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4 Outsourcing Mistakes Companies Still Make
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jjobe323
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jjobe323,
User Rank: Apprentice
8/25/2014 | 10:23:46 AM
On the subject of control freaks . . .
. . . we've been accused both repeatedly & vehemently.  Not in relation to managing the project, but in data & database design standards we REQUIRE for these deliverables.

Amazing that coders have no issues -- either verbally or in practice -- incorporating CODING standards into the final deliverable, but data/database design standards are just too onerous & time-wasting.  Definitions!?  We don't need to stinkin' definitions documented for the project. 

Whether the disconnect results from a communication problem, a philosophical difference in design/construction methodologies, or a money-manhour issue for the outsource developer, getting the job "done" includes documentation & compliance with pre-determined company standards.  Otherwise, you shouldn't be paid . . . period.
Ariella
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Ariella,
User Rank: Ninja
8/25/2014 | 11:14:25 AM
Re: On the subject of control freaks . . .
All observations are spot on, though I particularly like, "Don't think the outsourcer will do all the thinking for you."
PedroGonzales
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PedroGonzales,
User Rank: Ninja
8/25/2014 | 12:46:13 PM
Re: On the subject of control freaks . . .
I agree.  If a company isn't clear with the outsource companies about its own goals and objectives they won't able to solve their problem. I noticed that too that relying on a single factor(cost) it narrow the view by not taking into account the other factor which can impact while working with an outsource company as you have point it out.
Somedude8
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Somedude8,
User Rank: Ninja
8/25/2014 | 11:23:08 AM
Re: On the subject of control freaks . . .
Sounds like there are some strange ideas floating around that you are trying to resist. Stand your ground, because you are 100% right!

Standards and sensible design are super important for the database. If the database is screwy, anything built on it will be screwy too. IMO, database design is the place where you get the best and brightest you have and let them do it right, not something to be sent out of the shop to the lowest bidder.
shamika
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shamika,
User Rank: Ninja
8/31/2014 | 7:48:40 AM
Re: On the subject of control freaks . . .
In my opinion, more small businesses are outsourcing tasks these days because technology has advanced to the point of professionals being able to work from anywhere in the world, coupled with the availability and accessibility of extremely qualified professionals who have decided or been forced to leave the corporate world, for example  virtual executive assistants, marketing directors, graphic designers, transcriptionists, paralegals, web designers, HR consultants, bookkeepers, PR directors, IT specialists are some of the main areas.
shamika
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shamika,
User Rank: Ninja
8/31/2014 | 7:51:04 AM
Re: On the subject of control freaks . . .
While outsourcing takes place it is also important to look in to aspects such as; highly skilled employees, people with specialized knowledge, ability to perform highly repetitive tasks.
SunitaT0
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SunitaT0,
User Rank: Ninja
8/31/2014 | 2:40:19 PM
Re: On the subject of control freaks . . .
Highly skilled employees are easily found but they are not compensated well in terms of western economy, and not just that, the time difference and possible miscommunication creates a whole plethora of problems for employees and outsourcing managers alike.
Lorna Garey
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Lorna Garey,
User Rank: Author
8/25/2014 | 11:57:52 AM
Pricing
Shane, In terms of item #2, cost vs. quality. Is the answer to price per job vs. per hour? Say, $5,000 for [complete job] with additions only if the customer expands the scope. That way if the outsourcer takes longer than it estimated, that doesn't hit IT's budget.
Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Author
8/25/2014 | 6:10:01 PM
Re: Pricing
Yes Lorna, the analysts I talked to say hourly pay rate is inefficient, and they encourage pay per job or based on certain results. Or maybe they'll do a lower hourly rate, with a big bonus if the outsourcer reaches a goal (i.e. 100% Web uptime during a retailer's busy season). But this is easier said than done because business outcomes are hard to predict. So companies fall back on hourly rates because it's the standard.
Laurianne
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Laurianne,
User Rank: Author
8/25/2014 | 11:58:56 AM
Outsourcers
"If you're not dealing with your own conflicts between IT and the business, outsourcing will not fix them." This is an important point that Michelle raises. If anything, the tensions can get worse when business expectations are not met and IT shifts the blame to the outsourcer.
jjobe323
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jjobe323,
User Rank: Apprentice
8/25/2014 | 12:47:20 PM
Outsourcers
Ms. Laurianne, when we deliver documents which EXPLICITLY define data/database design standards & expectations from the request for quote to final acceptance -- the entire lifecycle of the project -- & have built a validation tool to ensure those standards are met, the problem then lies COMPLETELY with the outsource vendor.  In effect, the vendor is telling US what standards s/he is going to comply with & which we may not-so-politely stuff in our ears -- regardless, the vendor expects to be paid for an unfinished, non-compliant deliverable.  We refuse to accept the product, the vendor begins whining, & the real fun begins.

My point:  In the couple of years my company has been outsourcing application development projects, it has been the outsource vendor as the source of 90% of insufficient communication, conflict, & tension.  The implementation time required to get the outsource project functional has increased from 6 to 10 hours to 2 to 6 weeks -- a good bit of the added time showing the vendor where IF our standards had been complied with in the first place, the issues encountered would never occurred.  The vendors know LONG before implementation -- because we provide the findings reports from our validation tool -- their deliverable is out of compliance; there's no last minute 'gotcha!'.

They don't want to comply with data/database design standards because the coding tools they use are constructed for optimized CODE.  From that code, a database is, basically, reverse-engineered.  They're coders -- that's what they do & they're good at it.  I remember back in the Dark Ages when coders did everything from gather the requirements to write the programs to design the databases to implement the whole kit-&-kaboodle.  I remember because I was one. 

Coders are a lot like race horses:  They're blindered so they can only see what's directly ahead of them.  That's what makes a good coder.  See problem, fix problem, next problem.

Architects have to see the entire race track -- taking the analogy further.  As a matter of fact, we also have to see the stands, offices, parking lots, etc.  We HAVE to keep a handle on how the "everything" fits together.  Design standards enable us to do that more effectively & efficiently.

The other 10% of all project issues usually belongs to users changing their minds after development has begun.  But that is an entirely different herd of ponies.
TerryB
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TerryB,
User Rank: Ninja
8/25/2014 | 1:28:13 PM
Re: Outsourcers
That's a pretty blanket statement on "coders". There are quite a few of us out here who do the whole package. And funny thing, we tend not to outsource. It's only when you get a bunch of "architects" who can't produce a working product that a company starts looking outside itself. I'm assuming you work for a big company, where teams are so big no one can take a project from the user's mouth to have working code that does what it supposed to.

That is certainly no knock on you, not my intention here to insult you. I'm sure you are correct in all you said. But when you go from a complex communication path internally (architects to coders) it makes it pretty easy for mgmt to move the coding outside. And then you have added a bunch of coders who care about THEIR company and job, not yours. So the CYA factor during communication goes way up, that is your increase in lead time.

The core premise of Agile methodology is flat structure. If the guy getting requirements from users is same guy writing code, you can iterate to what users want pretty quickly. When dealing with large internal teams using waterfall, or outsourcers, what you talk about is a fact of life.

Again, not trying to insult you, but outsourcing probably works best when people like you don't exist. Let the outsourcer handle it (design thru code) and hold them responsible for working systems. If you have the expertise to define the application that thoroughly like you do, just write the code internally so you are in control. And accountable.
Laurianne
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Laurianne,
User Rank: Author
8/25/2014 | 2:15:56 PM
Re: Outsourcers
Terry makes some good points here re agile. This whole conversation wouldn't happen at a company like Netflix, which has essentially erased the wall between IT and biz ops. Most companies are not anywhere near that big of a culture leap, however.
TerryB
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TerryB,
User Rank: Ninja
8/25/2014 | 2:32:11 PM
Re: Outsourcers
I would add BIG companies, Laurianne. There are many like myself who have spent our careers at $30 to $100 million annual revenue companies who perform the Architect to Coder role. These companies can't afford big IT teams. One guy to write code/support ERP and 1-2 to do infrastructure admin. That's your IT team.

We were Agile long before it had a name. Actually, it did have a name. Rapid Prototyping, now just considered a small part of the whole Agile process. I saw very little need to write a business requirements document to myself after interviewing users. You can save a lot of time and money by getting right to the code.

But you have to be good at all roles to make it work. If you talk over users head in Technese, it won't work. If you don't know how to design the application for proper scale and other things like that, it won't work. And most importantly, if you write terrible code it won't work.

The question I have anymore is whether Comp Science programs are producing these kind of people anymore. You seem to either get the super techie Java coder or network hacker or the high level analyst type person who slides into these Architect roles. I'm not sure people are built to do the whole thing anymore because, like the @jjobe said, you just don't see it all outside the smaller companies. Everybody has to be a specialist today.

Glad to hear Netflix gets it.
Laurianne
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Laurianne,
User Rank: Author
8/25/2014 | 2:45:59 PM
Re: Outsourcers
"I'm not sure people are built to do the whole thing anymore because, like the @jjobe said, you just don't see it all outside the smaller companies. Everybody has to be a specialist today." Does this ring true to you too, readers? What happened to rotating people to broaden their skill sets? Are CIOs talking about it but not doing it?
SachinEE
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SachinEE,
User Rank: Ninja
8/26/2014 | 3:15:08 PM
Re: Outsourcers
Rotating people to increase their skill set may be a cool idea to begin with, but managers know that if you are working for a department for a couple of years and if you get transferred to a new department for the sake of new skills then that could mean a disaster. It could mean work stalling and hence work pile up. Not only that it would create delays is decisions which otherwise wouldn't have happened if the employee did not rotate. So basically there are too many factors to consider.
zaious
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zaious,
User Rank: Moderator
8/27/2014 | 5:24:55 AM
Re: Outsourcers
Work rotation is beneficial for the emplyee (sometimes), but it is hardly beneficial for the line manager. They have to let go their star player for a rookie.
jjobe323
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jjobe323,
User Rank: Apprentice
8/25/2014 | 4:24:57 PM
Outsourcers
TerryB, no offense taken.  As mentioned, when I started out in this career, we coders did it all.  Then our profession matured; some prefer to count the leaves on the trees (coders) & some prefer to ensure the forest is healthy, optimally thriving, & all the bits & parts are peaceably coexisting.

If I may, I think you might've missed the message.  Our implementation time has skyrocketed because we've outsourced the architect role along with the coding.  It isn't just that outsource teams DON'T want to abide by data/database design standards, it's that their failure to do so has resulted in their creations being unimplementable -- we won't even get into the tonnage of resources necessary to make these abominations functional for users.

If they HAD followed standards, the geometric increase in the time it now takes for our technical team to trot the new app out for the users to actually use would NOT be happening.  We know this because we know the entirety of the hardware, software, & communications architecture of the organization & work in concert to keep it humming along as best as we can -- they don't.  When standards are NOT followed, we have to create new & unique techniques for implementing & connecting everything up.  These new & unique techniques create unnecessary complexity which -- I don't know about your shop, but before outsourcing we were doing our best to simplify -- is contrary to both the demands of our executive leadership & industry best practices.

I've been reading a lot lately on the way(s) large companies handle 'big data', & the level of analysis & coordination (read:  data administration & architects) required to keep the wheels moving, & I think if folks believe it's the coders who are doing all of that, those folks are naïve at best & deluded at worst.

No offense intended, TerryB.
TerryB
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TerryB,
User Rank: Ninja
8/26/2014 | 9:44:46 AM
Re: Outsourcers
Thanks for clarifying @jjobe. I did miss the point they were doing the architect work. I also see you are talking about a "big data" project, which is way outside the scope of what small companies like mine have to deal with. I'm not going to sit here and tell you I'm an expert in that world.

Thanks for sharing your experience and good luck sorting things out with your outsourcer.
SachinEE
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SachinEE,
User Rank: Ninja
8/26/2014 | 3:12:32 PM
Pay rates and potential
Pay rates are seriously low in the eastern IT sectors. Most outsourcing companies focus too hard on the jobs without knowing the background of the staff that does the work for the western based company, and this creates blame games and payscale fluctuations. If managers on both sides could communicate such differences out of the framework then that would be very helpful.
shamika
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shamika,
User Rank: Ninja
8/31/2014 | 7:53:59 AM
Re: Pay rates and potential
@ SachinEE I have seen most of the outsourced work is directed to the south Asian countries. I believe it is mainly because of the low labor charges.
SaneIT
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SaneIT,
User Rank: Ninja
8/27/2014 | 8:01:10 AM
2. You focus on pay rates over results
This can not be said enough.   Too often outsourcing is not about an expanded tool set it is about doing something as cheaply as possible.  That almost never turns out how it is expected to.  I cringe every time I hear "we went with the low bidder" because I know that the management of the project and the clean up is going to be incredibly high.
jjobe323
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jjobe323,
User Rank: Apprentice
9/2/2014 | 7:46:25 AM
2. You focus on pay rates over results
Amen, Sibling.  (Not taking anything for granted even though you include a picture.)

It has been our unfortunate fate to be the port-o-potty clean-up crew.
KarthikS742
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KarthikS742,
User Rank: Apprentice
8/29/2014 | 2:40:54 PM
More frequent communication around Business goals
"Business goals can be moving targets, and if companies don't keep explaining those goals throughout the process, the relationship will sour fast. "

In my experience - this particular point cannot be stressed enough. The IT vendor makes several investments in terms of having a business savvy engagement management team , a team that not only provides IT operations management expertise and technology consulting input but also an understanding of the sector or business. However in some cases those investments aren't leveraged well because of inadequate attention given to this aspect. If a client is interested in the vendor helping it meet business results, it should emphasise that the engagement leaders have some understanding of their business and also invest some of its time in explaining its business goals driving the IT initiative and giving updates on those goals from time to time. 
yalanand
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yalanand,
User Rank: Ninja
8/30/2014 | 2:21:30 PM
Outsourcing possibilities are increased through proper communication
The observation in this post by Shane O'Neill underlines just how costly outsourcing mistakes can be, whether the errors are committed by the client or the outsourcer. To gain from the flexibility accorded by outsourcing, companies should never ignore the outsourcer and they should maintain effective communication for a mutually beneficial relationship.

Either way, companies should not forget why they need to outsource.We solicit outsourcing because there are times when we need extra work force for things we are dead sure we cannot accomplish and in situations that doesn't help adding the extra staff on our payroll. Companies should thus ensure that they hire the right people and for the right reasons, and because these reasons can change, consistent communication between the two parties is paramount.
jjobe323
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jjobe323,
User Rank: Apprentice
9/2/2014 | 8:06:13 AM
Outsourcing possibilities are increased through proper communication
"Either way, companies should not forget why they need to outsource."  We outsource because our fearless leader has decreed any job we need done that someone else advertises in the Yellow Pages shall be outsourced.  This has lead to a 70% reduction in 'regular' employees, & an as-yet inestimable cost in the commonly sneered-at concept of 'institutional knowledge'.

"We solicit outsourcing because there are times when we need extra work force for things we are dead sure we cannot accomplish and in situations that doesn't help adding the extra staff on our payroll."  Over half of the outsourced work is contracted to a single company which a) fills several staff augmentation position in this business area already, b) is owned & operated by a person who used to work for the organization [i.e., was around when the current masters were serfs], & c) acquired over 50% of its staff from people who used to work in this organization.  While there may be no collusion or kick-backs, it seems a bit too cozy an arrangement.  The APPEARANCE of impropriety, after all . . .

"Companies should thus ensure that they hire the right people and for the right reasons, and because these reasons can change, consistent communication between the two parties is paramount."  For those of us who still work as employees vs. staff augmentation, it looks a lot like there's some sort of quid pro quo between our organization & the seemingly overwhelming favourite outsource company management prefers.  Yes, the bids are lower than other companies, but the deliverables are inferior, require massive expenditures in resources to repair or even implement, & the favourite outsource company gets ever fatter.
zerox203
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zerox203,
User Rank: Ninja
8/30/2014 | 11:14:57 PM
Re: Outsourcing Mistakes
The funny thing about all this is, ''Outsourcing" is not (or should not be) a buzzword, a dirty word, or any other kind of special word at this point. It's a standard practice that's been around forever - it ought to be well understood, and not viewed as some foreign, inexplicable process by IT managers. Yet, you're exactly right, Shane - these seemingly obvious mistakes still seem all too common at companies both large and small. Do we really still need to tell trained professionals that they need to communicate their needs with their business partners (or risk failure!),  just because we're dealing with outsourcing? Apparently, we do.

There's no doubt that there's plenty of room for discussion on best practices when it comes to outsourcing, because it's a complex area.  At the same time, though, there ought to be a certain base level of competency that can be expected of managers on the topic... or they should not be employed in the first place. Now, in fairness, this applies to the managers on the other end of the outsourcing equation  (foreign or not) as well, right? You shouldn't need a memo to tell you that your client would like profits to go up and cost to go down, that's a lame excuse. If you're going to advertise that you can provide someone the same service as a competitor at a better price, then you should back up that claim.
shamika
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shamika,
User Rank: Ninja
8/31/2014 | 7:55:45 AM
contingency
Well what do you all think about keeping the main business place as the contingency site


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