How to Avoid 'Software Sweatshops' When Outsourcing to India

April 13, 2009
Working with outsourcing companies should be about more than cheap labor.

We've all been on the receiving end of a call from a friendly 'Bob from Bangalore' offering us anything from credit cards to outsourced software development services. The bad news is that they won't stop calling you. The good news is that the right offshore software development partner is worth their weight in gold.

So as orders are down, and machines are idle, you realize that outsourcing IT work is more and more of a necessity. Maybe you're working with an offshore software development firm, or maybe you're thinking about it. Or worse yet, you've been burned by an offshore "software sweatshop" but realize that the cost savings are too big to ignore. Obviously, there are advantages (and disadvantages) to outsourcing. Here are 7 tips to help you choose the right offshore partner:

High Value, Not Low Cost -- Sounds simple, but you get what you pay for. Avoid vendors promising high level technical skills at 'bargain basement' rates. Look for a team that loves what they do and that compensates their employees generously. Low price does not provide value, proficient programmers who work for a company they love does. Working with outsourcing companies should be about more than cheap labor.

Do You See What I See? -- If your development team doesn't see the vision, you're doomed; doubly so if they're half way around the world. If you're building a product that you plan on taking to market, you need to find a team that has a vested interest in your success. The real value in offshore development is in nurturing a team that matches your corporate culture and who understands the subtleties of your business. If they work with you close enough, they'll help you flush.

Culture Shock -- Are you focused on immediate results, organic growth and impeccable quality? Find a vendor who feels the same way. A cultural mismatch will definitely end the relationship. Ask lots of questions to unearth the underlying culture that governs how they do business. You don't need the biggest, cheapest, or fastest partner. You just need someone who thinks like you do and who can complement your corporate culture.

Most Vendors are the Same -- Outsourcing is more about trust and reliability than cheap technical skills. Companies that flaunt their technical competency are no different than their competitors. Look for business acumen and not tech skills. Throw them a project and see how well they meet incremental milestones, the types of questions they ask, and how responsive they are.

Fanatical Commitment -- Technical skills are easy to find, reliable people are not. Most offshore vendors don't understand the concept of a deadline. As a business, you can work around technical limitations, but you can't work around people who aren't committed. Find someone who does what they say. Unexpected problems are bound to occur, but at the moment of truth your vendor should be mature enough to roll with the punches and get the job done. Adopting agile development practices like scrum is critical here.

Ask Tough Questions -- People who are good at what they do aren't afraid to ask tough questions. Questions show that they know who they are and what kinds of problems they can solve. In an industry saturated with 'yes men', an inquisitive partner forces you to re-think how you do business. There are a lot of things that can go wrong, so make sure you look before you leap.

Maturity to Say "No" -- Finally, it's extremely rare to find a vendor that will tell you like it is. We've heard countless stories of offshore firms over-promising and under-delivering. You need to look for a partner that can be honest with you from day one, even if it means that they lose your business. A company that sets up realistic expectations is a company you can rely on, even if it's not the answer you wanted to hear. The "follow the sun" pitch is attractive, but your offshore software development partner needs to have a solid plan to ensure success.

Unfortunately, most offshore software development projects fail, but with proper research and commitment from both sides, outsourcing IT and software development can help ride out the recession.

Raza Imam is Managing Partner of Chicago-based offshore software development firm Adaptive Solutions, Inc. which has a strong focus in retail, manufacturing, and hospitality. ASI creates custom solutions that align business and technology. Raza Imam also writes about technology outsourcing issues at his blog

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