I was visiting several customers this week to discuss various software outsourcing opportunities and a topic that repeatedly came up was what makes a good outsourcing company. So I thought it would make a good subject for this blog. Since I have recently been in the habit of creating top 10 lists on several topics, I thought I would continue the trend and give you my top 10 things to look for in an outsourcing vendor.
- Consistent delivery
This goes without saying really, but there is nothing more valuable than a partner that can, and does, do what they say they can do. The best way to validate the company’s ability to deliver is by giving them several short four to eight week engagements and see how they handle them. Do they do what they claim? Does it go smoothly? Look for how consistent the delivery is over a few projects. If they are consistent, then they probably have quality and delivery embedded in their cultural DNA.
- Finding the Right Size Organization
One of the important factors in selecting an outsourcing partner is finding the “right sized” IT vendor. This means finding the right size company for the size of your project. If you are looking for a $100M outsourcing deal, there are only a dozen or so companies that can really handle that. You do not want to select a smaller firm for such a large project.
On the other hand, you do not want to be a small fish in a big pond. If you have a $2M outsourcing deal, you do not want to go with a big firm. Why? You will get the large vendor’s ‘C’ level talent (maybe worse). It is important for you to select a vendor where you are a big fish, but not too big. You do not want the risk of being their biggest client, but you do want to have influence.
Typically, being in the top 3-10 billing clients is a strong position to be in without too much risk. This will help ensure that you will get ‘A’ level talent, attention at the executive level, as well as other favorable perks, and terms and conditions that you will not get as a smaller client. Of course, you should do your due diligence to make sure that the ‘right sized’ IT vendor has the experience and technical capabilities to meet your needs. But getting the right sized vendor is critical to the overall success of the outsourcing engagement.
- Business Continuity
Look for a company that has been doing offshore for a long period of time. Having worked for a company that was new to offshoring and one now that has been doing offshore for 18 years, I can tell you it takes a while to work out the kinks. It takes at least a few years to really mature. If I was looking for a company, I would want at least 4 to 5 years of experience before I would work with them. The longer the company has been doing offshoring, the more likely they are to have matured delivery processes and perfected working with clients to achieve the overall goals of the project.
- Communication Plan
This may need to be much higher on the list of priorities, particularly if you are not familiar with offshoring. Communication plans should be based on a complete team approach. Daily meetings with the PMs and developers. Weekly status meetings with the business. A minimum of monthly meetings with the executive team. There should be clearly defined escalation processes, as well as regularly scheduled meetings with the business champions to demonstrate results and get feedback. When evaluating potential offshore partners, thoroughly investigate the communication plan and determine if there is transparency and open, ongoing dialogue. But that is not enough.
Having a plan is step one; executing the plan is even more important. Talk with client references and ask about the communication process. Find out if the vendors are consistent in following their plan. Find out if the business is involved, or is it just at a PM level. Can the developers, analysts, or workers be reached when needed? How long does it take to get feedback? Due diligence around communication will be key. And the only way to get real feedback about communication, is communicating with other clients of the vendor.
- Company Culture
The company culture matters because it effects both employee longevity (as discussed below) and the culture of quality and customer service. Is quality and customer service engrained across the organization? Is it consistent? How is it taught, encouraged, and reinforced? It is hard to evaluate culture, so make sure to do your due diligence. One way to evaluate culture is to selectively pick a few consultants to talk with. If you can, do a random selection.
When you interview the consultants, it should become evident if the company culture is prevalent, if it is consistent across the teams, and if there is emphasis placed on it. Finding a partner with a quality focused culture can make the difference between success and failure.
- Average Duration of the Team
Turnover can be a real issue in offshoring. Get stats on how much turnover the company has in a year and find out what the average duration is for their consultant base. Talk to several of the offshore consultants. Ask them about their tenure with the company.
- Technical Certifications
Companies with employees with long tenure can experience another problem, complacency. The longer they stay with the company, the more comfortable they get. The more comfortable they get, the less they strive to stay on the cutting edge. That is not to say that all employees do this, but it happens enough that you should check. It is very important that when talking with the consultants you investigate what certificates they have, how old the certificates are, and what the company does to keep the consultants current with the latest tools and techniques, etc.
- Innovation and Thought Leadership
Very closely associated with technical certificates is how involved and current the consultants are within the technical community. Do they publish articles, complete research projects, speak at events, train or mentors others, and/or participate in critical discussions. The more they participate with these type of activities, the more likely the consultants are to speak up, offer suggestions, provide insight, and provide critical thinking.
- Sales Process
I know this sounds like it has nothing to do with delivery, but the truth is that the sales process will foretell a lot about a company’s delivery process. If the sales executive asks tough questions, if they manage the details, if they interview you during the process; it is generally a good sign that the company has mature processes and that they will manage the details of delivery too. If on the other hand, the sales process is loose and is being “winged”; you can bet that the delivery process will probably be handled the same way. Often times the sales process will predict what is to come with delivery, so pay attention to how they pay attention.
- Point Solutions
If all of the other things mentioned above are present, than the more specific the expertise of the partner the better. My experience has been that the quality of the vast offshore companies that do everything are not as good as the niche companies that focus on what they do. A Microsoft based company, with experience in SharePoint for hospitals or healthcare will tend to deliver better results in this area, than a larger broader based company with lots of practices. But be careful, because these types of companies may not have all of the things mentioned above. When they do, the niche player is usually better at delivering the highest value.
Thank you for reading. I hope it helps. As always if you have questions, please do not hesitate to reach out to me at firstname.lastname@example.org. I would also love to hear any feedback or suggestions on topics or ways to improve the blog. Until next time, I wish health, happiness, and prosperity.
President and COO of Care Analytics