The Furure of Outsourcing - BusinessWeek online, and DNR!

I have not done much blogging last year, hopefully this will be more fruitful.
Just wanted to highlight the recent cover story of the BuinessWeek magazine on current state of outsourcing. Besides useful case studies and a good feature on 5 Best Pracitices it gives a peek into an area close to myself (as an associate of a Russian software outsourcing house) - how Russia is seeking to become a global powerhouse in software outsourcing.
I have written to the editor that I consider the quality of Russian programmers to be a myth, a self-inflicted boost based more on the size of the country than actual quality.
I will post the letter in a few days here if it will not be accepted for publication in the BW.
In the meantime, whoever reads this blog whould visit the Special Report on BusinessWeek's online site .
PD 02-13-06 A short version of my note was published as a comment to an article Titled "Angling to be the next Bangalore". No intention to be personal, only wanted to share some observations.
An episode of my most favourite DotNetRocks! podcast with Carl Franklin and Richard Campbell featured Stephen Forte and talked his experience in outsourcing. While there undoubtedly exist people with more insight this gave me a very good idea about what our potential clients know, think and expect. Some Stephen's observations I share, the best practices he offered are no doubt common-sense conclusions and worth following. Let the others pave the road for you!

Aspects of outsoucring

I find there are five basic aspects that need to be evaluated before you consider to outsource your software (not only) development. Here they are, without a particular order.

1. Productivity expectations
   The vendor may be on a different level than your internal resources, depending on who they are. As I deal mostly with outsourcing to cheap labour markets, expect adequately lower productivity. This affects your planning in terms of time to delivery and total cost.
2. Overhead cost
   • Setup cost
     Even when you find an established vendor (lucky you), there is a setup period - establishing communication, possibly hiring resources, office space, connectivity etc. Expect your vendor to ask to pay for their time even before they start producing any value.
   • Learning curve
     Effort needed to adjust to your business processes. Plugging people into conference calls, reporting schemes. Many of these are pretty standard accross industry, yet may be new to your vendor.
     Becoming familiar with the product is a specific subcategory where you need to be especially cautios. More on that later.
   • Quality control
     Extra checkups and tests may be a good precaution even if your relationship is established. The vendor is usually not in contact with your customer and that makes a difference in terms of quality awareness.
   • Project Management
     Frequent checks and tighter supervision of progress is another good measure for you to stay in charge. This costs money.
     Consider the pros and cons of working project-based vs. ongoing (time & material).


3. Skilled work
   The level of understanding your business has a great impact on how much independence you can entrust to your vendor. The problems you are solving (or whole sector) may not exist in the environment of your vendor and therefore have no common understanding, and the decisions made will be correspondingly bad. You cannot really make assumptions about higher education making a difference for your resources, neither about having a full control over who is actually working on your projects.
4. Time
   The time scale is different in many parts of the world. People like to take siestas, leave early to be with their families, your hour may last three elsewhere.
   Time shift - how much longer can you stay up?
5. Culture
   Communication in terms of language, but also getting direct information, honest reactions, reading between the lines and all those subtleties that exist and that make our world still so interesting. Assess yourself first - are you good with people, patient and proactive? Did you adopt the seven habits of effectiveness? Previous direct multicultural experience is a great start, almost a must prior to embarking on a remote model.

I would like to elaborate more on each of these aspects soon and provide some checks and guidelines for those interested in trying. A lot of tears and blood has been shed in the past several years on the path to successfully outsourcing software development and there is knowledge to be shared. Whoever is reading this and has comments and stories please share theme here.

Getting Started - about me

This is my first actual posting ever so be patient while you read this.
I am currently living and working in Ho Chi Minh City (formerly known as Saigon), Vietnam, as a software engineer and development manager for a small US company. We are trying to outsource development of .net Web applications for the life insurance industry. Having been involved with management of software distributed and multi-national development teams for over 7 years I became to thoroughly enjoy this process for the challenges it presents for everyone's personal and professional maturity, courage combined with consideration, integrity - just so much a better way to learn about the world than plain old backpacking if you are asking. In less high flying words you have to be pretty good to be successful. Am I? I don't know and will not find out until many years later. Above all this is a changing environment and personal flexibility is a must. And this is absolutely a learning process.
Why blogging? If anyone ever comes accross this I'd like to offer my experience and insight into what matters, what are important success factors, how to prepare and how to grow outsourcing of software development. There will hopefully be several introductory posts in the next couple of weeks. If you run or frequent a similar forum please let me know - I'll gladly visit.