Dustin Walling is Principal of Dustin Walling Associates, a Seattle-based management consulting firm providing strategy and operational consulting to small and medium businesses. For article topics, questions, or comments, Dustin can be reached at http://www.DustinWalling.com.
Finding someone with an India offshore horror story is a little like trying to find fireworks on the 4th of July (or Diwali, for my Indian friends…). They’re everywhere.
That’s odd, frankly.
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.
Something is going wrong.
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 2007.1 Add in a Robert Half Technology survey of 1,400 CIOs: of those who canceled offshore projects, the top three reasons were: need for excessive management/oversight, unrealized savings, and work quality.2 Finish with a new survey by the Washington Information Technology Alliance of area of venture firms, 71% of whom predict no significant use of offshoring in the coming quarter by portfolio companies.3
The value proposition is often unrealized. Why?
Simple, though harder 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,” or defend anyone. Simply, part of my role as a management advisor 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 article is about selecting better relationships for better reasons. And the process begins with you.
For many, the offshore vendor selection process should be remarkably short: you, the buyer, don’t have what it takes. Don’t do it.
The prototypical offshore relationship works best for companies with an IS/IT group featuring 1) a culture of accountability, 2) discipline to produce deliberate, detailed specifications (preparation), 3) the desire to intelligently and affordably expand existing capacity and capabilities (motivation), and 4) 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, effective testing and acceptance procedures also don’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 please, often paid in personal sacrifices we wouldn’t contemplate. In his classic work, A Passage to India, E. M. Forster captures this when he describes Mrs. Bhattacharya’s quiet cancellation of a planned trip in response to Mrs. Moore’s request to visit her home: “[Bhattacharya’s] gesture implied that she had known, since Thursdays began, that English ladies would come to see her on one of them, and so always stayed in. Everything pleased her, nothing surprised.”
The story is fiction, but the issues are real: I personally have unwittingly rearranged at least one marriage that I know of. 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.
The best way to find offshore vendors is through referrals from colleagues. If you’re looking for more guidance, check out The Black Book of Outsourcingby Douglas Brown and Scott Wilson.
The real question is how to sort through the maze of companies as vendor variety, maturity, and value grow beyond the prototypical offering.
To get a sense of where to start, look at the situation from the vendor’s point of view. India today is an exceptionally competitive technology employment market, with more than 30% average annual growth since 2004.5 A casual review of job boards reveals tech positions with as many as 40+ vacancies each. Stories of turnover include teams of people hired away over a weekend. For one of my own clients it has meant the team introduced prior to signing was no longer available when the deal was done.
No matter the size of the vendor, if there is no verified strategy to deliver and secure the right resources for the right time at the right risk, frustration will result. A valid place to start is by evaluating vendors of every size on organizational maturity. Important issues include ensuring resource selectivity through recruitment screening processes, understanding the training and mentorship programs that establish and control quality, and most importantly, retention rates and strategies. Clay Loges, CEO of Seattle-based Yodio.com, notes, “[Retention] is far more important to me than an impressive corporate resume. I care how the company is going to ensure the team stays with my project.”
Real experience is important, too, but hard to get at. First, it’s unrealistic to think any vendor has a full bench of seasoned consultants waiting, particularly in uber-competitive India. That means the staff assigned to your project may not have had anything to do with building the success of your vendor. Validate that key project roles are staffed by veterans.
Additionally, there’s nothing cultural about a salesperson over-promising – happens every day. But interviewing offshore vendors does add cultural factors. Between the “Indian Yes,” “Indian No” or rather the frequent lack of “No,” and the drive to simultaneously succeed yet be agreeable… honest attempts to validate capabilities will get caught in misunderstandings.
Ask about particular capabilities and any consultant may push the envelope of accuracy. Avoid the temptation to begin by asking about the specific things you need done – this comes last. Instead probe what the vendor has done in depth until you hear what you need, treating the process more like a job interview. This discussion reveals true core competencies of the vendor without building a façade of capabilities. Look not only at the experience of the firm but at the track record of the key resources assigned to your project where possible. And yes, check references.
Another strategy particularly useful with specialty and mid-tier shops is to use a written skills/experience inventory. By having vendors go on record as to their past experience and current actual capacity in the skills you need, you establish a more objective benchmark for cross-comparison.
There’s nothing wrong with rejecting the prototypical relationship and striving for a vendor that lifts more weight. If that’s your goal, start a discussion of development methodology. The conspicuous absence or presence of a full Software Development Life Cycle replete with discussion of project management and design philosophy will be your cue as to the vendor’s actual maturity level.
Finally, I strongly advocate running a short, low budget test project. This will confirm compatibility or immediately uncover issues. Finding a new vendor after one month is indeed very painful, but much less so than re-starting a major initiative.
First and foremost, the goal in all this is to uncover your own versus the vendor’s assumptions regarding the working relationship, add in knowledge about the depth and breadth of the talent bench, and how the vendor is managed. Armed with this, you’re in a much better position to make a calculated bet.
Pulling it Together
Of course many people offshore contrary to these prescriptions and meet with success. That’s why I haven’t called anything “rules.” These are guidelines and your mileage will vary… largely based on the vendor you find, the homework you do, and the investment you both make in understanding each other, your expectations, and in building a relationship of accountability and trust. That’s the real point.