Offshore Ties that Bind

Building solid ties with outsourcers takes time and requires careful planning.

You decide to offshore development of a new application, sold on the promise of saving, conservatively, 30 percent compared with doing it yourself. Even if you fall short of that goal, you reason, youre still significantly ahead of the game.

Youll achieve your goal only if you can effectively manage the relationship with your offshore outsourcer. It stands to reason that, given barriers of geography, psychology and language, managing that relationship will be more costly and require more expertise than you may now have. Have you budgeted sufficient funds to hire a project manager who knows the ropes? Have you taken the time to educate yourself in the risks? Have you budgeted for travel to India to solidify your relationship and demonstrate goodwill?

There would be nothing more embarrassing than to promise corporate management that you will save the company a chunk of change and then admit that you couldnt. So it makes sense to plan and budget an offshore initiative carefully—and then to execute the project with equal diligence.

One offshore provider, eFunds, is bending over backward to keep its customers from hitting potholes that are plain to see for the experienced but deceptively hidden for newcomers.

"Outsourcing has been positioned as the way to improve the health of your business, particularly the profitability of your business, without really trying" is a telling excerpt from a white paper published by the company, which specializes in work for financial services, retail and telecommunications industry customers. The companys headquarters is in Scottsdale, Ariz. It has 3,600 workers in India and about 400 in the United States.

Everyone needs to get over the gold-rush mentality, said Karen Williams—international marketing director at eFunds. The case for caution works both ways, Williams said.

"We have had our fingers burned by accepting information from customers. We recommend the customer give us a process of incubation offshore before we sign the SLAs [service-level agreements]," she said.

Even a provider thats eager for your business says its a good idea to walk before you run. Before you go in up to your neck, give a pilot program a chance to show where the pitfalls and opportunities are.

Out and about

As more and more neophytes look offshore, the value of caution increases. Marc Hebert, executive vice president of Sierra Atlantic, which has 700 employees in Hyderabad, India, and 60 at its Fremont, Calif., headquarters, said he is finding new customers among large consumers of packaged applications as well as among software vendors.

"In Silicon Valley, there is almost no company that doesnt use offshore. VCs [venture capitalists] are demanding it," said Hebert, who added that backlash against offshoring is, if anything, having a positive effect. "All the controversy is generating business," he said.

It might not come as a big surprise that the state of Washington is relying on technologies from home-state software giant Microsoft in its new Digital Archive system (, which came online last week. But a key role was also performed by Electronic Data Systems in developing the document and management applications. EDS used Microsofts Visual Studio .Net 2003 and Windows Server System products.

Adam Jensen, chief archivist of the state of Washington, said it was no small feat to apply metadata, index and securely store digital records of different types from city, county and state files. Different databases came into play, along with various e-mail archives, hardware and networking environments. For its part, EDS was looking to build a set of services from the experience. "Everything we do is as repeatable as possible," said Bill Kilcullen, EDS chief technologist.

In other deals, Siemens Business Services won a contract worth almost 2 billion pounds over 10 years to deliver technology services to the BBC. As previously reported in this space, the BBC sought to sell its massive IT operations to an outsourcer. Thus, Siemens has acquired BBC Technology and will rename it Siemens Business Services Media Holdings.

Stan Gibsons e-mail address is

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