From sourcing to selection: finding an offshore software services partner – part 1: What are you outsourcing and why?
So you have decided to explore the ‘outsourcing’ option, great. Have you thought through your objectives and decided on the ‘functions’ or ‘processes’ to outsource?… yes… great!
When determining the ‘what’ to outsource (onshore or offshore), did you consider all parts of the value chain that can be done better, more efficiently, more economically, faster, etc. by an external partner? Did you consider all models of outsourcing from team augmentation to retained resources? How about ‘what’ can not be outsourced, is your forte, high risk or core to your business?
I have a client in the new media sector whose forte is client acquisition, account management and almost everything other business function is outsourced, it works for some in the same vertical but not so well for others. While working with a start up in Sweden their outsourced service solution was a mixture of onshore team augmentation and off shoring module development while keeping testing in-house. For a client in the healthcare sector in the UK our outsourcing relationship extends from discovery & innovation to recycling for their software products.
The point is every engagement is unique; some need a bespoke service design whilst others need a tailored approach – there is no off the peg approach to an outsourced software services partnership.
Your organisation is unique, and you need to think long and hard about your best fit provider to gain ‘across the board’ benefits of software outsourcing.
You need to find the right offshore software development partner for YOU: a service provider whose skill sets, creativity, desire for innovation, attitude, passion, principles and values will complement and enhance your own. It is not black and white it is a freakin’ rainbow! if you want to get the best out of a team the team must gel…. for outsourcing to succeed your internal teams and your provider’s external teams must work as a single geographically separated unit.
Though it wont happen over night you can maximize your success rate by asking yourself ‘What am I outsourcing and why?’.
Lets get one thing clear there is no ‘magic list’ of what can and can not be outsourced for a software/tech businesses (or any type of business), each business is unique.
All or parts of your software development life cycle can be outsourced and executed by a carefully selected third party better, more efficiently, more economically, faster than you depending upon your unique circumstances; your market position, strengths, challenges, strategy, and constraints amongst a multitude of variables.
You and your teams have to determine the ‘what’ and ‘why’ for your business… external consultants can facilitate the process but the discovery has to come from within. And there are common tools to help do so.
On a slight tangent not enough start ups or maturing businesses carry out near enough regular business analysis. You and your teams must assess and re-asses your analysis reports every quarter as a minimum, ideally monthly unless it is deemed an exemption. For your organisation/resources/talents/products/services/ventures/concepts from top to bottom.
You need to be allocating time for regular and documented analysis of your business to keep things in focus and gunning towards your objectives. At Cranfield they call ‘working on your business’ and it is one of the best habits I took away from the BGP there (I’ll get to squeezing the lemon at some point no doubt.)
It may sound daunting but these are eye opening, surprising and fun exercises! and there are a multitude of tools that can aid this process; a few we religiously use our selves include:
- SWOT analysis (Strengths, Weaknesses, Opportunities, and Threat) – you must conduct one for all your talent, services, products and a holistic one.
- SCORE analysis (Strengths, Challenges, Options, Responses, Effectiveness) – compliments and builds on SWOT rather nicely.
- PEST/STEEPLE analysis (Social/Demographic, Technological, Economic, Environmental, Political, Legal, Ethical) - gives you a birds eye view of you in your environment.
- Ansoff Matrix assists you to map product/market growth strategically – more insightful when combined with cost-benefit analysis. Never surprises me when I hear a fellow entrepreneur go Ansoff who!? Ansoff is the most under rated yet critical tool for thinking for stat-up entrepreneurs. All I am saying is we ought to use it more often.
- Cross Impact Analysis – its strengths is that it forces attention towards “chains of causality: x affects y; y affects z”. Surprisingly eye opening mixed with an away weekend for the team(s) and it works best in the morning session time boxed till lunch with presentations the next morning.).
And if you find the tool is bogging you down keep it simple and adapt the tool for your circumstances.
And the key is to assess both before and after actions are taken and to routinely revisit the data and keeping your findings updated, tick of and celebrate where objectives and actions have been achieved and address where things could be, were planned to be better.
These exercises will shape your strategy and enable you to identify and assess areas/business/development functions that ought to be outsourced to a specialist who would make a better, faster and more economic job of it. And which ones are your forte, or are high risk, core, that you need to make an even better job than you currently are in-house.
Only when armed with the knowledge of which functions/business units would be better delivered by a third party/specialist and what your objectives are from doing so can you start looking at types of outsourcing service providers you ought to be working with. We will get there… we have the what.. next post is the where and who?
What! you’re seriously not giving us a list!…?
No. there is none! it is like hell fire: there is none there, you take your own. (unknown Sufi Philosopher.)
There are however types of companies that are better suited than others to derive maximum value from outsourcing software development to an onshore/offshore partner. You may be one of them if you are:
- A software company looking to dramatically reduce your time to market for a new software product. You may benefit from outsourcing the entire build or just a single function of the build cycle… testing and documentation to prototyping could be your selective candidates.
- A software company with a desire to offload maintenance and upgrades of existing products so in-house developers are free to build new products for sale. You may want to outsource the support and maintenance of a mature and stable product and free up your internal resources for the next big thing!
- A tech start-up seeking to build product on a limited development budget. You may want to get a proof of concept built on a very limited budget before seeking funding or you may want to get the most out of your development budget post seed funding.
- A software development company looking to add technical resources to your in-house team without taking on the fixed costs associated with in-house resources . You may want to explore the possibilities of adding expertise for new skill sets whilst minimizing your financial exposure.
- A results-oriented, budget-conscious company wanting to automate business processes to maintain a competitive advantage and keep IT costs down.
Common sense alert! The above is not a comprehensive list.