For richer, for poorer...
Dmitry Loschinin, President and CEO, Luxoft on choosing the right outsourcing partner.
Apr 15, 2005
CXO. What mistakes do companies typically make when deciding to outsource?
DL. They decide to outsource only to save money, looking for the lowest-cost provider while ignoring vital factors such as task complexity and suitability for outsourcing. It is critical that executives in charge have a clear understanding of why, what, where and with whom to outsource prior to finalizing a decision. We use a decision matrix as a part of our client engagement model. This matrix helps our clients not only select the most appropriate outsourcing relationship, but it also helps companies determine whether outsourcing is right for them in general. Once knowledge transfer begins it is too late to inhibit the process by citing information security restrictions. Client engagement done correctly avoids such problems.
CXO. What should companies look for in an outsource provider?
DL. Aside from labor costs, companies should also look for supplier technical expertise, strength of management, organizational capabilities, cultural fit, language skills and commitment to quality, as well as outsourcers who have achieved process certifications such as CMMI level 4 or 5. After a shortlist of candidates is identified, companies should conduct a full evaluation prior to final selection.
CXO. When India seems to be the global outsourcing/offshoring
leader, why should companies consider outsourcing to Russia?
DL.The question of whom to choose as a partner is best decided according to specific requirements rather than geographic location. And there are technical, cultural and economic reasons to consider Russian outsourcing providers. Certain applications characterized by a higher level of complexity require non-traditional, "one of a kind" approaches. Russian-trained professionals are renowned for their ability to creatively handle complexity, executing demanding projects with ease and excellence. Russia’s reliable infrastructure is another advantage. Culturally, Russian work and communication habits are similar to those of workers in the US.
CXO. What is the client engagement model and how can it help
companies avoid pitfalls?
DL.The client engagement model is a framework that guides a customer and software development outsourcer to achieving a successful relationship. This framework contains rules, processes, methodologies and other components that, if left undefined, could easily cause trouble during the engagement. Effective models also contain special parameters that allow the tailoring of rules to reduce engagement risks.
CXO.Why must outsource providers be flexible enough to consider
specific needs of the client? Typically what form do these specifications take?
DL.Henry Ford famously said he would paint his Model T "any color as long as it is black". Companies should ask potential outsource providers about their flexibility to customize and fine-tune their processes to account for the infinite differences and needs of each client, such as: its operating standards and processes, outsourcing goals, engagement size and scope.
CXO.What are some best practices to ensure outsourcing successful for customers?
DL.Clients and outsourcing providers should define key performance parameters at the start of each engagement. The two organizations should establish clear measurements for each parameter and assign a straight connection between these performance parameters and client’s service level agreements. Other best practices include: maintaining a continuously high level of communication, formal issue resolution workshops and risk reduction programs.
DL. They decide to outsource only to save money, looking for the lowest-cost provider while ignoring vital factors such as task complexity and suitability for outsourcing. It is critical that executives in charge have a clear understanding of why, what, where and with whom to outsource prior to finalizing a decision. We use a decision matrix as a part of our client engagement model. This matrix helps our clients not only select the most appropriate outsourcing relationship, but it also helps companies determine whether outsourcing is right for them in general. Once knowledge transfer begins it is too late to inhibit the process by citing information security restrictions. Client engagement done correctly avoids such problems.
CXO. What should companies look for in an outsource provider?
DL. Aside from labor costs, companies should also look for supplier technical expertise, strength of management, organizational capabilities, cultural fit, language skills and commitment to quality, as well as outsourcers who have achieved process certifications such as CMMI level 4 or 5. After a shortlist of candidates is identified, companies should conduct a full evaluation prior to final selection.
CXO. When India seems to be the global outsourcing/offshoring
leader, why should companies consider outsourcing to Russia?
DL.The question of whom to choose as a partner is best decided according to specific requirements rather than geographic location. And there are technical, cultural and economic reasons to consider Russian outsourcing providers. Certain applications characterized by a higher level of complexity require non-traditional, "one of a kind" approaches. Russian-trained professionals are renowned for their ability to creatively handle complexity, executing demanding projects with ease and excellence. Russia’s reliable infrastructure is another advantage. Culturally, Russian work and communication habits are similar to those of workers in the US.
CXO. What is the client engagement model and how can it help
companies avoid pitfalls?
DL.The client engagement model is a framework that guides a customer and software development outsourcer to achieving a successful relationship. This framework contains rules, processes, methodologies and other components that, if left undefined, could easily cause trouble during the engagement. Effective models also contain special parameters that allow the tailoring of rules to reduce engagement risks.
CXO.Why must outsource providers be flexible enough to consider
specific needs of the client? Typically what form do these specifications take?
DL.Henry Ford famously said he would paint his Model T "any color as long as it is black". Companies should ask potential outsource providers about their flexibility to customize and fine-tune their processes to account for the infinite differences and needs of each client, such as: its operating standards and processes, outsourcing goals, engagement size and scope.
CXO.What are some best practices to ensure outsourcing successful for customers?
DL.Clients and outsourcing providers should define key performance parameters at the start of each engagement. The two organizations should establish clear measurements for each parameter and assign a straight connection between these performance parameters and client’s service level agreements. Other best practices include: maintaining a continuously high level of communication, formal issue resolution workshops and risk reduction programs.