Cost reduction often is the primary push to outsource a non-core area. And when the savings are significant, slashing the costs almost in half, more and more American companies are taking advantage of the lower price, even if the supplier is half way around the world.
On the IT waterfront, Indian outsourcers can save their American clients up to 45 percent of the project cost, according to Dilip Dongre, global business development manager for Mastek Ltd., a publicly traded global IT outsourcing company located in Mumbai, India. The company specializes in offshore application development and maintenance, application migration, product development and support, and Web application development. The newest application is e-commerce; the company has 200 people working on Web-based businesses. All told, Mastek has 800 employees.
The company has subsidiaries in the United States, United Kingdom, Belgium, Germany, Japan, Malaysia and Singapore. Mastek's U.S. subsidiary is located in Santa Clara, California. Having subsidiaries in various countries, following the rules and practices of the land gives the Indian firm added credibility, Dongre observes.
One of the big worries in outsourcing offshore is managing the project from afar. Mastek makes sure its customers don't lose control of their projects when the programmers are on a different part of the planet. The outsourcer allows its customers to access their project status through its Intranet using tools such as Application Review and Tracking System (ARTS) and ComCenter. AT&T is using this facility for controlling its offshore projects at Mastek in India.
This instant access is an advantage for executives presenting progress reports to the board. Instead of having to wait for phone calls and faxes for a project update, they can simply download all the data and bar charts they need.
The Internet also helps to manage customer expectations. Dongre points out there is little miscommunication when both parties are on the same Web page. Meanings don't get distorted or blown out of proportion.
Providing Constant Coverage
Offshore development in India has many advantages. Because there is a 12 hour time difference between India and California, programmers are literally working on a project night and day, providing 24/7 coverage.
Dongre says many Indian programmers have IT skills that are not readily available in the United States or the United Kingdom. Indian programmers are highly motivated and often more career oriented than their stateside counterparts, in Dongre's view. An American programmer will leave at 5:30 when the company turns out the lights because America is so full of after work options. When an Indian works on-site in the U.S. office, there's nothing to do but sit at home and watch TV after work," says Dongre. "So our programmers are happy to stay at work to further their careers in the global marketplace," he says.
And the careers are global. Mastek attracts many two career couples. If a husband is working in the U.S. and his wife wants to take a job in Australia, Mastek has a broad enough range of assignments to transfer both of them Down Under. This wealth of work allows the outsourcer to attract competent and peripatetic employees.
For the last few years Mastek has been growing 60 percent a year. This rapid growth requires the firm to have stock options to keep its key employees.
Indian programmers believe people skills are important if the company is to create a high profile in the global marketplace. Indian culture places great value on creating long term relationships. Mastek tries to do this through open communication and "customer intimacy." Nourishing customers it already has is a wise business move because of the high cost of attracting new customers.
Cultural Conditioning Classes
Mastek realizes each country it works in has different work and cultural rules. Before any Mastek employee accepts an offshore assignment, the outsourcer recommends they attend the company's internal conditioning sessions where they learn the culture and the history of the foreign land. "Our people are proficient in the software platforms and know how to deal with people with different backgrounds," Dongre says.
In addition, there are foreign language classes two hours a week so the Indians can communicate with their clients in their tongue. Every week native speakers teach Mastek employees French, German and Japanese.
Typically, Mastek assigns three teams for every contract. The first team is on site at the customer's headquarters. The second team is off site at Mastek's office in that country. The third team is offshore in India, at the company's 150,000 square foot facility.
Mastek developed this system working for AT&T. Now it has an exclusive offshore center dedicated exclusively to AT&T projects.
The newest area of growth for the Indian outsourcer is the insurance industry. These concerns realize they need to outsource their IT to reduce their costs and increase their profitability. But they are worried about the secrecy of their data. The Internet is beginning to allay some of their fears. So, the insurers are turning to companies like Mastek to develop software that has an appropriate system of checks and balances.
Lessons from the Outsourcing Primer:
- The Internet can provide comfort to the buyer by providing ready access to progress reports.
- Outsourcing IT in India can save up to 45 percent of a project's budget.
- Outsourcing offshore can provide 24/7 support since one team is always working on the project.
- Offshore suppliers can ensure success by providing cultural and language training for the employees who will be stationed at the customer's site.