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Increased savings, access to talented pool at lower costs, flexible resources, better co-ordination and faster communication enabled by modern technology, 24*7 work cycle, shorter time to market are few reasons that offshore outsourcing is gaining impetus. Offshore outsourcing can result in increased profits, only if it's done methodically.
Deciding on the right outsourcing partner for your business needs is the first and most important step in offshore outsourcing. There are many who claim to meet all the pre-requisites for becoming your offshore partner. But an outsourcer must follow a comprehensive vendor evaluation process before making the final strategic decision.
A thorough vendor evaluation process can take upto a year. The process itself involves expense, which is mostly ignored during cost calculations.
Prior to selecting offshore vendor first decide on the country. Evaluate different offshore destinations with respect to your outsourcing requirements. India, China, Russia and Philippines are some of the top offshoring destinations. Assess the compatibility of outsourcing related laws of different countries with those in your own country. E.g. A European Protection Directive doesn't allow personal data to be sent offshore unless the other country has equally strong laws or the contract explicitly includes measures for data protection.
Once an appropriate destination is selected, decide on the type of delivery model that works best for your project. Depending on whether an onsite team would affect the project work, you can choose either a global delivery model or an entirely offshore model.
The outsourcer should also try to understand the overall outsourcing industry scenario. The reasons why some succeed and achieve the anticipated outcome and why some fail miserably should be analyzed at length. The fact "Offshore outsourcing is a long-term investment with not much immediate gains" should be well understood.
The next step is scrutinizing the different vendors based on common benchmarks. Assess each vendor against common criteria like industry know-how, technical skill set, cultural flexibility, quality standards, pricing model, procedures followed, et all.
After narrowing down your choice to a few selected vendors, begin a pilot project with the offshore vendors. This project, though smaller in size and non mission-critical, will help to further analyze the short listed offshore vendors more critically. Project's outcome will help decide which offshore vendor's mind-set best suits your project needs.
Before signing the final contract, it's advisable to make a personal visit to the offshore site. This would help in validating the claims made by offshore vendor. Interaction with offshore team gives an idea about their attitude towards your company and their flexibility to work with a team located far away.
Finalize the contract with SLA (Service Level Agreement). It should clearly list out the minimum level of service to be provided by the offshore vendor. Performance Measurement techniques should be well defined within this. The steps, in case of failure to meet the set standards, should also be mentioned and agreed upon by both parties.
To keep the project moving along the expected lines, it's essential to have continuous monitoring and performance measurement as per mutually agreed procedures. This helps to identify and work out any discrepancies and issues, as and when they arise. Offshore team must strictly adhere to the reporting system decided upon.
Performance monitoring may also include occasional visits to offshore site. This would help get a more realistic idea of the project's progress.
An outsourcer's final decision should accomplish a balance between cost and desired quality of deliverables.