Managing Risks

managing risks in outsourcing

Inherent Risks of Outsourcing

Software projects have many risks and each of these risks has its own variation. In general, in-house is the safest venue and offshore is the riskiest, with nearshore somewhere in between, although closer to the in-house situation.

This is but a brief review of the major risks, to help you be on the look out for them and identify them, and, ultimately, to help manage your projects to success.

The majors areas reviewed here are:

Engagement Manager

Besides the appropriate technical qualifications, the ideal engagement manager must have very, very good people management skills and be courageous. That’s because he/she is going to represent the remote team to the local team and vice versa.

Find somebody who has had experience managing a remote team, preferably somebody who understands the cultural differences between your team and the remote team. This requirement stands even if you plan to outsource onshore!

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Tech Leads

You need to have a technical lead for for every five or six offshore engineers. These leads act as the bridge between the offshore and US teams and must, therefore, work a shift that overlaps both teams.

Besides the appropriate technical qualifications, the ideal candidates should better than average people skills.

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Staff Turnover

Find out what the turnover is in the particular area where your vendor is located. Also, ask vendors what their turnover has been in the last 12 months, and last 24 months (i.e., you want to know if their rate is going up). If a vendor’s numbers don’t jive with the reported turnover numbers for the area, then keep looking for another vendor.

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Productivity Loss

The main cause of the difference in productivity is due to experience and skills level of the engineers that outsourcing vendors can attract, and retain. The outsourcing vendor is motivated to put together a team quickly, to start billing sooner. This is simply the nature of the business.

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Ironically, the most often forgotten item is training. This is perhaps because within a co-located development team training just “happens.” Even new teams members get one or two days of orientation (“this is your CVS login”); the rest of the training happens in the daily interactions with the rest of the team. When dealing with a remote team, this just won’t work.

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Plan to have the Engagement Manager travel to the outsource locale every six months, at least. If you’re having any type of persistent problem, the engagement manager must make a visit to the site as soon as feasible.

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Process (and Documentation)

You are going to need to establish a more robust process when you have a split team. When everybody in the team sits in the same vicinity, you can get away with sloppy process and thin documentation. Once you have a remote team, the situation changes and you’ll have to have a better defined and more strict process in place, including more complete documentation for every step of it.

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Even this brief overview of potential risks should make it clear that outsourcing is not to be taken lightly. Software is hard to do and splitting out pieces of it makes it harder. It’s not an impossible tasks by any means, but it’s one that has to be carefully managed and where experience is the best guide.

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