Outsourcing has been there for quite a while. The need for outsourcing was felt primarily to save costs, improve productivity, faster time to market and to focus on core competencies while outsourcing non-core competencies to specialists.
If we look in the retrospect not every business which decided to outsource actually was able to get the best out of outsourcing. Some common reasons why outsourcing could not deliver the desired results are:
- hiring the wrong contractor
- setting unrealistic goals
- inadequate contract details
- inflexible contracts
- having limited or poor understanding of expectations
- failing to use a statement of work or scope of work
- failing to have a method for price adjustments or incentivized pay
- inadequate management review
- poor project and contract management by the manager and contractor
- failing to understand scope or statement of work before bidding or contract negotiation
If one decides to dig deeper then we found the single most reason for outsourcing is Collaboration and not all of the above. In fact the above reasons are by product where collaboration was not done properly.
What is Collaboration especially in context of Outsourcing?
Collaboration in context of outsourcing means that when you outsource a product to someone you don’t just dump it on the contractor. Collaboration means that both you and contractor take do planning and implementation in collaboration with each other. In other words, Outsourcing is a double handshake phenomenon. Even If you hire the most qualified contractor for a job without collaboration you cannot guarantee whether that product will be successful or not.
Why there is a real need to collaborate?
Since most of the outsourced product development happens where the business and the contractor are separated by thousands of miles away it becomes important that the projects requirements are properly communicated and understood by contractor. Similarly if the contractor is setting some expectations than those are understood by the business so that there are no surprise later.
In nutshell, the need for collaboration is because of following reasons:
- Buyer’s unclear expectations up front (Business assumes he is understood when the provider stops asking questions, but the Provider don’t actually understands)
- Poor governance
- Poor communication
- Poor cultural fit
- Interests become misaligned over time (both don’t understand each other’s communication needs and are frustrated)
In an IT environment, not hitting the target can be a big loss as it delays the project. Suffice to say that the traditional method of project handling and reporting isn’t effective as a whole.
The Right way to Collaborate
A core principle of collaborative outsourcing is the notion that true collaboration among knowledge workers accelerates delivery while fostering innovation and reducing risk. Collaboration between IT (employees, contractors, partners, etc.) and the business (employees, contractors, partners, etc.) yields acceleration of time, improvements in quality and reductions in risk. While most executives (IT & business) will agree that such collaboration in a real and consistent manner has been largely an elusive goal.
Real collaboration requires both a mechanism to enable seamless, transparent communications and, more importantly, trust between the parties. These two ideas are interlinked. True collaboration will occur when parties share information and have an established trust relationship between them. Trust will survive only when information is shared willingly and consistently in a truly transparent fashion.
Collaborative outsourcing addresses this issue through delivery communities and an environment of transparency. Delivery communities are the basic requirement of collaborative outsourcing. The delivery community is organized around a business process and incorporates all the professionals (business and IT) who delivers value to the business in that business process area
The delivery community becomes the point of execution for work in the collaborative sourcing model, as well as for work in the IT governance model. Delivery communities are virtual organizations with membership spanning any number of operational and organizational boundaries to bring together professionals to work on various components, which creates a lot of value in the relationship.
While outsourcing not necessarily requires a manager to be on-site, the same cannot be said about collaborations. This is because they key to a successful outsourced product development is to have a good project management. This can only be done when there is a liaison to help and assist the engineer on the product development. While not having one can save cost, it does have a big penalty: communication. This is because there will be multiple layers of communication that makes it highly ineffective. By having liaison, things can be done quickly and all queries can be answered as soon as possible. Companies that do not have a liaison officer often find themselves changing tactics in time. Suffice to say that on-site project management liaison is the way to go.
Advantages of Collaborative Development
Following are the main advantages of doing collaborative outsourced product development:
- Innovate faster with distributed coding and software delivery
- Implement architecture standards and enable compliance across projects
- Improve productivity through a community architecture and the reuse of shared software assets
- Cut cost by reducing the number of applications, servers and administrators, and eliminating shadow IT
Reduce cycle times and improve delivery throughput and quality
- Simplify and standardize delivery processes that can scale
- Improve visibility to delivery bottlenecks
- Leverage existing dev/test/build tools and processes
Improve operations efficiency to meet Development/Test project needs:
- Standardized and automated delivery of production-like environments to Dev/Test
- Improved success rate of production rollouts
- Common understanding of quality and performance between Development, Test and Operations
Collaborative sourcing is the new and best way of working in today’s global market. It is a transformational approach that should be taken by anyone who wishes to outsource especially in context of outsourced product development where time to market is most important.