August 26th, 2008
In the world of IT development, data protection is a top priority. Data faces many of the same risks when sent to a global sourcing provider as it does when kept in-house. Intellectual property is one of the greatest assets an organization can possess and proper security measures should always be implemented to protect it. Problems with security can be avoided when an outsourcing company takes precautionary steps before sending work to a global sourcing provider.
When searching for a vendor, there are certain criteria that are considered when choosing a company. One of the main factors that should be included in the decision process is the vendor’s data security policies. There should be clear, enforceable policies in place and the access controls should be identified. Many of the larger vendors will have certifications showing that information security practices are upheld. Some firms will have obtained the ISO 27001 certification, which means the company documents and follows information security practices and controls.
It is important to find out how the vendor enforces access controls and how these controls are updated when employees change jobs or leave the company. Some vendors will offer to provide development on a dedicated data server, which will include audit control access. Once a vendor is chosen, IT managers must make sure the company follows the outsourcer’s industry best practices and compliance guidelines of the home country.
Whatever policies and access controls that are discussed should be outlined in detail in the contract. A signed non-disclosure agreement, non-compete agreement and no solicitation agreement can provide additional protection for the outsourcing company. If a vendor refuses to include data protection information in the contract, it would be wise to consider a different global sourcing provider. Even after the initial terms are agreed upon and the contracts are signed, an outsourcing company should perform regular audits to ensure that data privacy policies are being followed and enforced.
Only the information that is crucial to the project should be shared with the global sourcing provider. The outsourcing company will have to carefully evaluate the propriety data and technology that are needed to successfully develop the outsourced projects. In-house employees should be aware of what information is acceptable to share when talking with the global sourcing provider.
By being aware of the potential challenges associated with data protection and taking preventative steps, an outsourcing company can reduce the associated risks. A&E Consulting can help you evaluate data protection issues when global sourcing and will oversee the first outsourced project.
August 20th, 2008
There are some major differences when it comes to managing a global sourced IT project versus an onshore project. Managers must be aware of the unique challenges presented by sending work to a global sourcing provider. By taking preemptive measures, a manager can ensure the success of the project.
One of the most important steps to take when managing an IT project is to create a plan. Even if a project is simple or fairly small, the outsourcing company and the vendor can greatly benefit when all of the project details and deadlines are outlined. The plan should include specific processes for completing the project and the expectations. A plan is only good if those involved are aware of it and understand the requirements. Therefore, after the plan is completed, all of the employees that are involved in the project development should receive a copy. When a project is to be developed through global sourcing, then the plan should also be sent to the vendor’s project manager and employees.
Most IT projects need to be completed in a specified timeframe. When a project is delayed, the outsourcing company stands to lose valuable time and money. Before a project begins, deadlines and goals should be set and communicated to the global sourcing provider. Tasks should be broken down into steps with assigned dates. By setting deadlines and creating goals, the vendor becomes accountable and the outsourcing company can see the results more quickly. The outsourcing company will then be able to address any problems that may arise.
Communication is crucial to the success of any IT project. When utilizing global sourcing, poor communication can lead to a project’s failure. Managers should set regular review meetings with the vendor to track the progress of the project. Regular communication will help reiterate the outsourcing company’s expectations and will answer any questions regarding the project.
A common mistake made by IT managers is their lack of involvement with an outsourced project. Many managers feel that since the project was sent to an outside vendor, they do not have to be as actively involved as they would be if the project was completed in house. This thought process can be damaging to the project. An IT manager must stay involved in overseeing a project, even when it is sent to a global sourcing provider.
An IT manager must also understand the unique set of challenges that are associated with projects sent to global sourcing providers. The difference in time zones, cultural barriers, geographical distance and security issues can all harm an IT project. If an IT manager is aware and addresses these potential risks, the chance of a successful project significantly increases.
A&E Consulting can show you how to successfully manage an IT project sent to a global sourcing provider. We will help you choose the right vendor and will oversee your first project.
August 13th, 2008
There was a great article posted on CIO.com in March 2008, titled, “Outsourcing: The Pros and Cons of Offshore Remote Infrastructure Management.” The article discussed many of the recent trends related to remote infrastructure management, including the increase in competition caused by offshore vendors.
Infrastructure is generally managed remotely, even if the data center is located nearby. According to Bill Piatt, CIO of the International Finance Corporation, “remote infrastructure management is something that virtually every organization does every single day.” He goes on to say that people think there is a difference if that work is done offshore. However, recent trends show that remote infrastructure management is being included as an additional service in global sourcing. Numerous global outsourcing proposals now contain some form of offshore infrastructure delivery of services.
Many of the large global sourcing providers believe that infrastructure management will be the next main revenue source. IT vendors are increasing their delivery capabilities to attract more business from outsourcing companies. From 2003 to 2005, the number of vendors who have the ability to handle infrastructure tasks tripled to 15,000.
The utilization of global sourcing providers for services involving infrastructure management has become more mainstream. The market for remote infrastructure management is estimated to be somewhere between $80 billion to $120 billion. Experts feel that global sourcing providers will gain additional market share and will continue to grow by 20 percent each year.
The article on CIO.com listed the percentages of infrastructure support functions that could be sent to a global sourcing provider. These functions included:
• Network Services 80%
• Internal Help Desk 75%
• Servers 70%
• Maintenance 60%
• Administration 35%
• Mainframe 30%
• End-user Devices 15%
A report published last February by India’s National Association of Software and Services Companies (Nasscom) asserts that up to 75 percent of all infrastructure management roles could be outsourced globally, which would create a $26 billion to $28 billion revenue potential by 2013. The report stated that Indian companies could capture approximately 50 percent of this revenue.
There currently is a lot of competition among infrastructure providers. Global sourcing vendors have been purchasing infrastructure service providers to grow that segment of their businesses. The recent changes will give outsourcing companies additional options, but can also create more confusion on making the right decision for remote infrastructure management.
There are benefits to sending infrastructure management to a global sourcing provider, but it may not be a good fit for every organization. A&E Consulting can help you weigh the benefits of working with a global sourcing partner and will oversee your first outsourced project.
July 31st, 2008
Quality assurance is crucial with IT development. Even the most knowledgeable, experienced developers can create code that has errors or “bugs.” If a defect is not detected until the point of construction or maintenance, it can cost the company significantly more to fix it than it would have cost during the initial creation process. Companies involved in IT development generally have a system for quality assurance. When IT managers decide to global source part of the development, they need to ensure that the vendor has similar quality assurance testing in place.
Quality assurance testing will confirm that all functionality, security and scalability issues have been addressed based upon the system requirements. This testing should be done for every process that is developed through global sourcing or in house.
The most common causes of code errors have to do with the IT vendor. The vendor may have lacked its own quality assurance team or assumed the outsourcing company would handle quality assurance testing in house. The project could have had a tight deadline and the vendor rushed through a quality assurance check or may have skipped it all together. Vendors also may misunderstand the system requirements, which would lead to inadequate testing. Whatever the reason, poor quality assurance can greatly impact a project.
Before signing a contract with a global sourcing provider, it is important to find out what type of quality assurance system has been established. Is there a quality assurance team? What processes are set up to correct code errors? How is the software being tested and does it include the end-user experience? Another key fact to uncover is whether the quality assurance testing done by the vendor is comparable to that of the outsourcing company. Many vendors have quality assurance teams that work with the developers to test the software.
It would be ideal for the global sourcing provider to conduct regular inspections of the software as it is developed. Inspections can be done at every stage of the development process and can include technical peer reviews of software designs and implementations. By conducting these inspections, schedule delays can be avoided and costs can be better controlled because problems would be detected early.
When choosing a global sourcing provider, take the time to review its quality assurance system. By carefully evaluating a vendor’s quality assurance processes, outsourcing companies can avoid waiting until software is released to discover it has code errors. A&E Consulting can help you choose a global sourcing provider and will oversee your first outsourced project.
July 31st, 2008
Most global sourcing experts will agree that communication is one of the key factors in the success of IT development. Even though so many people know that communication is important, it still creates problems for outsourcing companies. Communication with a global sourcing provider has its own set of unique challenges. When referring to communication, it is more than just language. The outsourcing company must find a way to handle the different time zones, distance and multiple locations.
It is common for an outsourcing company to not place a high priority on communication. When communication goes wrong in global sourcing, cultural differences are often blamed. However, usually there is more to it than just cultural differences. If information cannot be communicated to the correct people, at the right time, there is a strong potential of the project being delayed or not properly developed. Before a project is sent to a global sourcing provider, a communication plan must be created that will address how and when communication will take place.
Establish a communication infrastructure. Will correspondence take place via email or telephone? Who is the point of contact? When communicating with the vendor, it may be wise to invest in high quality digital communication lines, to ensure a clear connection. Some outsourcing companies have also found it helpful to create a toll free number that can be used for team members. Direct telephone numbers and extensions, plus email addresses should be exchanged among those involved in the project. By having an established communication infrastructure, team members will know how to contact each other and there should be minimal to no delay in relaying information.
Determine the frequency of communication. How often should virtual meetings take place? Who should be included in each meeting? As the global sourcing provider and outsourcing company work together, it is important to determine if regular conversations will occur, which will go over the project status and address any issues that may have arisen. The frequency of such meetings should be determined in advance to avoid any complications or schedule conflicts. This interactive communication will effectively relay pertinent information to those involved in the project. After a team meeting, there should be some type of follow up report, outlining what was discussed in the meeting. This information should be dispersed to the meeting participants.
Create methods for communication. In addition to telephone and email, what other methods will be used in communication? Status reports, newsletters and Intranets are all helpful tools for communication. A dedicated Intranet can be used to communicate project goals and expectations to ensure the success of the project. However, whatever method of communication is used, it is vital that all team members and project managers read the information. Even though a lot of effort may be put into creating great information, if it is not read, it is useless.
There are many additional ways to overcome communication barriers. A&E Consulting can help you create a communication plan and choose the right global sourcing provider. We will also assist you with your first outsourced project.
July 22nd, 2008
Companies have a lot to gain through global sourcing, such as the ability to get products to market faster, lower costs, increase productivity and create a better focus on core competencies. All of these benefits can be lost if the wrong global sourcing provider is chosen. Failing to choose the right vendor can leave the outsourcing company in a worse condition than before.
By thoroughly analyzing a global IT provider, organizations can avoid repeating the same mistakes that many others have made in the industry. It is vital that the vendor chosen is able to deliver solutions that will meet the outsourcing company’s needs. There are key criteria that must be considered when deciding the appropriate global sourcing provider. Even though a vendor may be a good fit for one company, doesn’t mean the same vendor will align properly with another.
Vendor Size – Deciding to go with a large vendor versus a smaller one is tricky. Larger vendors tend to have several outsourcing services in order to provide multiple offerings to clients. The problem with going with a large IT vendor is that there is a lack of individualized attention. On the other hand, vendors that are too small may not have the services needed. The solution is finding the right balance - a global sourcing provider that is big enough to handle the IT work, but small enough to give personalized and prompt attention to the outsourcing company.
Industry Expertise – Vendor expertise is crucial to the success of IT projects. It is ideal to outsource to a global sourcing provider that has knowledge in various software technologies. If a vendor has limited expertise, there is no way of knowing if there is a better method for software and process development. Vendors should also have knowledge in the outsourcing company’s market.
Employee Qualifications – The quality of development is only as good as the developer’s knowledge and experience. When interviewing vendors, it is important to inquire about the background and experience of the employees. How many years have they been in this line of work? What type of degrees have they earned? Finding out the language skills of the employees is also crucial as language barriers can harm an IT project.
Communication Capabilities – Vendors should have some type of communication infrastructure in place. There should be a system for knowledge transfer and a well defined method for communicating project requirements. Also, the vendor will need to have either email, phone or other type of communication capability that would allow the outsourcing company to discuss the project with the vendor. Some global sourcing providers have project managers located in the United States to coordinate projects and schedules.
Security Measures – The protection of intellectual property is essential in the IT industry. If the vendor is located in another country, the laws of that region should be reviewed to find out the level of intellectual property protection. Employees of global sourcing providers are often culprits of trade secret theft. Before signing a contract with a vendor, find out what kind of background checks are done on employees. Vendors should have firewalls and other types of security protection methods established to protect proprietary information.
This list is just a sample of criteria that should be reviewed. A&E Consulting can help you choose the right global sourcing provider in order to ensure the success of your IT projects.
June 24th, 2008
Not all global sourcing projects fail – many outsourcing companies have great success with global sourcing providers. When a project does fail, there are usually numerous reasons and not just one underlying cause.
Lack of global sourcing vendor strategy
The management of the outsourcing company must have a strategy established for handling IT projects. For example, how will the process be managed? What are the expectations for the offshore resource? Too often, outsourcing companies do not properly prepare for how the projects will be administered. Management should clearly define how global sourcing will be implemented and effectively communicate the strategy to the internal IT department as well as to the vendor.
Underestimated time involved
Outsourcing companies do not always calculate the amount of time it will take to get a project in operation with a global sourcing partner. It takes time and effort to transfer technical and business knowledge to the vendor. Once the transfer is made, hours will be spent maintaining the business relationship.
The outsourcing company and the global sourcing provider also have to coordinate between the teams involved to make sure that everyone understands the details of the project and to communicate the timelines and processes. If an outsourcing company does not account for the extra time it will take for the project, the deadlines set may not be met.
Unrealistic cost-reduction expectation
A project can be unsuccessful if an accurate budget was not put in place. Outsourcing companies sometimes have unrealistic expectations regarding the cost savings associated with global sourcing. Even though labor costs may be lower, there are other hidden costs that can cause a project to go over budget. As the years go by, the cost savings will go up because the global sourcing model will begin to operate efficiently.
Communication barriers
Communication doesn’t just refer to language. Challenges arise when there are various time zones and locations involved. While having an operation that runs virtually 24 hours a day, which is done with an offshore partner, is a major benefit of global sourcing, it can make it very difficult to communicate crucial information in a timely manner. Consequently, this barrier to communication can negatively impact an IT project. By creating a communication plan, including accepted modes of communication and points of contact, this barrier can be eliminated.
Chose an incompetent offshore vendor
When price is the main motivating factor in choosing a vendor, there is a risk of choosing the wrong one. An outsourcing company will find that a low-cost vendor most likely will not provide high quality work. Cost should not be the only criteria in choosing a global sourcing provider. A potential global sourcing partner should also be evaluated on multiple areas, such as trained personnel, technology and processes. A thorough analysis of a prospective vendor will allow the outsourcing company to have a good sense of what to expect.
Cultural differences
The variation in cultures is frequently overlooked when working with a global sourcing provider. However, it can play a major role in the success or failure of an IT project. Cultural differences include religion, mode of dress, social activities and work ethic. Even the way a question is answered can differ depending on the culture. To overcome cultural obstacles, it is important that the outsourcing company takes measures to clearly outline project specifications and encourage feedback from the project managers.
By understanding the common reasons global sourcing projects fail, an outsourcing company can take necessary steps to avoid potential problems. A&E Consulting will work with you to ensure that your IT projects succeed. We will assist you in choosing the right global sourcing provider and establishing the business relationship. In addition, we will manage the first outsourced project to make the transition as smooth as possible.
June 24th, 2008
When most executives think of outsourcing, they immediately consider offshore locations. There are many near shore outsource service providers that offer the same benefits of offshore vendors. Many IT departments, including those from Fortune 500 companies, have numerous reasons for sending work to near shore IT providers. Outsourcing to a near shore IT supplier is thought to lower risk, increase productivity and reduce hidden costs associated with outsourcing.
What are the top near shore locations for IT outsourcing? Mexico, Canada, Brazil and the Caribbean region offer great outsourcing opportunities for U.S. based companies and some of these areas were even listed on Gartner’s list, Top 30 Countries for Offshore Services.
Canada
Since Canada borders the United States, travel to this country is similar to Mexico in its convenience. The country covers four U.S. time zones, which allows for real time communication. There is strong support of IT services within Canada and the government has been known to offer tax breaks and incentives. This country also has stringent intellectual property protection and privacy laws. The Canadian workforce is considered to be highly educated and skilled in IT-related fields. Plus, the cost of labor is lower than the United States. The language and culture are very similar between Canada and the United States, which helps eliminate cultural and communication barriers.
Caribbean Region
The Caribbean region is a convenient location for help desk support, call centers, bookkeeping and tax data processing support. English is commonly spoken in some Caribbean countries and many of the employees located in this area have attended colleges and universities within the United States and Canada. Cost of labor is cheap in comparison to the salaries paid to U.S. employees. The close proximity to the United States and the similar time zone make it an attractive outsourcing option for U.S. buyers. Just like some of the other near shore locations, there are many cultural similarities between some of the Caribbean countries and the United States.
Brazil
Brazil has one of the largest economies in the world, as it is ranked 11th based on 2007 GDP figures in the CIA World Factbook. The population in Brazil is significantly large and continues to grow at an impressive rate each year. Brazil has a well developed IT sector and is only one time zone away from the Eastern Standard time zone, aiding in the communication and coordination of projects. The country also boasts cultural and demographic similarities to western countries. The native language in Brazil is Portuguese, but there are a lot of IT professionals who are proficient in English.
Mexico
Mexico’s proximity to the United States makes it easy for quick and inexpensive trips to the IT supplier. Most of Mexico is on the Central Standard Time zone, making it simple to coordinate meetings and project deadlines. The Mexican government has taken steps to increase the size of the IT industry within Mexico. There is a large labor pool of IT professionals and it is estimated that the country has hundreds of thousands of students studying IT related subjects in universities and technical schools. Many of the workers speak fluent English and the Mexican culture is very compatible with that of the United States. The cost of labor is lower than the United States.
There are many near shore locations to choose from when it comes to outsourcing. A&E Consulting will help you determine if near shore outsourcing is right for you. We will assist you in choosing an outsource service provider and establishing the business relationship. In addition, we will manage the first outsourced pr
