In 2001 Business Engine, a company that helps Fortune 2000 companies justify and manage IT investments, decided to produce a collaborative project management application. Having watched Indian application, development, and maintenance (ADM) firms successfully handle the Y2K coding challenges, the company chose to outsource the ADM work to a leading software development firm there. The Indian supplier’s delivered code failed to meet Business Engine’s expectations 80 percent of the time, according to Kazim Isfahani, Business Engine’s Director or Marketing.
The company leadership had a meeting to determine which fork in the road to take: should they abandon the effort and bring the work back to the States or figure out how to make offshore work. They chose the later since they wanted to capture the 30 percent cost benefit.
Isfahani says offshoring only works if companies make it “part of their core beliefs.” He says Business Engine chose to stay the course and fix the problem because it believed offshoring was the best option. “We realized we had to learn from our failure. An 80 percent error rate could have easily killed the project. But we felt it was important to make the necessary changes to make it work.”
Sending Someone to India Fixed the Problem
Isfahani says the leadership team discovered miscommunication was the No. 1 problem. “We had to do a much better job of improving the processes including detailing the specs and performing reviews with much higher frequency than before to ensure that the Indian team understand exactly what we wanted,” he says.
Business Engine then assigned one of its employees the job of overseeing the project–in India. “We realized we had to have someone there to represent our interests, understand our perspective, and manage what’s going on on a daily basis,” says Isfahani. The employee has a three year tour of duty.
Business Engine’s Suggestions for Offshore Success
1. Move one of your employees to the offshore supplier’s site.
2. Select a project manager with superior management skills.
3. Make offshore a core company belief.
4. Be willing to learn from failures and change course to correct the errors.
Having a supplier who agreed to this solution was key to the initiative. “You have to find a supplier who understands your process and your business. If not, going offshore could hurt you despite the cost savings,” the Business Engine executive says.
Moving an employee to India produced remarkable results. Three years later the error rate is a respectable, acceptable five percent. “Our employee introduced a level of rigor and visibility at the supplier’s that wasn’t there before. It made a big difference that our guy could walk down the hall and say to the developers, ‘We have a problem,'” says the Business Engine executive.
Isfahani says this project made him realize there are a lot of similarities between running projects in the office and offshore. “People shouldn’t be scared of going offshore if they have a good project manager who has an enhanced skill set and solid collaborative project management systems and processes,” he observes. “The key to realizing the potential business gains of any IT project lies in effectively governing the projects wherever they are,” he says.