Inside Outsourcing in India
Outsourcing to India can provide a huge payback—if you're willing to work at it. Two offshore veterans share their hard-earned lessons to help you determine if Indian outsourcing is right for your company.
BY STEPHANIE OVERBY
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DON'T BOTHER TRADING horror stories about
outsourcing to India with John Doucette. He'll trump you every time. "I
was doing this back when you didn't want to be doing this," says
Doucette, CIO of Hartford, Conn.-based United Technologies, who first sent
coding work to India more than a decade ago when he worked at General
Electric. "Most CIOs don't have any clue what it used to be like. You
had people who couldn't speak English. The telecommunications were terrible.
It was awful trying to transfer files back and forth."
Today, however, Indian outsourcing is one of the
best ways for CIOs to cut application development and maintenance costs, deal
effectively with the peaks and valleys of software demands, and focus on more
strategic work. Depending on whom you ask, anywhere from one-half to
two-thirds of all Fortune 500 companies are already outsourcing to India,
and, according to Forrester Research, the amount of work done there for U.S.
companies is expected to more than double this year. If you're not already
sending some development or maintenance work to Mumbai or Chennai, chances
are you're either looking into it or your CFO, salivating over potential
labor cost savings of 70 percent, is wondering why you aren't.
Doucette created a sourcing plan stating what goes
offshore, what goes to U.S. outsourcers and what stays at UTC. His criteria
for what goes where are pretty simple. "First, you have to ask yourself
if the work is strategic. If the answer is yes, you should keep it
internal," Doucette says. "Then, if it's not strategic, you have to
ask yourself if it's going to the lowest-cost source. If you're not the
lowest-cost provider of that service, you need to contract it out."
In setting standards for what should go to India and
what should stay, Doucette also took into account that UTC's six subsidiaries
have very different structures and needs. Companies such as Otis, with most
of their IT departments centrally located at headquarters, were good
candidates to go offshore. Carrier, however, was not. It has 49 manufacturing
plants scattered across the United States with a handful of IT people located
at each one. "When creating an offshore model, you really need to look
at your own business model and where your IT staff is, and customize it based
on that," explains Doucette.
Though Otis was sending work to Wipro before Wood
transferred from Otis Asia Pacific in 2001, Wood has made significant changes
to the relationship during the past two years. The biggest change: moving
from a project-by-project service delivery model to having Wipro set up a
dedicated offshore development and maintenance center for Otis (for a closer
look at dedicated centers, see "The Hottest Trend in Outsourcing
"The benefit is that people assigned to the
project feel more attuned to the company, so turnover rates are lower,"
says McCaffrey of Software Outsourcing Research. "And those vendor
personnel are acquiring long-term knowledge about your systems, so you have a
more productive worker."
Once few and far between, competent business
analysts and project leaders are no longer in short supply in India, Doucette
says. But that doesn't mean Doucette and his reports rest easy. "We are
ruthless on the people who come in," he says, recalling the time at Otis
when he sent the vendor's proposed project leader, who was a database
administrator lacking business analysis and project management skills, back
to Bangalore after just four hours.
Indian companies have spent years honing rigorous
development methodologies, and many are certified Level Five, the highest
level of Carnegie Mellon University's Capability Maturity Model (CMM). That
means they've moved ad hoc, chaotic software processes (Level One—where the
average U.S. company is) to mature, disciplined software processes that allow
for continual improvement in quality. But the CMM level of your Indian vendor
means nothing if it is not complementing similarly rigorous processes
in-house. "The vendor can only operate, at the most, two levels higher
than the customer," Meta Group's Davison explains. "If you continue
to run at a Level One, the vendor will have to put more people onsite to
compensate for your inadequacies, and they'll spend all of your
vital to a viable Indian outsourcing relationship is having robust quality
assurance processes. "When you're outsourcing to India, you need the
rigor in your QA organization to be tenfold over what it was before to make
sure what gets built is what was agreed upon," Beaver says. That's
something that's still being developed after the fact at Otis, according to
Beaver, largely because skilled QA employees are tough to find.
Not one of nine at the first company could tell you the difference between a printer port and a LPT port. When asked about the Control Panel, several indicated the laptops keyboard, or alternatively the small status display LCD just above. At the second company, all six of the "Lead Techs" -- the ones that were supposed to teach the other 20 back in India -- fixed a static IP address conflict by recommending a three-hour reimage, reload, and reconfiguration to be performed by the local (USA) staff. One infamous trouble ticket: "computer wont boot - removed battery floppy drive hard drive - computer still wont boot - escalating".
Be careful to ensure that you actually get what you are looking for. In both cases, middle management falsified efficiency reports in order to present a scenario combining lower costs with increased efficiency, to provide a seemingly glowing success to their superiors. Underlings who are informed by their superiors on the obvious advantages of a course of action have an unhealthy tendency to seek to ensure that no contradictory information appears.
Furthermore, please be aware that as you send jobs overseas, you sacrifice flexibility and adaptability, as well as the ability to grow expertise with your software, your clients, and your business practices within your own company. You'll be paying the same amount every quarter for services that will not grow or mature with time, nor will you have any real input or direct control over the systems and people that will be providing a critical service your company.
In order to avoid these pitfalls, I recommended initiating a change control process simultaneous to the offshore migration. Select one or several technologically competent individuals from departments not under threat of downsizing and use them to monitor the abilities and capabilities of the overseas contingent. Ensure that these individuals are not in any way under the management or influence of anyone in the department that is being decimated -- this is simply good practice to obtain clean information. An efficient practice would be to use those IT professionals that already take care of your own computer, office, and local area network - under the assumption that you know these people well enough to have faith in their judgment in an area you are not directly qualified to hold an opinion.
Finally, above all else, remember to listen to and except the reports that these people will bring you, even if it tells you straight out that you made a mistake. Unfortunately, based on what I've experienced, they probably will...
As an addendum, I should also report here that both companies that outsourced their local IT staff have had to develop suspiciously large "High Availability Technical teams", "High Piority -- Rapid Resolution desks", and "Priority Escalation teams". I would regard any post-outsourcing recommendation to form any variant of one of the above departmental groups as a clear bureaucrateese admission of failure. Basically, your department heads have noticed the startling new levels of incompetence in the IT department and are taking steps to protect themselves -- the rest of your employees and / or customers will not be so fortunate.
hello i m shoeb and i have studying in secondyear bca
Indians only think about gaining money for themselves. Russians think about populating Mars with humans. Indians have high telecommunications cost. It's cheaper to call Russia than to call across the street. Russian scientists first sent rockets and life beings to space. It's more profitable to deal with them, they work 12 hrs/ day with their own initiative, as they are inspired and think the planet Earth.
TEC-BAM Workers of America is a non-profit, non-partisan, public policy organization that favors an environmentally sustainable and economically sound America. We oppose all efforts to use federal immigration policies to depress wages of vulnerable workers. TEC-BAM is pro-environment, pro-worker, pro-liberty and pro-immigrant. Activists and Members of TEC-BAM are Americans of all races, religions and we heavily encourage diversity in our ranks. We would love to have you join our mailing list and our group. We are bringing together the resources of displaced workers from many sectors to become a sizeable force. We hope to show support to each others groups by helping with protests and through shared publicity. Current and future sponsorship is much appreciated. We are in the process of creating bumper stickers, car magnets, and yard signs. The media coverage we have so far received has helped our site surpass a quarter million hits in a little over 2 months.
We are getting together with other groups in a coalition to effectively lobby State Representatives and raise public awareness.
TEC-BAM represents workers in the Technology, Engineering, Call Center (Customer Service), Business Management, Accounting, and Manufacturing Industries. Our goals are;
Educate the VOTING public on this issue and to get them to contact their State Representatives.
Protest Corporations considering or actively "Off-Shoring" U.S. jobs. Contact and work with politicians that are with us.
Protest and email politicians that are behind the large corporations.
Contacting the media and keeping them informed on "Off-Shoring" and Visa abuse.
Get our members back to work through networking and references.
We have members from the Dallas, TX area and would like to have similar groups form around the country and raise awareness in their home towns. We have no problem with you being a member of other groups. The founder of TEC-BAM is a member and co-founder of the Texas Labor Champions.
The average person really has no idea on how this will impact their lives in the next few years. Its up to us to educate them before it is too late!
NOTE: We are NOT interested in dialog with Xenophobes or Radical Anti-Government Groups! We embrace ALL ethnicities and religions. Our issue lies with the lack of ethics in our large corporations and government officials. We understand there is a lot of emotion tied up in losing your job, and it is human nature to attack the differences we see in each other. We have been disturbed by some of the emails we have received and we hope that we as a NATION can rise above such petty things. Lets TRY to make that an Embarrassing Memory and Chapter in American History! But lets NOT forget those mistakes lest we make them again.
We don't blame the people in other countries for taking advantage of our Corporate and Political Greed to better their lives! Thank You, Corey www.goodetech.com
Wipro to increase workforce by 9000. Software exports to touch $50 bn by 2008- Premji [wipro chairman]. No major threat to India emerging in BPO - Karnik [head of a national IT organisation].
These are three random headlines I picked up on the issue of outsourcing from the site that Indian CIOs and CEOs use, www.sanghanak.com (it's a news site on the business of IT for CIOs/CEOs/CTOs.)
These headlines would alarm an American IT worker even more. But remember that American CIOs and CTOs are under pressure from shareholders/Wall Street/Nasdaq to ALWAYS cut costs and increase profits. If it wasn't for this pressure, they wouldn't be outsourcing. Who are the shareholders of the big US companies that outsource work to India? Mostly Americans. So if you want outsourcing to stop, target the real "culprits" - not the hapless Indian techie, but the shareholder who wants higher profits all the time.
(headlines for sept 7)
CIO Magazine - June 1, 2003