information to create a shorter list of potential vendors, request recommendations from the vendors’ previous clients, analyze the vendors’ capabilities, request proposals, and then select a single vendor.

Given the vendors’ overseas location, the screening and selection process is somewhat different than that used for evaluating contractors closer to home. Here are five guidelines that you should follow in selecting an offshore provider for your software development needs.

Location, location, location

Be sure to pay attention to the vendor’s location and consider the economic and political environment of the country where it is located. Other issues, such as the adoption of information technology and pirating laws should also be factors in the selection decision. Choose to work with a vendor in a country that has a powerful and fair judicial system in order to minimize your risks in outsourcing. Also, consider whether the use of outsourcing is increasing or decreasing in that country, and investigate the reasons behind that change. Finally, be sure to follow the political trends, especially prior to elections, because the regime in power can have a great impact on the viability of your offshore operations.

Know your vendor inside and out

You’re going to have a close working relationship with your offshore vendor, so it is important to understand its mission, vision, core competencies, and goals in the short run and in the long run. You are about to enter into a long-term relationship with a vendor, and you want to know whether your potential candidates will be a good fit with your organization. Be sure that you are comfortable interacting with the management and that you have confidence in the leader’s ability to run the company and fulfill its promises to you. If there are slight differences between the vendor’s business practices and your own, ask the vendor whether it would be willing to make the necessary adaptations for better integration.

"Know your vendor inside and out"

Conduct a SWOT analysis

You should understand the strengths, weaknesses, opportunities, and threats facing each of the vendors on your short list. Examine each potential vendor’s HR policies, staff qualifications, available technology, policies for handling confidential information, quality management, and anything else that touches on your project. Be sure that the vendor is capable of managing crises and has enough resources available to complete your project as promised. If possible, visit the vendor in-person to verify the information you’re receiving at this stage.

Money talks

Conduct a thorough financial analysis of each vendor’s proposal so that you understand all the costs involved to produce and deliver the final custom software project that you’re looking for. Consider the vendor’s financial position and strategies to understand how risk factors may influence the total cost of the project.

Read all the fine print

Once you have identified the vendor you would like to work with, be sure to develop a comprehensive and binding contract for the relationship. At a minimum, the contract must address the scope of work, timelines, a budget, methods and frequency of payment, quality standards, roles and responsibilities, and reporting schedules. A clearly defined service level agreement (SLA) and clauses for confidentiality and termination are other critical elements in any offshore development contract.

Following the five guidelines described above will make it much simpler to evaluate prospective vendors and choose the contractor who is best positioned to meet your company’s offshore outsourcing needs.

"How to evaluate an outsourcing vendor?"

How to select the right outsourcing vendor?

Proper evaluation and selection of offshore vendors is vital for your business’s success in overseas outsourcing. When you outsource important business functions, you will inevitably lose some control over the project, including its quality standards, budget, and timeline. That’s why it is so important to select the right offshore partner, who will not only complete the work to your standards, but also have a compatible working culture and high ethics.

Vendor Evaluation and Selection

Proper evaluation and selection of offshore vendors is vital for your business’s success in overseas outsourcing. When you outsource important business functions, you will inevitably lose some control over the project, including its quality standards, budget, and timeline. That’s why it is so important to select the right offshore partner, who will not only complete the work to your standards, but also have a compatible working culture and high ethics.

During the evaluation and selection process, your business should address each of the following considerations with potential offshore vendors.

Intellectual Property Rights

Within the confines of the laws of the onshore and offshore countries, your business and the overseas vendor must reach clear agreement about who will own the information transferred during the project, as well as the final software product. A detailed contract is essential for mitigating disputes that could otherwise arise during the course of the project.

Protection of Proprietary and Confidential Information

Your chosen offshore vendor will have access to a significant amount of confidential and proprietary information from your business. You must be confident that your offshore vendor will work protect the safety and security of your information during every stage of the project, from exchanging data at the project outset to storing it after the project has been completed. Your business should be intimately familiar with the offshore vendor’s security policies and practices and have strong guarantees that confidential business information will not be shared with third parties without prior written authorization.

"Protection of Proprietary and Confidential Information"

Termination Clauses

Your business should look for a stable, long-term relationship with an offshore vendor for at least the full duration of the project. However, in the even that disagreements arise or conflicting commitments or a changing market environment require early termination, it is critical that your outsourcing contract include an adequate termination clause that addresses the legal environment in both the onshore and offshore countries. An appropriate termination clause should result in significant financial losses for the company that terminates the agreement, providing an incentive to carry the project to completion. And your company should always have a contingency plan for completing the project just in case the chosen vendor decides to quit working on the project before it is finished.

Regular Progress Reports

Clear communication and regular, thorough reporting are essential for keeping your business informed about the status of the offshore development project, and for keeping the offshore vendor informed about changes in your project needs. A clear reporting structure and schedule should be defined and agreed to in writing before the project begins. An adept project manager will be able to monitor the project’s progress and quickly inform your business about milestones and obstacles, as well as any anticipated deviations from the terms of the contract. Your contract should explicitly address who will be involved in communication and reporting at each company, and to what extent.

Orient Software has developed a delivery model that will help you and your company resolve these and other issues onshore. As a global IT consultant, we pride ourselves on delivering products and services of the highest quality to prominent clients all over the world at low cost.

"How to select the right outsourcing vendor?"

How to hire the right developers?

When you engage in outsourcing overseas, the individual team members working on your project at the offshore vendor’s office are key players in making your project a success. This raises interesting HR issues, as you must consider the personnel concerns not only for your onshore employees, but also for the overseas workers in order to develop powerful synergies between the two teams.

HR Concerns in Overseas Outsourcing

When you engage in outsourcing overseas, the individual team members working on your project at the offshore vendor’s office are key players in making your project a success. This raises interesting HR issues, as you must consider the personnel concerns not only for your onshore employees, but also for the overseas workers in order to develop powerful synergies between the two teams.

Skills Checklist

Know what skill sets you need to have among the offshore team members and evaluate vendors’ personnel accordingly. Pay attention to not only technical skills, but also project management abilities, which are equally important in keeping your project on track.

Working Conditions

Examine the offshore vendors’ facilities and their ability to train the offshore teams to better meet your needs. You might want your offshore vendor to create new policies and procedures to improve the working environment and help the offshore team better meet the demands of the project.

Recruitment and Retention

"Recruitment and Retention"

Be familiar with the offshore vendor’s HR policies and procedures and be confident that it will be able to recruit, hire, train, and retain the type of personnel you need to have working on your project. Ask about the company’s attrition rate, which can delay your project and waste valuable resources on repetitive trainings.

Teambuilding and Integration

Before the project begins, consider whether you plan to have onshore and offshore personnel travel to meet in person. This can greatly improve teambuilding and integration, but it is also expensive and time consuming. If your employees plan to travel to the offshore office, be sure to clearly explain how the transition and expenses will be handled ahead of time to avoid any unwelcome surprises.

Confidentiality

Know the offshore vendor’s policy regarding intellectual property rights inside and out. You’ll be sharing a great deal of confidential information with your vendor and you’ll want to be sure that the information won’t be lost or misused. Understand the local laws for protecting intellectual property. Finally, make sure that workers who terminate their relationship with the offshore company are bound to maintain confidentiality even when they are no longer employed there.

Cross-Cultural Considerations

When working with an offshore vendor, there are often significant differences in culture and language. These differences can be challenging at times, so it is important to address their implications for interpersonal relationships before the project begins. Your business should choose to use an official language, presumably English, for the project and make sure that the offshore team members have sufficient proficiency in the language to communicate with your onshore employees.

"How to hire the right developers?"

Risk Management

When you’re ready to use offshore outsourcing, risk assessment and risk management are critical for protecting your organization from the potential pitfalls. Long-term risk management must include plans for data backup and disaster recovery.

Managing the Risks of Offshore Outsourcing

When you’re ready to use offshore outsourcing, risk assessment and risk management are critical for protecting your organization from the potential pitfalls. Long-term risk management must include plans for data backup and disaster recovery.

Information Security

When you outsource your work to another organization in a different location and a different socio-political environment, risk is inevitable, but that doesn’t mean that you can’t minimize and manage those risks. In many ways, outsourcing IT functions carries more risk than does outsourcing other functions. Why? Because when you outsource ID, you’re losing control over a strategic business function and if it goes awry you may jeopardize the security of your information, possibly unintentionally sharing your confidential and proprietary business information. Close monitoring of the vendor is critical and can be achieved through benchmarking and periodic audits. Pay special attention to the ways in which your company and your vendor communicate with each other about the outsourced project. Make sure that feedback lops are in place, so that changes can be made during the project if necessary. Remember that you are responsible for managing the vendor. Before beginning the project, have a comprehensive plan for risk management that identifies all foreseeable risks and their likelihood. Discuss these risks with your vendor and together develop solutions that will make the outsourced project a success.

Reduce risk by using dedicated team model

Using dedicated team model is an excellent way to mitigate the risks of offshore outsourcing. The Model lets you remain in charge of the project, even though geographic distances are involved. The Model is based on having the project conducted offshore, but with vendor resources located onshore. The local contacts help you communicate with the vendor and increase collaboration between the offshore and onshore teams that are working on the project. In addition, dedicated team model is cost-effective and may reduce the length of the project. The offshore teams provide the results that you need and expect, because they’re working closely with the onshore individuals who guarantee that the system will meet your needs and be compatible with your existing systems. Using dedicated team model is the best way to reduce your risk while outsourcing strategic business processes.

"Risk Management"

Other Concerns

Other articles address the specific concerns involved in selecting an outsourcing vendor while paying attention to the country and personnel issues, but there are many additional concerns.

Other Concerns in Offshore Development

Other articles on this website address the specific concerns involved in selecting an outsourcing vendor while paying attention to the country and personnel issues, but there are many additional concerns. This article presents the most important issues that our business should address when considering offshore outsourcing. With early and thorough consideration, your company will maximize the benefits of outsourcing.

Flexibility in the Work Environment

The teams working on your project need training and preparation, regardless of whether they’re working at your onshore facility or for the offshore vendor. Many onshore teams have misperceptions about outsourcing and those concerns must be addressed very early in the project. You must thoroughly prepare your personnel for the changes that lie ahead in their work environment and ease their fears.

Cost-Benefit Analysis

Offshore software development can save your company significant costs, but probably not right away. Expect that it will take some time to fully realize the potential cost savings of outsourcing. Also, be aware of the costs that lie hidden in the evaluation and selection of a vendor, the transfer of your project overseas, your employees’ transition to a new way of working, potential layoffs of onshore employees, and the time spent managing the project and communicating with the offshore team.

Relationship Building

It is unrealistic to expect that the offshore vendor will take your project and run with it without any further input from you. You need to build a strong businesses relationship with the selected vendor and appoint someone on your staff to manage the project and communication flows. This is the best way to improve communication and coordination between the onshore and offshore teams.

Intellectual Property Rights

Make sure that outsourcing doesn’t make your business lose its invaluable proprietary and confidential business information. Insist that your trade secrets be bound by full confidentiality and shielded from misuses and abuse.

"Intellectual Property Rights"

Roles and Responsibilities

Clearly define the roles and responsibilities of the onshore and offshore teams before the work begins. Both your business and the offshore vendor must have clear policies and procedures for daily work, and clear guidelines about how that work will be evaluated.

Your business should also ask the following broad questions before beginning to outsource a project.

  • For a given business function, should we outsource it entirely, or should we use a mixture of offshore and onshore capabilities?
  • Should we contract one vendor or many vendors? If we choose to contract with many vendors, should they be based in one country or in many different places?
  • Can we build a long-term relationship with one offshore vendor, or should we first proceed one project at a time?

Once your business has chosen an offshore vendor, developing an appropriate contract is critical. This agreement is known as an SLA (Service Level Agreement) and it clearly defines the scope of the work that the offshore vendor will perform, and when. It defines the deliverables and when they should be delivered and helps to ensure that you and your vendor have the same goals in mind. Performance measurement techniques should be agreed to in advance in order to make sure that the final product is indeed what you are looking for. The greater the clarity of the SLA, the more likely it is that your project will succeed.

You should also consider the amount of the time that the contract should cover. Be sure to include not only the full anticipated length of the project, but also time for transition and contingencies for the specific type of services, delays in information gathering, and changes in the marketplace during the course of the project.

Your contract should also include assurances that the offshore vendor has all the necessary licenses to conduct business in the offshore company, as well as an insurance policy that would cover all potential losses. The contract should also establish a warranty for the quality, specifications, and ownership of the final product.

Orient Software’s delivery model is based on these and other key elements of an SLA and is a proven tool for maximizing the success of offshore outsourcing projects all over the world.


Linh Nguyen

Technical/Content Writer

Linh Nguyen is a technical writer who conveys technical matters and information into writing