Offshore 101 for SMEs

Face it: as a small or medium enterprise, you simply do not have the kind of leverage on offshore service providers as the GEs and Citis. But just because you aren't spending $20 million annually on offshore services doesn't mean that you have no options.

In its latest quarterly financial report, leading Indian offshore firm Infosys reports nearly 130 customers that spent $20 million or more in the last twelve months. But what of lesser clients? According to Forrester Research, offshore service providers are "increasingly willing to walk away from business rather than make concessions or alterations that don't suit them."Fortunately, there are ways to get the kind of attention and service you need even if you're a relatively "low-ticket" spender.

Play the potential. With tough competition, offshore providers are often willing to come more than half way to win a new customer with an eye toward the future. It's in their interest to help you understand and realize the benefits of offshoring, and these firms are in it for the long run. Remember, they have come up the hard way and are accustomed to skeptical customers.

Offer the niche. Your routine software development requirements could invite a routine response. On the other hand, your specialized needs have the potential to offer the vendor something that cannot be obtained easily elsewhere: the chance to learn something out of the ordinary. If the outsource vendor can gain marketable expertise from you, you're likely to have the upper hand.

Seek second-tier vendors. Forrester suggests finding a smaller but more qualified vendor that has the strengths and special qualifications you need. Remember: small is not necessarily sub-standard. For example, if ISO and CMM certifications are any indication, an extraordinarily high number (and subset) of Indian software vendors have proven their ability to deliver high quality solutions.

Pay more attention. SME's don't have the luxury of long-term contracts and quarterly performance reviews. You need to focus much more closely on all aspects of the outsource relationship (than a larger firm might). Expectations - contractual and otherwise - and assessments need to be closely managed on an ongoing basis.

Encourage and engender trust. There's something in that old adage about trust begetting trust. For a smaller outsource vendor, there is as much risk and consequence of a failed relationship as there will be for you. Trust builds one action at a time. Help your vendor succeed by sharing information, fostering an open exchange of ideas, and inculcating a sense of shared responsibility.

Smaller enterprises need a different approach to reap the rewards of outsourcing: an approach that is more hands-on and based on true partnership.As a small or mid-sized enterprise, you simply do not have the kind of leverage on offshore service providers as the GEs and Citis. But just because you aren't spending $20 million annually on offshore services doesn't mean that you have no options... Fortunately, there are ways to get the kind of attention and service you need even if you're a relatively "low-ticket" spender.