hughk's Journal: Overdue dilligence in Outsourcing/Offshoring

A concerned parent usually makes enquiries of any new baby-sitter to determine whether they are responsible enough to handle a job or whether they will end up ignoring the baby and enjoying the family alcohol supply with their boyfriend instead.

When you hand a project to another organisation, it is important to ensure that the company is appropriate for your project. That is, that it is big enough to handle the project and it has a track record.

One interesting factor is the experience. When a person has done something, they have physically participated at least. When a company has done something, then at best you can say someone who was an employee at the time did it. There may be little transfer of knowldege so the expertise is lost. Sometimes the staff turnover may be so high that the experience is actually lost during the project. Given the high ratio between the fees charged by some offshore companies and the employee compensation, staff loyalty becomes an issue.

Of course, it is good to know that you are dealing with a sound company. It is difficult enough in the west. Worldcom or Enron anybody? Remember that companies pay taxes based on their annual reports, and in some lesser developed countries or the former Soviet Union, those taxes may be very high so they may well be creative works of art compared with the reality.

In general, it is better to use your eyes and ears when investigating the suitability of an outsourcing company, particularly when it is offshore. Also remember, that when an outsourcing company pitches to you, they are unlikely to use just average staff and the staff you see are unlikely to ever work again on just implementing projects.