A Distant Shore

Is moving your development project offshore the right move for you?

As a CEO, CIO, or senior IT manager, you feel the pressures of bulging it budgets and constantly changing technology. To maintain competitiveness, you need to execute projects despite money and skill crunches. Outsourcing has been a popular option for a long time. Improvements in communication technology and rapid solution requirements in the Y2K era opened a level playing field for offshore outsourcing, tapping into the huge technical resource pool available outside the country and producing quality work for much less cost.

The Benefits

Using an offshore partner has some very direct, obvious, and immediate advantages to your bottom line:

• Productivity. An experienced offshore partner, specializing in IT project delivery, should have proven systems and procedures that can increase your overall productivity. Many offshore development centers (ODCs) are certified under the capability maturity model (CMM), acknowledging their commitment to improved development procedures. If the ODC is several time zones away from the parent site, it will contribute round-the-clock productivity. In postimplementation analysis of offshore projects, productivity emerges as one of the top scorers for ODCs.
• Cost. Usually cost is a big motivator for moving projects offshore. During the first three to six months, you may make investments in remotelink, knowledge transfer, and resource sharing. But once the setup is in place, cost reductions can accrue significantly.
• Flexibility. Because your initial investment in specialized equipment and training is relatively low, you can rapidly start and end new projects.
• Expertise. An established offshore partner should be able to provide expertise in areas outside the existing skill set of your company. This expertise may never be available inhouse because it's too expensive, nearly impossible to procure, or only necessary for a shortterm requirement. Ready availability of such expertise is critical in this world of zerotimetomarket demands.
• Staffing reorientation. Using an offshore partner, you can free up your resources to work on strategic projects or other critical work. With a defined labor strategy, this approach can benefit your existing IT personnel giving them a chance to work on new development or other projects viewed as more interesting or rewarding.

The Risks

Although the rewards can be significant, you should evaluate the numerous potential risks of offshore development. You can address many of these through effective advance planning, but others may be persistent:

• Communication. People offshore and onsite are not always on the same page and may not express their views or concerns precisely. >Eliminating ambiguity and ensuring clear communication are major concerns that you need to address up front.
• Legal. Every country has its own intellectual property, patent, copyright and export laws. You must take care that such issues do not interfere with your project's execution and delivery. Companies frequently neglect this potential hazard.
• Political. The political climate of any country can change overnight, and nobody can control it. If the ODC is in a zone of high political instability, it like any other business enterprise may be jeopardized.
• Cultural. You must understand cultural differences and address them through training and information sharing. Failure to understand the unique body language, gestures, and cultural mores of international resources can result in misunderstandings and communication failures. One of the best examples in this category is the difference in how people from different countries or even disagreement. In North India, moving the head sideways (like an American shake for no) does it, while in southern parts of India, people move their heads up and down. Such differences can impair effective communication.
• Infrastructure and processes. Offshore vendors may be unable to ramp up necessary hardware and software resources quickly. Also, if the vendor does not follow good development and verification methodologies, the quality of the project could be in danger. Proper quantification of the work and definitive change management procedures are necessary.

The Offshore Movement Methodology

The methodology you use to execute an offshore project - or any software project - affects its success or failure. Although many organizations have defined standards for the software development life cycle (SDLC), such as the CMM by the Software Engineering Institute of Carnegie Mellon University at Pittsburgh, offshore development has no industry standards. These projects follow their individual paths. The offshore movement model (OMM) is a generic process you can follow to execute offshore projects.

Project definition. Define your business reasons for initiating the IT project. Here, you specify the project's scope and decide what technical platforms and tools to use on the project. You should avoid all possible ambiguity by stating the project's objectives in precise and measurable terms.

Offshore justification. Explain why the project should be done offshore: time and money savings, flexibility, expertise, a combination of all these factors, or something else. The reasons are critical because project expectations develop from this assessment.

You also need to evaluate your current IT labor strategy. How will a move offshore affect your existing resources? Do you have a consensus on transferring critical or strategic projects offshore?

Partner selection. Once you decide what you need to move offshore and why, you should look for a suitable partner. People and processes can make or break a project. The important criteria you should use to evaluate a vendor include:

• Available skill resources
• Experience executing similar projects
• Infrastructure capabilities
• Development methodologies and quality processes.

Initiation. This phase is the first interaction between the on-site and offshore staff that will be working on the project. It ideally covers a pilot study so that both parties can increase their mutual comfort and compatibility levels. This exercise must be carried out at your or your partner's site, with the team from the other side visiting.

The initiation explains the project's scope, definition, and final requirements and establishes the ground rules for the project's communication, methodology, and execution. The pilot's cost will save you money later when meeting tight schedules and deliverables makes time valuable. The best contribution of the initiation phase is determining the details of the next phase - kickoff.

Kickoff. I list this phase separately from the initiation phase, even though it is entwined with it. The boundary line between initiation and kickoff is thin and flexible. The differences are in the tasks that you need to accomplish. During kickoff, you create templates for all the work performed during the project's execution. Kickoff comprises the following four major components:

• During the infrastructure setup, you determine logistics, create a remote link between sites, and establish Internet and intranet connections. Compatible hardware configurations and relevant software systems are installed.
• Resource identification involves carefully selecting onsite and offshore coordinators and other project staff. The coordinators should have sufficient exposure to your business processes and possess industry and management experience, with prior experience in an offshore model a big bonus. The development team should be screened for their technical and personal skills and experience. You should also appoint a single point of contact for issue resolution and project monitoring. The offshore vendor may appoint a relationship manager who can tackle the nontechnical issues so that others can concentrate on delivery.
• The structure stage involves creating a project hierarchy, defining people's roles and responsibilities, and establishing processes for escalating issues, quality verification, and change management. Outlining a development methodology and performance management plan, such as collecting project metrics, is also important.
• Soft communication encompasses selecting a group-ware application such as Lotus Notes so project members can communicate with each other effectively. Simply synchronizing the email systems of both the partners may be suitable in some instances. You also need to create the technical standards for the project's execution and documentation templates and standards for an easy knowledge storage and transfer.

Execution, delivery, and quality analysis. Once all the outlining is complete in initiation and kickoff, the stage is set for action. The project starts with design and follows the standard path of SDLC in coding, unit testing, system or integration testing, acceptance testing, and documentation. Some activities, like acceptance testing, may need to be carried out on-site with support from the offshore team. Each step of the process includes quality reviews and collecting metrics for improving the development process (See sidebar "Important ODC Metrics,"). Many industry standards handle this phase of the project, so I will not delve further into the topic.

Acceptance. This phase begins during the acceptance testing in the previous phase and includes system end-user training, implementation or go-live, proper knowledge transfer to your company, and some level of infant care support ranging between 30 to 90 days.

Close-up analysis. This phase captures the lessons derived from the offshore experience and provides feedback on all previous stages. It also delves into the project's long-term maintenance strategy or recommends other offshore initiatives.

What Goes Offshore?

IT leaders frequently ask, "What projects are suitable for offshore development?" Existing network and communication technologies provide the capability to do practically any project offshore. But you must assess your ability to effectively manage an offshore relationship. Critical factors to consider are the quality and maturity of your relationship with the offshore partner. If the relationship is relatively new and untried, you would be wise to start with small, less critical projects that let all parties become familiar with work habits, deliverable quality, and other aspects of offshore projects. Once the working relationship is proven, you can consider more complex or mission-critical projects.

Several types of projects are good prospects for offshore work:

• Projects that are currently being handled by high cost vendors
• Projects that are discretionary
• Any development project with fairly stable and defined requirements
• Any project that requires extensive tooling or rapid team size modulations (conversion and migration projects)
• Maintenance and support activities that do not need same-day resolutions
• Packaged implementations (with the functional and strategy design being done on-site).

ODCs provide enormous advantages, but companies need to take the first step and pursue the process with utmost sincerity. Success will come. International Data Corp. estimates that outsourcing will soon grow to a $100 billion industry - and offshore development is a large portion of that figure. The possibilities are practically limitless.

Sudhi Ranjan Sinha (sudhisinha@hotmail.com) works for Tata Consultancy Services (TCS) and specializes in analysis, design, and transformation of business systems. He has been involved with several offshore initiatives between TCS and its clients.