Frequently Asked Questions
How do I know if my organization is ready to outsource offshore? Q: How do I know if my organization is ready to outsource offshore? It is import to evaluate the objectives you have for offshore outsourcing. Ensure your expectations for cost saving, service level and organizational commitment are realistic. Another area to evaluate is your own current processes and your organization's maturity level to adhering to those processes. Build a self evaluation risk profile including your operational, financial, market segment, and regulatory risks. When deciding if offshore outsourcing is right for you, look inward and determine your strengths, weaknesses, opportunities, and threats. back to topQ: How can Metagyre help if I am already working with an offshore provider? About half of Metagyre's involvement with clients is focused on the management of existing provider relationships and the recovery of out-of-control projects. Through our assessment services, clients learn what areas need to be improved and which improvements will deliver the highest return on investment. Metagyre's management service implements the recommended improvements or advises you on executing the plan yourself. Significant value is delivered to senior executive because of Metagyre's independence, experience, and focus your business concerns. back to topQ: What makes Metagyre an expert in offshore outsourcing? Metagyre's advantage includes proven processes and experienced staff. Through extensive development, Metagyre has built processes to address the complexities of offshore outsourcing including contract negotiation, scope management, governance programs, relationship management and quality assurance. Our staff bring extensive outsourcing experience to your engagement. They have worked for large outsource providers or as senior staff of companies who have been through the outsourcing process before. Additionally, Metagyre has resources located in many foreign countries to quickly assess and resolve issues at your provider's offshore center. This combination of hands-on experience and proven processes, working exclusively for companies buying offshore outsourcing services, makes Metagyre your independent outsourcing advisory choice. The State of Texas' Department of Information Resources has developed the following outsourcing policy: "External sources may be considered to assist the agency in managing the complexity of an outsourcing arrangement. Companies are available to help with defining statements of work, evaluating internal needs, negotiating, evaluating vendor performance, and providing quality assurance. While these services represent additional outsourcing costs, they can enable the agency or university to reduce outsourcing risks and accomplish agency goals." back to topWhat is different between offshore, near shore and onshore? All three outsourcing models refer to locations where information technology and business processes are performed. Onshore indicates that the work will be performed at the client sight. Onshore is the traditional outsourcing model used in the 70s, 80s, and 90s by companies such as EDS or Perot Systems. Offshore refers to outsourcing work to countries in locations significantly distant from the client's. Typically these locations are in developing countries where high quality workers are available at exceptionally low cost. Near shore refers to an outsource provider located relatively close to the client. For the US, Canada and Mexico are considered near shore outsource providers. Along with these three models there are a number of hybrid options intended to reduce risk and increase quality. Regardless of the outsourcing model or country, every option has its limitations and risks. It is important to clearly understand the advantages and disadvantages before making a decision. back to topQ: How do I communicate with the offshore team? Communication takes on a number of forms, some basic methods include:
back to topQ: How often should I visit the provider's center? The frequency of trips you make to your provider's center depends on a number of things. If your projects are on schedule, the quality meets SLA requirements, and your company has become comfortable with the processes, then plan on visiting every 9 to 12 months. The team that visits should include those project managers who are working day to day with the provider's staff. The visit needs to be organized with an agenda and goals to be accomplished. Plan on 10 to 14 days at your provider's center to ensure enough time to achieve your goals, exchange ideas, understand issues and develop strong team bonds. The trip should include an exchange of knowledge in both directions. Enlist improvements from your provider who should understand your business from an unique prospective now. Additional trips should be considered when there are changes to business components, new services or other major opportunities. If your projects are behind schedule, or quality is poor, first focus on project management and overall communication. Understand what is causing the relationship to deteriorate and the processes to fail. Remember travel is only one component of your communication and project management processes. back to topQ: What training should I provide my staff? Most offshore providers will refer to the activity known as "Knowledge Transfer" where their staff works with your staff to learn about the work they will take over. Your contract should include a "Knowledge Transfer" clause where the provider trains your staff on their processes and how to work effectively in the new offshore environment. The other area that becomes key is project management. Consider university project management certification programs or training designed to support the Project Management Institute's Project Management Professional program. back to topQ: How do I reduce employee backlash caused by outsourcing work offshore? An important responsibility of offshore governance is domestic staff relations. The domestic staff will have anxiety with the launch of offshore outsourcing and the changes it brings. As with most staff management issues direct, clear and timely communication is best. The governance board should work with human resources to understand and mitigate these issues through documented FAQs, brown bag discussions, success stories and other channels. These outlets allow the governance board to facilitate team building between domestic and offshore team members. Metagyre brings offshore public relations expertise to increase your messages' positive result. back to topQ: How can I mitigate my offshore outsourcing risks? Offshore outsourcing is not an activity that can be neatly packaged and easily inserted into a simple organizational chart. To work successfully, offshore outsourcing needs to be an integral part of the enterprise's business strategy. Just as supply chain management brings together manufacturing, purchasing management and distribution, offshore integrates project management, development staff, IT infrastructure, HR, and vendor management. In order to merge the different disciplines into a workable method, successful enterprises address offshore outsourcing in an integrated offshore model. The model applied by Metagyre is comprised of four layers. These four integrated layers are: Strategic Guidance, Offshore Governance, Project or Program management and Work Packet management. back to topQ: What is my biggest risk with offshore outsourcing? Every sourcing strategy has limitations and risks. Your risks are as dependent on your own organization's profile as much as it is on your provider. However, the items that represent the greatest cost containment problems are: lost productivity and cultural issues, required process development, and vendor management. back to topQ: What cost savings can I expect with offshore outsourcing? The cost savings realized by a company depends on a number of factors. The first thing to understand is that cost savings are a long term goal not an immediate outcome. There are a number of initial costs associated with shifting work to an offshore provider including the cost of outsourcing procurement, contract management, staff down-sizing, and retraining as well as knowledge transfer. On going expenses will also increase as the need for communication infrastructure, travel and management time increase. Finally, expect to pay higher rates for the provider's on sight staff than those located offshore. All this considered, if your are following Metagyre's model you can expect to save between 20 - 40 %. The higher savings come from experience and increasing the amount of work your provider performs offshore. Be aware that because many companies don't realize the management activities of outsourcing, about 27% of them do not save money by outsourcing work. back to topQ: How do I select the work that is best fitted to outsource offshore? Evaluate your work against three factors: complexity, interaction level and business criticality. Complexity concerns the amount of definition around the work. Work that is unique, poorly defined, and involves many decision points is considered complex. The interaction level involves the amount of communication that is required between on-sight and offshore personnel to complete the work. Business criticality reflects the business' dependency on the work being completed correctly and on time. Initially select work with low complexity, low interaction levels and low business criticality. As your experience with offshore increases you will want to select work with different values. As maturity increases move to higher interaction level work, then increase the complexity and finally add work that is business critical. The "Prioritization Matrices" is an excellent tool for this activity. back to top
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