According to Clinton, the U.S. – India relationship needs an “upgrade,” which she termed “U.S. – India 3.0.”  Her speech seemed to indirectly support the arguments made by India’s IT outsourcers that visa restrictions fall under the category of protectionism.  Clinton did not address the argument regarding offshore outsourcing and lost jobs in the United States.  Instead, she said that any differences in perspectives regarding the relationship between U.S. and India could be worked through by focusing on shared objectives and concrete results.

Legislation proposed by U.S. Senators Chuck Grassley (R-Iowa) and Dick Durbin (D-Ill.) seeks to establish stricter prevailing wage standards that could increase salaries for H-1B workers and impose limits on the number of visa workers to 50 percent of a company’s total workforce.  This bill has been strongly protested by the Indian IT community and Indian government.  Wipro Chairman Azim Premji, said that there is extreme concern among the India IT industry regarding the Grassley-Durbin bill.

The basic argument against the Grassley-Durbin bill is that global sourcing tends to lower costs for U.S. companies.  By lowering costs through offshore IT outsourcing, companies can expand in other areas and markets outside of the United States. 

India’s ambassador to the United States, Meera Shankar, said that India’s IT talent has enabled U.S. companies to become more competitive globally, while at the same time creating jobs and profits that can circulate through the economy. 

There are many offshore outsourcing benefits available for U.S. based companies.  If your company is looking to outsource IT development, you should first speak with an outsourcing consultant from A&E Consulting at 661-200-3612.

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If you are an outsourcing buyer, be careful that you do not enter into an agreement that contains a minimum commitment.  Most of these types of outsourcing deals contain minimum volume or revenue commitments, which are not necessary.  Instead of committing to a minimum amount, you can develop an agreement based on volume discounts.

Make sure that you include a termination for convenience clause in the contract.  This provision will allow you to terminate the agreement before the contract expires for any reason without having to pay a termination fee.  Sometimes it is not a good fit between your company and the vendor and this clause will allow you to terminate without having to come up with an excuse.

Outsourcing contracts do not have to be lengthy.  It is advisable to enter into an agreement that has an initial term of two to three years with an option to extend it.

There should be provisions in the IT outsourcing contract that address intellectual property rights.  For example, when software is being developed, it should be very clear as to who owns the software, which will prevent the vendor from using the software again for another purpose.

If you are looking to outsource IT development, you may want to consider working with an outsourcing consultant who can help you ensure that you enter into a good IT outsourcing deal.  The outsourcing consultants at A&E Consulting have the knowledge and experience necessary to help you succeed.  Contact us today at (661) 200-3612 or email info@aandeconsulting.com.

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The current world economy and geographic instability has forced many companies to rethink the way they approach outsourcing.  It is possible to establish practices that will help you anticipate possible threats and create an alternative plan.  One of the ways you can protect your company when global sourcing is to negotiate or re-negotiate your outsourcing contract.  CIO.com gave several tips for negotiating outsourcing contracts, some of which are summarized below:

1. Revise clauses, such as force majeure to include other threats.  Force majeure usually releases both the buyer and vendor from liability when there is an event out of their control.  Typically the focus is on natural disasters.

2. Review termination provisions.  Termination provisions should take into account the possibility of an unforeseeable threat to the vendor’s viability.  The buyer should make sure that the provision allows them to respond to changing vendor conditions.

3. Modify change of ownership provision.  This provision should address an event where there is a breakup of the supplier.  The change of ownership provision should include acquisitions, as well as breakups.

4. Decide who owns the assets.  It should be clearly stated in the contract which entity owns software, documentation and other intellectual property.

5. Include terms and conditions that focus on emergent concerns.  CIO.com advises suppliers to use clauses addressing transition-out requirements, audit provisions and termination costs.

6. Seek advice from a professional.  It is advisable to contact a professional, such as an outsourcing consultant, who can help you get the contract right.

The outsourcing consultants at A&E Consulting have the experience and knowledge to help you succeed with your outsourced IT projects.  We offer support throughout the entire process and we will provide you with flexible solutions to meet your IT outsourcing needs.  Call (661) 200-3612 or email info@aandeconsulting.com today.

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Most companies looking to outsource IT development typically focus on the benefit of cutting costs.  However, what most companies fail to realize is that global outsourcing has more to offer than just cost reduction.  Additional value can be created in an outsourcing relationship through innovation.  Once an outsourcing relationship has been established, it opens the door to innovation, allowing the buyer to realize an even greater benefit provided by the vendor and to stay current with technology trends.

Offshoring and near shore outsourcing provide a way for companies that have been forced to layoff key personnel, to still move forward with strategic projects.  Global sourcing is an attractive option for many companies that have had to reduce budgets due to the economic slowdown. 

Companies today are feeling the pressure to achieve results while avoiding the common mistakes made by other companies that have outsourced in the past.  This sense of urgency had made companies try to avoid the learning curve associated with IT outsourcing.  It is often difficult to attain this goal, but with the proper preparation and informed decision making, it can be done. 

A company must decide if it will outsource to multiple providers or focus on one vendor.  While choosing to outsource to just one IT provider does make the process a lot simpler, the company can be missing out on the opportunity to take advantage of the diverse expertise offered by multiple providers.

Global sourcing offers many advantages to IT companies.  Companies can benefit from IT outsourcing during this downturn, as long as they take into consideration the unique factors presented in this economy.

The outsourcing consultants from A&E Consulting can help you choose the right outsourcing location and partner.  It is our goal to provide each client with a personalized solution that minimizes the time of implementation and maximizes the return on investment.  Contact us today at 661-200-3612.

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We are experts in our field.  When you partner with A&E Consulting, you are adding our experience to your team.  Our consultants meet the highest qualification standards in the industry and have completed rigorous training.  We possess real world outsourcing experience.

A&E Consulting offers support throughout the entire process.  We offer support and flexible solutions to help you with your outsourcing needs.

You will be able to avoid hidden costs.  Through benchmarking with our industry experts, you will be able to avoid the hidden costs associated with outsourcing. 

We will create a customized decision framework.  Our global sourcing strategists will develop a tailored framework to lead your company through the entire outsourcing project.

Our strategists will provide tools to capture value.  There is more value to an outsourcing relationship than just cost reduction.  We will show you how to capture additional value and innovation.

You can learn to avoid common pitfalls.  Through our experience, we will help you address and prevent the common issues that arise in less effectively managed outsourcing relationships.

A&E Consulting will help you establish governance structures.  We will help you develop a structure to manage your relationship with the IT provider.
 
We provide support for objective evaluations and decision making.  Our consultants will assist you with the evaluation process that will be based on your company’s needs.

Our consultants manage the change process to minimize disruption.  We offer support with early and frequent two-way communications, as well as assistance with developing a communications strategy.

We will help you get the contract right.  Even though we do not provide legal advice, we do have the capability to advise you on matters that will help ensure you have a successful outsourcing relationship.

For more information about A&E Consulting, call (661) 200-3612 or email info@aandeconsulting.com.

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During the initial negotiations it is important to get all of the key contract terms and conditions hashed out.  However, just because the buyer may have gotten it right in the beginning, things change - people change, technology changes, timeframes change and budgets change.  There are certain topics that must be discussed as the outsourcing project progresses, including when something is wrong or when there seems to be a misunderstanding of the project’s requirements.

It is crucial to talk with a vendor when something is wrong.  Unfortunately, things do happen, such as missed deadlines and improperly designed processes.  Some IT managers will initially avoid conflict and choose to avoid uncomfortable conversations with the global outsourcing provider.   If something is wrong, the buyer should address it head on, with the goal of increasing competency and capability.  A buyer can benefit from creating a culture where conflicts are appropriately addressed and handled.

Sometimes there is a misunderstanding of the project’s requirements, which can lead to a failed outsourcing relationship.  When an IT company is working with a vendor located in another country, misunderstandings can become even more prevalent, as there are cultural differences and language barriers.  This challenge can cause frustration and may disrupt the development of the IT project.  To overcome this potential complication, IT managers should schedule regular meetings to review the project’s status.  It would also be advantageous to take the time to understand the vendor’s culture to avoid a cultural clash.

Outsourcing is an effective way to increase productivity, while saving money at the same time.  As long as key topics are discussed, an outsourcing relationship can greatly benefit both parties.

If your company is considering IT outsourcing, contact the global sourcing strategists at A&E Consulting at 661-200-3612.  We can help you choose the right outsourcing location and partner.  It is our goal to provide each client with a personalized solution that minimizes the time of implementation and maximizes the return on investment.

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The International Association of Outsourcing Professionals (IAOP) completed a study that analyzed the state of outsourcing relationships for more than a decade.  Researchers discovered that some of the factors that impact the success or failure of an outsourcing relationship remain the same.  A study that was conducted in 1997 identified some of the same factors in the success of an outsourcing relationship as IAOP’s most recent report.

According to the 1997 study by the Outsourcing Research Council, some of the factors that negatively influenced outsourcing relationships included the following:

• Setting unrealistic expectations and over-promising during the sales process.
• Structure of the relationship was inappropriate, which led to a discrepancy of interests during the engagement.
• Transitional details were not given adequate attention.
• Both parties were inflexible when it came to business needs and changes to operational requirements.
• Clash of culture between the two parties.
• A high turnover rate.
• Customers did not work through their business objectives.

Even though these studies identified potential problems, IAOP did identify some ways to assure the success of the alliance.  The IAOP study analyzed the key elements involved in creating a successful outsourcing relationship between the outsourcer and provider.  These findings were also consistent with the 1997 study and are summarized below:

• The expectations set by the outsourcer will lead to improved market standing through acquisition of new skills and competitive positioning.
• The provider will use its techniques, competencies and processes to improve the efficiency of the operation and cost basis.
• Both parties must understand that there has to be a strong relationship, including communication in order to create a successful alliance.

The IAOP researchers came to the conclusion that the factors necessary to create a successful outsourcing relationship have remained consistent and will continue to do so in the future.

If your company is considering IT outsourcing, contact the global sourcing strategists at A&E Consulting at 661-200-3612.  We can help you choose the right outsourcing location and partner.  It is our goal to provide each client with a personalized solution that minimizes the time of implementation and maximizes the return on investment.

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According to the 2007 State of the Outsourcing Industry Survey by Black Book, 66 percent of the 22,000 respondents ranked security capabilities as the third most important factor they would consider.  However, data security and intellectual property protection are often overlooked.  Some of the reasons that the responsibility for protecting data and assets in outsourcing relationships is overlooked include the following:

• The belief that responsibility for security can be outsourced
• Security has a low profile within the business
• There is an inadequate awareness of security at the senior management level

When security is overlooked in an outsourcing deal, the potential repercussions can be especially damaging for an IT organization.  Not only will the buyer face an increased risk of security incidents, such as virus outbreaks, there is also a risk that controls will no longer be strong enough to meet compliance within the industry.  Employees of the outsourcing provider may steal data and intellectual property if the appropriate security measures are not put in place.

Data security is a crucial element that needs to be addressed in the outsourcing contract.  It is more of a challenge to add security into the outsourcing agreement at a later time and it can be expensive to revise the contract, which is why it should be an initial part of the outsourcing deal.  IT executives should prepare the outsourcing deal in such a way that it is clear how security will be maintained during and after the outsourcing relationship.

By addressing security issues upfront, IT companies have a better chance of protecting data and intellectual property.  If your company is considering IT outsourcing, contact the global sourcing strategists at A&E Consulting at 661-200-3612.  We can help you choose the right outsourcing location and partner.  It is our goal to provide each client with a personalized solution that minimizes the time of implementation and maximizes the return on investment.

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IAOP’s survey was completed during the first quarter of 2006 and included the participation of 57 companies.  Approximately 50 percent of the responses came from providers, 30 percent from customers and 20 percent from advisors.

Four basic hypotheses were used by researchers, which included the following:

• Value: Researchers have observed that outsourcing arrangements were not delivering value and that many organizations were revising their outsourcing strategies.  Participants of the survey were asked questions regarding their experience with value capture, key measurements used and possible reasons for failures.

• Capabilities: The survey examined the capabilities that companies had in place to support outsourcing deals.  Participants were asked questions regarding senior management support and if any special skills were being developed.

• Benchmarking: Participants in the survey were questioned regarding whether or not they had established a benchmarking program and if so, was the program effective.

• Perspectives: The survey analyzed the different perspectives on value capture, capabilities and benchmarking by including buyers, suppliers and advisors as participants.  The authors of the study were looking to discover if perspectives would differ based on the role of the participant.

After conducting the extensive study, the researchers found that few organizations are generating value from outsourcing on a consistent basis.  However, when it came to the providers’ perspective on value, they were three times more optimistic in stating their companies generated value from outsourcing, as compared to the customers’ point of view.

When participants were asked why outsourcing relationships fail, some of the reasons given were unrealistic expectations, lack of outsourcing strategy and too many requirement changes.  According to participants in the survey, providers are doing a poor job on setting expectations in their outsourcing relationships.  It was also found that customers need to place more emphasis on change management during the implementation process.  In addition, a better focus needs to be made on an upfront strategy and change management strategy, which can be accomplished through the help of a global sourcing strategist.

If your company is considering IT outsourcing, contact the global sourcing strategists at A&E Consulting at 661-200-3612.  We can help you choose the right outsourcing location and partner.  It is our goal to provide each client with a personalized solution that minimizes the time of implementation and maximizes the return on investment.

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Before a company decides to outsource, the potential cost savings should be evaluated.  Often times, organizations do not include all of the costs of outsourcing when determining the total amount that will be saved by the arrangement.  For example, initial transition costs, travel expenses, license agreements and other expenditures associated with global IT outsourcing are often overlooked.  To realize the full cost savings of global IT sourcing, it is important to consider all expenses, including the initial “one time” costs.

A successful outsourcing arrangement will depend heavily on the vendor’s capabilities.  The global sourcing provider can make the difference of whether a project succeeds or fails.  Some of the criteria that should be considered when choosing an IT vendor include the location, employee qualifications, established security measures, industry expertise and communication infrastructure.  The global sourcing IT strategists at A&E Consulting have the knowledge and experience to help organizations choose the right vendor. 

Once a global IT provider is chosen, the contract should be carefully and thoughtfully drafted.  Most outsourcing engagements last for several years, which makes it crucial to obtain terms and conditions that are fair to both parties.  Expectations and requirements should be clearly defined in the agreement, along with key metrics to evaluate vendor performance.  Some companies like to include a risk and reward mechanism in the contract, which would also incorporate penalties if the vendor fails to perform the required tasks.  The final contract should include all of the agreed upon terms and conditions, so there is no room for ambiguity.

By taking these necessary steps, companies can work towards getting the most value out of global IT sourcing.  A&E Consulting is a full service consulting firm that has been successfully helping clients with their global needs.  For more information, call 661-200-3612 or email info@AandEConsulting.com.

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