Outsourcing to India
How to get the best out of an outsourcing
|"We are company with
over $500 million in revenue and plan on outsourcing some
IT and R&D work to a very reputable Indian firm.
However, we have been reading some horror stories of
outsourcing gone bad. We are very impressed with the
firm and have done all the research but do you have any
other suggestions on how to get the most out of this
partnership and how can we avoid any problems?
doing everything right so far. Outsourcing, like any other
business process, has its risk and you have to manage it as
another risk. What we have found is that when a firm
recognizes that all business processes have associated risks, and
then honestly identifies what those risks are, and manages them,
they are less likely to be caught by surprise. And in the
business world, all the way from your top management to Wall
Street, nobody likes surprises.
How to manage an outsourcing
project to an Indian firm?
While Indian firms can be technically
very competent, they are still not very well-versed in
the American business practices. Some firms have
employees who have worked in the US or other developed
economies, most employees have never left the shores of
India. Thus, the methodologies and principles that
we take for granted are new to many people who will work
on your assignment. Solution: Take a look at
the background of the team that will be working on your
engagement. If you see that some have never worked
outside India, it makes sense to insist that the company
staff the team with at least 20% of the team with people
who have experience of working in the US. You may
also want to fly other members of the team for a couple
of weeks to the US and let them get acquainted with your
firm and business philosophy and processes. An
expense but will payoff in the end through better
productivity, fewer communication problems, and better
Have a very clearly defined set of
goals to be accomplished, what the final output will
look like, who will do what/when, etc. Due to
differences in culture and poor communication, Indian
firms are yet to fully appreciate the urgency that is
the way of life in corporate America.
Do a thorough risk analysis and share
it with your Indian partner. Develop jointly a
risk management framework. Finally, implement a
risk management program and assign roles and
responsibilities. (Related article: Risk management)
Provide incentives to your partner
beyond just meeting the metrics presented during the
sales pitch. If you share your savings with your
partner, you are likely to achieve higher savings.
Make sure that there are metrics in
place and they mean the same thing to you and to your
Develop a governance structure,
particularly a communication program. Outsourcing
such critical processes as IT and R&D is not the
same as outsourcing payroll. You have to be
actively engaged with the progress of the project.
As part of your risk management
framework, lay out steps to be taken when something goes
wrong. Make sure that the partner can take some of
these steps without requiring approvals from multiple
levels of bureaucracy in your office.
Finally, spell out what will lead to
termination of the relationship and how it will be done.
Recommended articles: Framework
for outsourcing options How
to develop an India strategy?
economic prosperity to America Global
R&D for pharmaceutical sector
your business in India
business models for India
comments, feedback, and suggestions