Friday 23 May 2008

Tips for Successful Offshoring

Over the last few weeks I've posted about how our offshore shenanigans have worked out and about how sustainable the location is shaping up to be. I thought it'd be worth also putting something out about some of the little operational lessons we learnt along the way...

For many organisations like us, offshoring is no longer about the cheapest delivery or adjusting the capital/labor ratio - it is now about the best quality and retaining capacity (although cost effectives is very much a priority). Companies that are successful at this are winning because they are not treating their offshore resources as cheap disposable assets - they are investing in the people, infrastructure and facilities. The economics involved often means ROI on this is significantly better than the same investment spent at home. Given this change in landscape how do you make sure you're still getting the best out of offshoring?

The first thing to do when considering offshoring is to decide what exactly you are going to offshore. Your options typically fall somewhere between product specialization and disaggregation, or in plain English having an offshore center wholly own the entire production chain (SDLC) vs. providing one or more steps (such as development, testing or support) as a service.

We went down the product specialization route. Setting up our offshore engineering center to be capable of end-to-end delivery for a chosen set of our products via agile/SCRUM was the right decision for us; so not everything here will be relevant to everyone!

Here is what made a difference for us:

  1. Set yourself up to be as independent as possible. Even a 2 hour time difference doesn't sound much but when you think about it 9am in the UK is 11am in Romania. You can pretty much lose half a day if you create organizational dependencies in either direction. If there are certain areas you can't achieve total independence in then work one day ahead (plan properly) in the lagging time zone.
  2. Invest in good communication. Personal interaction matters, doing frequent visits both ways and using tools like video conferencing to keep relationships alive in between are good. There are also a few easy, obvious things that really make a big difference on a daily basis; like phones that use internal extension numbers and having voicemail and integrated calendars between offices. Sounds simple but you'd be surprised how many people rely solely on email and don't integrate basic planning tools.
  3. Collocate whenever possible. When you can't collocate make sure you outline the key events in your SDLC (new project kick offs, sprint planning and demos in agile) to your product guys and get their commitment that they'll turn up, in person, to these as a minimum. Traveling a lot gets costly so if necessary coax them over with company apartments to alleviate their hotel budget woes - it's worth the expense.
  4. Get good local advice. An obvious one for professional services like legal and accounting but don't forget about some experience on the ground to help judge cultural impacts and advise on local 'norms' for everything from pay to holidays.
  5. Treat the people the same way as you do the rest of the organisation. Obviously there will be differences in areas like employment contracts and other things you might need to do to keep parity with the local market but these are expected in a mature global organisation. As long as everyone has the same opportunities for career development and can participate in all the same company-wide initiatives that will help teams bond internationally.
  6. Be prepared to fight head office. If you're responsible for any remote office you'll always be subject various well meaning head office types coming up with great new 'process improvements' for the whole organisation. Great if you can adopt them but if they don't quite suit the local environment it can be a nightmare fending off the unified procedure merchants. When the right thing to do is have something locally tailored you have to have that fight if you want the best results from those teams.
  7. Cultural adapting is a 2 way street. A lot of emphasis is put on how the big, bad HQ must come to grips with, and embrace, the unique flavor of a newly acquired territory; but the reality is a blending has to take place. Yes, the greater organisation is absorbing a new culture but that new culture is joining a greater whole and as such needs to expect some changes too.

Clearly there is a whole lot more to it than this but these are the big things we picked up that worked well in our model. Drop me a line if you've picked up something valuable in similar circumstances.

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