How to Successfully Outsource Your Software Projects

By Rex Black  |  Posted 2010-01-28

How to Successfully Outsource Your Software Projects

In the last decade, outsourcing became a powerful force in the software industry. Motivations behind outsourcing vary, but the reason mentioned most is that of cost savings. Unfortunately, all too often, previous attempts at outsourcing failed to deliver the desired efficiencies or perhaps failed to deliver anything at all.

So, is outsourcing some siren on rocky project shores, luring to doom the captains of IT who dare to listen to the siren's song? Not at all, but outsourcing is not without its risks. Over the last 20 years, I've worked on both sides of the outsourced IT relationship and have seen it work. Let's examine what successful outsourced efforts have in common.

Successful outsourcing involves planning and handling the unique logistical details of outsourcing. For example, success on many software projects requires e-mail and intranet communication, synchronized software life cycles, procedures for file transfer and effective configuration management. It also requires support for development, test and staging environments, sufficient test data, common tool usage and compliance to applicable standards.

Project teams must understand the tactical details of how the work will get done, day-by-day, person by person, and resolve any logistical obstacles that could occur in advance. Good project logistics are like air and water: You don't notice them until they're bad or, worse yet, completely missing.

However, outsourcing logistics are complex and often span organizational areas of responsibility (or even falls into gaps in areas of responsibility). Problems happen often and cause many outsourcing difficulties and failures.

Trust and Communication

Trust and communication

Successful outsourcing also involves good working relationships with mutual trust and open communication. Studies show that simply locating people on separate floors in the same building can dramatically reduce communication and relationship building. Having people located thousands of miles and half a dozen or more time zones away is even harder on relationship building and maintenance.

However, successful outsourcing requires that people actively nurture good working relationships across the organizational and geographical boundaries. If relationships are weak, trust is missing and communication is infrequent, every project challenge becomes harder to manage. In the long term, relationships sour and morale suffers. In addition to creating an emotionally unpleasant working situation for everyone, quality and efficiency both decrease.

Capability Maturity Model Integration

Successful outsourcing requires understanding what Capability Maturity Model Integration (CMMI) does-and doesn't-tell you about an outsource vendor's capabilities. Properly applied, CMMI will lead to more orderly, consistent practices-which can increase quality and efficiency. There are those who use CMMI to improve their processes, reduce costs and deliver better software. That said, the jury is still out on whether there is a statistically valid and reliable correlation between CMMI levels and the cost per delivered KLOC (Thousand Lines of Code) or Function Point, or between CMMI levels and the reliability or defect density of the delivered software.

If that seems to contradict what I said earlier about some companies, my point is that it is a logical fallacy to say that, since some companies have success with CMMI, therefore every company that achieves a high level of CMMI maturity will produce better, cheaper software than another company with a lower level of maturity. Even Dr. Bill Curtis of the Software Engineering Institute, one of the fathers of CMMI, admitted at the ASM/SM 2002 conference that, when used purely as a marketing device, CMMI does not significantly improve quality or efficiency. So, if an organization says they are CMMI-accredited (at whatever level), dig further to see exactly what that means in terms of their daily practices, and look at solid metrics for efficiency and quality.

Selecting the Right Service Provider

Selecting the right service provider

This brings us to the final factor for successful outsourcing: selecting the right outsource service provider. As I mentioned earlier, just looking at CMMI levels won't suffice. But even if you satisfy yourself that a vendor is mature, efficient and delivering quality, remember, as an investment prospectus would say, past results are not necessarily indicators of future performance.

In other words, just because a vendor has had good results on past projects doesn't mean they will succeed on your projects. Here are seven other questions to consider:

1. Who are the specific people who will work on your projects, how long have they been with the vendor, and what measures are in place to prevent turnover?

2. Does the vendor have experience with technologies, business domains and projects similar to yours?

3. Does the company have sufficient infrastructure to handle your projects?

4. If you anticipate growth in your use of the vendor, do they have the ability to scale up their staff without compromising the quality of their work?

5. Are the technical and managerial leaders of the company well-established in the field, with a good reputation and perhaps even a record of thought leadership?

6. Are the vendor's corporate culture, work habits and ethical standards consistent and compatible with your own?

7. Does the vendor have competencies in specialized areas such as testing or requirements engineering, or should you consider using specialist vendors for those elements of the project?

If all of this seems difficult and complex, keep two things in mind. First, even relatively small projects can have significant costs, especially opportunities costs, if they fail. So outsourcing is always a decision to be made with care. Second, in most cases the real efficiencies of outsourcing will only kick in after a few projects. Organizing for outsourcing success is worth doing well because, if you do it right, you only have to do it once. Once you have established a successful working relationship with an outsourcing vendor, you will find yourself reaping the benefits, project after project.

Rex Black is President of RBCS. Rex is also the immediate past president of the International Software Testing Qualifications Board and the American Software Testing Qualifications Board. Rex has published six books, which have sold over 50,000 copies, including Japanese, Chinese, Indian, Hebrew and Russian editions. Rex has written over thirty articles, presented hundreds of papers, workshops and seminars, and given over fifty speeches at conferences and events around the world. Rex may be reached at

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