The Controversy of Outsourcing
Oct 03, 2003
Featuring Ian S. Hayes by Jon Huntress, Editor, BrainStorm Group's - BrainStorm Bulletin.
We had an exciting time at BrainStorm San Francisco last week and got quite a bit of media attention, but not the kind that IT information providers usually seek out - protesters outside the hotel on September 16th! A group of about 50 unemployed IT workers protested the Nearshore/Offshore segment of the conference. The story was carried around the world.
BrainStorm's CEO, Gregg Rock pointed out to the media in San Francisco that 4 percent of current IT budgets is dedicated to outsourcing projects and the trend is for more. BrainStorm has provided the industry with the best information and advice on outsourcing since 1999. It is a very complicated issue, and not easily distilled into sound bites for the media. Choosing to outsource is not a decision that should be made lightly or quickly. There are more pitfalls to outsourcing than in other IT projects, because not only do you have all the normal difficulties of turning a proposal into a working system, but you have to do it with a foreign partner in another part of the world, who may not understand the cultural context of what you want to do. Join us in New York for expert advice on your outsourcing project. I covered the protest as well as some of the challenges and benefits below.
Also in this issue we are covering Ian Hayes's keynote presentation for BrainStorm New York, on what it takes to launch a successful outsourcing engagement. Ian is the principal with Clarity Consulting and the Co-Chair of the Nearshore/Offshore Conference being held in BrainStorm New York. Read about what Ian will cover below.
BrainStorm New York starts November 4th, so make plans to join us for the most recent information on the critical issues facing Business and IT professionals today.
Best Regards,
Jon Huntress
Editor
www.BrainStorm-Group.com
--------------------------------------------------------------------------------
FROM THE EDITOR: The Controversy of Outsourcing
Having been in the IT and event industry for over 12 years and with combined experience of over 75 years, BrainStorm Group has almost seen it all. The operative word being "almost".Something new was added to the just-completed BrainStorm San Francisco Business Integration and Nearshore/Offshore outsourcing conference - protesters.
About 50 out-of-work technology workers gathered outside the conference hotel and protested the Nearshore/Offshore segment on September 16. Stories about the protest appeared in the local Silicon Valley newspapers that day and the next. These stories were picked up by papers around the world, including the San Francisco Chronicle, London Financial Times, Business Standard in India, ZDNet News in Australia and Asia, and Wired News, CNET, among others.
The SF Chronicle coverage may be read at: www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/09/17/BUG6Q1OCIQ1.DTL
The news stories covered some of the protester's statements, as well as what Gregg Rock, BrainStorm CEO, had to say about outsourcing. Of course, you won't see much "fair and balanced" coverage of outsourcing in the news. There simply isn't time or space available to cover a topic as broad and complicated as this one. BrainStorm has been in the business of providing Business and IT Executives with an unbiased platform to discuss all aspects of Outsourcing.
Outsourcing continues to be controversial in many ways. It is definitely not a panacea or a sure-fire way to reduce costs or guarantee a positive ROI, which our leading presenters have been saying at our conferences for many years. It is difficult to get into, hard to control, and if not done right, can cost a fortune and give very little back. The following recommendations were provided by past BrainStorm presenters:
Gregg Rock pointed out in San Francisco, "The genie's out of the bottle on offshore outsourcing. Three to four percent of IT budgets nationally are already earmarked for foreign labor. It's up to the government, not businesses, to handle the fallout of this shift. Businesses will go the path of least resistance and greatest savings."
So you see, outsourcing has many sides and challenges. The idea is being considered by most businesses now, which was inevitable given the state of the economy and recovery. There is a lot of hype, and because of that, much misinformation. The best source for understanding all sides of the outsourcing issue is the New York BrainStorm Conference, starting November 4.
Jon Huntress
Editor, BrainStorm Bulletin
--------------------------------------------------------------------------------
FROM THE EXPERTS: Launching a Successful Outsourcing Engagement
Featuring: Ian Hayes, Conference Co-Chair President, Clarity Consulting
by Jon Huntress
The BrainStorm New York Nearshore & Offshore Outsourcing Conference is a primary resource for IT and business executives to receive unbiased insights into what is needed for the success of their outsourcing initiatives. Ian Hayes, Conference Co-Chair, will give the keynote address on November 4th.
Ian is the founder and president of Clarity Consulting, a management-consulting firm. Ian advises Global 1000 companies on outsourcing, productivity and service level metrics, business/IT alignment, efficiency enhancement and process redesign. He is a regular contributor to the Cutter IT Journal, Software Magazine and other publications; and his articles have also appeared in Business Week, Computerworld, Application Development Trends, and Enterprise Application Integration Journal.
Ian's keynote address in New York will focus on companies that are thinking about offshore outsourcing, just beginning an offshore engagement or seeking to correct a troubled outsourcing arrangement, and is designed to get them on the right track. Solid planning at the beginning of a project creates accurate specifications and achievable goals that simplify the whole process and help insure positive results.
From his experience turning around troubled outsourcing relationships, Ian has invariably found that most problems arise from decisions and actions taken at the start of the initiative. Companies choose the wrong kind of vendor for the work they want to do, cut corners in setting up the engagement, or send the wrong kind of work to the vendor. Ian has found that if you take just a little more time at the beginning, it can make all the difference as to whether a project succeeds or fails.
One of the things that Ian will discuss is the type of project that best lends itself to an outsourcing solution. Some things are best kept onshore, a decision often determined by company strategy. If minimizing cost is the main consideration, offshore is a good bet. Characteristics such as the need for extra security or a high level of interaction between the project team and the end users will also affect where work is sourced. These factors don't necessarily preclude offshore work, but companies must foresee and control them.
Knowing how and where to partition projects is critical to a successful sourcing strategy. Ian said that many companies aren't used to partitioning projects, but any project can be partitioned. For example, aspects such as coding database accesses or standalone components that don't require interaction with end users are candidates for offshore development. Companies normally partition based on skills or entire projects or sub-projects, but they can also divide work in a variety of other ways. Many offshore vendors now have a number of locations where they perform work, including in the US, and can handle entire projects, sending some work out and keeping the rest in-country as appropriate. The key is to determine the right mix of onshore/offshore work to advance and support company objectives and goals.
In the past few years, offshore outsourcing has exploded. The percentage of companies willing to outsource, and even increasing their outsourced workloads, is growing substantially. Ian believes that this trend will only accelerate as companies see the benefits of offshore outsourcing come to fruition. It is becoming increasingly difficult for outsourcing vendors to compete on price alone for IT work, but price isn't the only factor. Often, it isn't even the most important factor. Software development and programming are still 'people work,' meaning that there are organizational and process issues that need to be determined and worked with and around. The skill sets and capabilities available in India, according to Ian, have matured greatly and are every bit as good as those in America. The better-known development centers in India follow very high standards, and are producing a high quality product at an extremely cost-competitive price. Many of the offshore vendors have achieved the highest levels of process maturity and CMM certification. For example, one company, relying on its mature processes, typically brings in its projects within 10% of the original bid, a rarity in the software industry. They accomplish this feat by reviewing every variable in their estimation model after each project, and making changes so that subsequent estimates will be even more accurate. By continually honing its delivery and estimation capabilities, the company can stand by its bids with confidence.
Ian's talk is directed toward people who are considering launching an offshore engagement, have launched an offshore engagement, or those who are unhappy with their current arrangement and need to turn it around.
A wealth of information about Nearshore/Offshore Outsourcing is available at the Conference in New York in November. Make plans to attend.
Jon Huntress
Editor, BrainStorm Bulletin
We had an exciting time at BrainStorm San Francisco last week and got quite a bit of media attention, but not the kind that IT information providers usually seek out - protesters outside the hotel on September 16th! A group of about 50 unemployed IT workers protested the Nearshore/Offshore segment of the conference. The story was carried around the world.
BrainStorm's CEO, Gregg Rock pointed out to the media in San Francisco that 4 percent of current IT budgets is dedicated to outsourcing projects and the trend is for more. BrainStorm has provided the industry with the best information and advice on outsourcing since 1999. It is a very complicated issue, and not easily distilled into sound bites for the media. Choosing to outsource is not a decision that should be made lightly or quickly. There are more pitfalls to outsourcing than in other IT projects, because not only do you have all the normal difficulties of turning a proposal into a working system, but you have to do it with a foreign partner in another part of the world, who may not understand the cultural context of what you want to do. Join us in New York for expert advice on your outsourcing project. I covered the protest as well as some of the challenges and benefits below.
Also in this issue we are covering Ian Hayes's keynote presentation for BrainStorm New York, on what it takes to launch a successful outsourcing engagement. Ian is the principal with Clarity Consulting and the Co-Chair of the Nearshore/Offshore Conference being held in BrainStorm New York. Read about what Ian will cover below.
BrainStorm New York starts November 4th, so make plans to join us for the most recent information on the critical issues facing Business and IT professionals today.
Best Regards,
Jon Huntress
Editor
www.BrainStorm-Group.com
--------------------------------------------------------------------------------
FROM THE EDITOR: The Controversy of Outsourcing
Having been in the IT and event industry for over 12 years and with combined experience of over 75 years, BrainStorm Group has almost seen it all. The operative word being "almost".Something new was added to the just-completed BrainStorm San Francisco Business Integration and Nearshore/Offshore outsourcing conference - protesters.
About 50 out-of-work technology workers gathered outside the conference hotel and protested the Nearshore/Offshore segment on September 16. Stories about the protest appeared in the local Silicon Valley newspapers that day and the next. These stories were picked up by papers around the world, including the San Francisco Chronicle, London Financial Times, Business Standard in India, ZDNet News in Australia and Asia, and Wired News, CNET, among others.
The SF Chronicle coverage may be read at: www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/09/17/BUG6Q1OCIQ1.DTL
The news stories covered some of the protester's statements, as well as what Gregg Rock, BrainStorm CEO, had to say about outsourcing. Of course, you won't see much "fair and balanced" coverage of outsourcing in the news. There simply isn't time or space available to cover a topic as broad and complicated as this one. BrainStorm has been in the business of providing Business and IT Executives with an unbiased platform to discuss all aspects of Outsourcing.
Outsourcing continues to be controversial in many ways. It is definitely not a panacea or a sure-fire way to reduce costs or guarantee a positive ROI, which our leading presenters have been saying at our conferences for many years. It is difficult to get into, hard to control, and if not done right, can cost a fortune and give very little back. The following recommendations were provided by past BrainStorm presenters:
- Many of the best-known outsourcing companies in India are CMM Level 5 firms. Most US companies are CMM Level 3 or below. On the surface, this looks positive, being able to jump two levels simply by going into partnership with another firm. But what it really means is that in order to even communicate with your new partner, you have to drag your whole company up close to the level of your partner. That means company-wide changes that will deliver very little initial ROI.
- When you outsource, you go into a long-term partnership with your outsourcing vendor. It may take a good year or two to get things running smoothly. It is not something that can be entered, or exited, easily. Requirements must be well understood. Responsibility can never be outsourced.
- Foreign countries and cultures are different. This sometimes makes communication challenging, to say nothing of the travel problems. Digital resources travel at the speed of light. Managers and personnel are much slower.
- You should never consider outsourcing a core company asset you can't afford to lose. Accidents and wars happen.
- You, the client, are always responsible for the success or failure of any outsourced project. If you don't get help in all phases of this process, there is a very good chance you will get taken to the cleaners.
- It really is less expensive, much less expensive, for any process that is not core and can be easily understood by both parties.
- Most first and second level help desks are already being outsourced.
- Diverse skill sets needed for complex projects are seldom found in-house anymore.
- Outsourcing is ideal for companies with a global presence, or for projects that need three-shifts because it allows true 24/7 delivery of service.
- There is a host of alternatives to consider, and some may be a very good fit for your company.
- Popular outsourcing countries include India, Canada, Mexico, Ireland, New Zealand, Russia, China, the Philippines, Vietnam, and Israel.
- Applications currently being outsourced include in descending order, although it varies by industry: Application Integration, eBusiness/Web, new development, maintenance, and legacy integration.
Gregg Rock pointed out in San Francisco, "The genie's out of the bottle on offshore outsourcing. Three to four percent of IT budgets nationally are already earmarked for foreign labor. It's up to the government, not businesses, to handle the fallout of this shift. Businesses will go the path of least resistance and greatest savings."
So you see, outsourcing has many sides and challenges. The idea is being considered by most businesses now, which was inevitable given the state of the economy and recovery. There is a lot of hype, and because of that, much misinformation. The best source for understanding all sides of the outsourcing issue is the New York BrainStorm Conference, starting November 4.
Jon Huntress
Editor, BrainStorm Bulletin
--------------------------------------------------------------------------------
FROM THE EXPERTS: Launching a Successful Outsourcing Engagement
Featuring: Ian Hayes, Conference Co-Chair President, Clarity Consulting
by Jon Huntress
The BrainStorm New York Nearshore & Offshore Outsourcing Conference is a primary resource for IT and business executives to receive unbiased insights into what is needed for the success of their outsourcing initiatives. Ian Hayes, Conference Co-Chair, will give the keynote address on November 4th.
Ian is the founder and president of Clarity Consulting, a management-consulting firm. Ian advises Global 1000 companies on outsourcing, productivity and service level metrics, business/IT alignment, efficiency enhancement and process redesign. He is a regular contributor to the Cutter IT Journal, Software Magazine and other publications; and his articles have also appeared in Business Week, Computerworld, Application Development Trends, and Enterprise Application Integration Journal.
Ian's keynote address in New York will focus on companies that are thinking about offshore outsourcing, just beginning an offshore engagement or seeking to correct a troubled outsourcing arrangement, and is designed to get them on the right track. Solid planning at the beginning of a project creates accurate specifications and achievable goals that simplify the whole process and help insure positive results.
From his experience turning around troubled outsourcing relationships, Ian has invariably found that most problems arise from decisions and actions taken at the start of the initiative. Companies choose the wrong kind of vendor for the work they want to do, cut corners in setting up the engagement, or send the wrong kind of work to the vendor. Ian has found that if you take just a little more time at the beginning, it can make all the difference as to whether a project succeeds or fails.
One of the things that Ian will discuss is the type of project that best lends itself to an outsourcing solution. Some things are best kept onshore, a decision often determined by company strategy. If minimizing cost is the main consideration, offshore is a good bet. Characteristics such as the need for extra security or a high level of interaction between the project team and the end users will also affect where work is sourced. These factors don't necessarily preclude offshore work, but companies must foresee and control them.
Knowing how and where to partition projects is critical to a successful sourcing strategy. Ian said that many companies aren't used to partitioning projects, but any project can be partitioned. For example, aspects such as coding database accesses or standalone components that don't require interaction with end users are candidates for offshore development. Companies normally partition based on skills or entire projects or sub-projects, but they can also divide work in a variety of other ways. Many offshore vendors now have a number of locations where they perform work, including in the US, and can handle entire projects, sending some work out and keeping the rest in-country as appropriate. The key is to determine the right mix of onshore/offshore work to advance and support company objectives and goals.
In the past few years, offshore outsourcing has exploded. The percentage of companies willing to outsource, and even increasing their outsourced workloads, is growing substantially. Ian believes that this trend will only accelerate as companies see the benefits of offshore outsourcing come to fruition. It is becoming increasingly difficult for outsourcing vendors to compete on price alone for IT work, but price isn't the only factor. Often, it isn't even the most important factor. Software development and programming are still 'people work,' meaning that there are organizational and process issues that need to be determined and worked with and around. The skill sets and capabilities available in India, according to Ian, have matured greatly and are every bit as good as those in America. The better-known development centers in India follow very high standards, and are producing a high quality product at an extremely cost-competitive price. Many of the offshore vendors have achieved the highest levels of process maturity and CMM certification. For example, one company, relying on its mature processes, typically brings in its projects within 10% of the original bid, a rarity in the software industry. They accomplish this feat by reviewing every variable in their estimation model after each project, and making changes so that subsequent estimates will be even more accurate. By continually honing its delivery and estimation capabilities, the company can stand by its bids with confidence.
Ian's talk is directed toward people who are considering launching an offshore engagement, have launched an offshore engagement, or those who are unhappy with their current arrangement and need to turn it around.
A wealth of information about Nearshore/Offshore Outsourcing is available at the Conference in New York in November. Make plans to attend.
Jon Huntress
Editor, BrainStorm Bulletin