Thought Leadership

Quality People & Processes Are Key to Leveraging Offshore Capabilities----By Krishnaswamy Subrahmaniam

Companies are beginning to realize that they not only save money by sending work offshore, they also get better results. Major American corporations such as Lands’ End, Textron Financial Corporation and Ford Motor Company cite quality people and processes as key elements in a successful offshore engagement.

Offshore outsourcing is booming, and that growth is attributed to more than just cost savings. Research firm Meta Group predicts offshore outsourcing will grow at a rate of more than 20 percent through 2005, and Giga Group predicts 23 percent growth this year. Fortune 1,000 companies are expected to spend approximately 25 percent of their IT services budgets in India, the location of choice for offshore IT work.

While countries such as China and Russia are attempting to establish a presence in the offshore outsourcing market, analyst firms such as Meta Group cite India as the leader in this category with 85 percent of offshore development centers located there. India has earned a reputation for developing high-quality software, on time and on budget.

As American companies send more work offshore, the quality of the people and processes utilize to complete the work becomes increasingly important.

Enterprises depend on IT vendors with offshore capabilities to consistently deliver services and solutions on time and on budget, across technologies, industries and various complexities. As the delivery track record has improved, American companies have come to trust increasingly significant projects and investments to vendors with offshore capabilities.

American technology services providers with facilities in India have invested in quality processes and rigorous development methodologies in ways that U.S.-only vendors simply have not. These processes and methodologies include the Software Engineering Institute’s (SEI) Capability Maturity Model (CMM), which represent the highest possible quality levels. SEI CMM is now the gold standard for assessing all outsourcers.

Additional quality measures include ISO (International Organization for Standardization) 9001, standards for quality and process measurement, and SEI People Capability and Maturity Model (PCMM). The PCMM framework, developed by TeraQuest Metrics Inc. and Software Engineering Institute at Carnegie Mellon University, defines organizational maturity of people processes and practices on a scale of 1 to 5, with 5 being the highest. It is the only framework that addresses the needs of employees, their competencies, and the processes that need to be in place to ensure that the organization is continuously improving and is able to meet the business needs effectively and efficiently. These three frameworks help alleviate quality concerns that arise when U.S. companies consider sending work offshore.

IT departments are composed of technology and people. Both entities must be able to evolve and change rapidly in order to keep up with the pace of business today. It is critical to quickly and nimbly adopt new policies, procedures and approaches in order to deliver the highest quality work, conforming to the client’s needs.

Companies have to manage the reduction of IT budget by the business, offer technology based solutions that will enable their business to take a lead over competition and clear the backlog of pending enhancement requests to improve the quality of business. The current IT staff are fully engaged with their current assignments and hence cannot do new work or clear backlog. Some times the reduced budget imposes constraints on the amount of work that could be done. Companies want to use the current IT staff to work on the new generation IT solutions to leverage their experience and understanding of the business. These challenges have made the companies look for alternatives that will help them overcome all of the above challenges. They resort to outsourcing to offshore companies. Other American enterprises send work offshore because their businesses are cyclical. Instead of maintaining a large IT staff that is unused most of the year, businesses can tailor support to meet their changing needs by implementing outsourcing.

Outsourcing application maintenance and development work allows corporations to focus the internal IT staff on more strategic initiatives, enabling the company to achieve and maintain its competitive advantage. Outsourcing can also help a company manage existing applications, replace legacy systems, or even support internal IT staff in more strategic endeavors.

IT providers with offshore resources have earned the reputation of possessing an exceptional work ethic and being highly efficient – as much as 40 percent more efficient, in some instances. They also have excellent resource management processes and continuously improve productivity through best practices. The offshore option allows for a very finely tuned development capacity, one that ramp up or down quickly and efficiently without compromising quality. It also offers 24/7 capacity, rather than an eight-hour workday.

While companies are always looking for ways to do more with less, many large American corporations and financial institutions are now looking beyond economic considerations when it comes to offshore outsourcing for IT. Thanks to years of consistent, high quality delivery, enterprises have begun to equate quality people and processes with offshore outsourcing. Leveraging offshore to offer IT solutions Better, Faster, Cheaper is the key to success.

The offshore option has begun to develop brand attributes of quality, efficiency and dependability – undeniable benefits that reinforce cost savings as more and more companies make outsourcing part of their formula for business technology success.

Krishnaswamy Subrahmaniam is president and chief operating officer of Covansys India, a wholly owned subsidiary of Covansys Corporation (a CSC company), a global provider of information technology services. Headquartered in the U.S, with dozens of locations worldwide and three development centers in India, Covansys has 12 years of experience in offering clients the value of offshore outsourcing with the support and expertise of an American-based company.