How to find the right Small or Medium outsourcing vendor?
Outsourcing is never easy, especially for a novice. Selecting the right outsourcing partner is often the most difficult task. Most organisations opt the easy way out. They just select a company with all the right certifications. This is by no means a bad way to choose. In fact, opting for a company with top-level certifications like SEI CMM can be a foolproof way to get quality work. And if one is looking at India, they will indeed find many companies with various levels of SEI CMM.
The problem is that by looking for a SEI CMM certified company, you will get mostly just big companies to choose from. However, it is often a good idea to hire a Small or Medium (S/M) company who is willing to travel that extra mile to deliver more than what the customer asks for.
Here comes the real challenge, most S/M companies wont be having the SEI CMM certification. This is because, for smaller companies, it takes huge investment, effort and experience to get SEI CMM certification. Though they might have some of the other internationally recognised certifications like Six Sigma, ISO, eSCM, DNV etc. They will also possess the capability to deliver what you are asking for. In other words, by approaching them you might get what you need at a much lower cost.
However, the difficult part is to find the right S/M vendor who can offer the best service. Finding an S/M company who do the kind of tasks your require is easy enough, but finding the right one can often prove difficult. This article is designed to provide you some tips on how to evaluate a small or medium sized enterprise as outsourcing partner to reap optimum benefits.
While selecting an outsourcing partner, each and every factor connected with the company needs to be evaluated to assess the companys capability. When the company is smaller, each and every part is important and needs to be checked out. S/M vendor with the experience, zeal, knowledge and business acumen to deliver value added service must be chosen carefully.
How to find the right firm
Trade associations can be good sources of information. For example, The National Association of Software and Services Companies (NASSCOM) represent Indian outsourcing vendors and provide information on its members. It conducts events to educate technology managers about outsourcing, such as panel discussions for CIOs from smaller enterprises interested in offshore outsourcing. Most trade associations will have official websites and other contacts too. Participating in user groups at small-business associations and listening to word of mouth is seen as another way to find potential contractors. Another easy way is to hire a reliable consultant.
Give out a Request for Proposal (RFP). You can give the companies that approach you with a questionnaire, to be answered, orally or written. The answers to this questionnaire will solve most of your doubts. Ask the companies to bring information on their company and activities by way of brochures, presentations etc. Check out the websites, at least it will give you an idea about the firm. All this will take time, but there is no other way to do this. You can always hire a consultant to do the screening, but even then, it is better if you personally conduct the final check.
Look for value added service, timely delivery and quality work, at the best price. Before taking the final decision go and discuss with them the finer points at their office. Check out the company offices.
Some questions to put forward
How do they differ from competition?
Key differentiators, process model, project development, management, delivery methodologies and SLAs
After sales service
The Duration. Is there any guarantee or warranty for their service?
People responsible for each area of the project, Person who will be communicating with you during the duration of the project
Their background, expertise and credentials. Are you comfortable dealing with them?
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Whether the verbal answers are in line with their brochures, sales presentations, Web site, etc.
Is there a collaboration, coordination and communication protocol set-up and are you comfortable with that?
Do you feel comfortable accepting advice from the company?
Evaluation of their capabilities
Some key factors that can be easily checked out :
Clients, previous work, feedback from key customers
Company culture and work ethics
Credibility and accomplishments of the top management
Collective expertise of the employees
Capability to deliver quality work on time, within budget
Comfort level while working in close association
Certifications that assure a certain quality standard
Customer referrals are very important to provide credibility to the project-bidding phase. Ask the companies bidding for project to submit customer contacts. With todays communication infrastructure, it should not take much time and effort to verify a companys experience in project delivery through a phone call or email.
Pilot projects are a good way to start the evaluation process. You can ask them to submit a pilot project along the line of your needs. This will help you assess their capabilities.
Make sure the contract covers all the points. Maintain close contact and communication. Work in mutual co-operation. Once you select the firm and sign the contract, if possible, make them do a relatively risk-free short-term project. Once the performance is found to be satisfactory, assign more work long term.
Once the contract is given, periodical checking is very important. Make sure that the requested milestones are completed in stipulated timeframe. This is done to minimise risks and losses.
If you get to get the right vendor to carry out your work and if it is successful, it is sure that you will be happy that you opt for a S/M outsourcing vendor. As the cost factor, personal attention and importance given to your work will definitely be better than from a bigger enterprise.
Why Outsource to India?
Why Outsource Data processing and Software development to India? Just as the Gulf has its natural resources in crude oil and South Africa in diamonds, India’s natural resource lie in its abundant technically skilled manpower. India is the world’s second largest exporter of software (after the U.S.), and is the source of management and technical talent for over 40 per cent of new start-ups in Silicon Valley. Thanks to its large English-speaking scientific and higher education institutions, specialist computer institutes, and low costs of software talent, India has more software companies with ISO 9000 certification than any other country in the world.
There is more than enough evidence of the superlative role that Indians play in the progress of the Net. The impact of India’s success abroad is also being felt. The stars of the Indian Internet industry are the Web solutions and Webware companies, many of whom have made the transition from offshore turnkey and services companies to full-fledged e-commerce service providers and Web strategy consultants. IT heavyweights like Microsoft, Intel, Cisco and almost all the Silicon Valley big-wigs always feature India prominently in their itineraries.
Benefits of Outsourcing in India
India offers many advantages that make it the favorite of 82 percent of US software export market (Nasscom).
Large pool of computer literate and English speaking professionals
Well recognized Information technology skills
Wide gap between personnel costs in India and developed countries.
Work practices largely comply with ISO and SEI CMM standards. Three out of every four SEI-CMM 5 companies worldwide are located in India.
Quality standards meet the approval of the world. India exports software to more than 95 countries.
India has a stable political environment and pro-IT government.
Reliable satellite and submarine communication links facilitate good broadband connectivity with the rest of the world.
According to the National Association of Software & Service Companies, the Indian software industry lobby, almost half the Fortune 500 companies now use Indian Software services. With over 4 million highly trained English speaking technical personnel (second only to the USA), heavy government support and leading world class software companies, India is set to become the software giant of the new Millennium. Furthermore, a World Bank funded study in the United States confirmed that vendors rated India as their number one choice for outsourcing. Other industry sectors have benefited greatly from their decision to outsource to India: The U.S. and India have an average 12-hour time zone difference, but this kind of use of datacom can provide a virtual 24-hour office to a client in the U.S. Lately, this concept has worked wonders for large projects and also for projects involving remote software maintenance using video conferencing. Offshore projects mean immense time and cost savings.
Outsourcing could be defined as the shifting or delegating a company’s day to day operations or business process to an external service provider, done in anticipation of a better quality, lower rates and in a sense getting an edge over one’s competitors. When a company’s operations or business processes are outsourced to firms in foreign countries, often to take advantage of cheap skilled labor, it is referred to as Offshore outsourcing or Offshoring.
Where functions previously performed by an organisation are supplied under contract from a third party.
Buying goods or services instead of producing or providing them in-house.
While outsourcing is not exactly a new innovation, the shifts that have occurred recently in this space are worth noting. As the need for e-learning moves higher up on the IT and corporate training agendas, organizations are wont to take on the IT management burden of implementing a learning management system (LMS).
The concept of taking internal company functions and paying an outside firm to handle them. Outsourcing is done to save money, improve quality, or free company resources for other activities. Outsourcing was first done in the data-processing industry and has spread to areas, including telemessaging and call centers. Outsourcing is the wave of the future.
A long-term, results-oriented relationship with an external service provider for activities traditionally performed within the company. Outsourcing usually applies to a complete business process. It implies a degree of managerial control and risk on the part of the provider.
The transfer of components or large segments of an organization’s internal IT infrastructure, staff, processes or applications to an external resource such as an Application Service Provider
Types of Outsourcing
Offshore outsourcing services can be mainly divided into Technology services outsourcing and business process outsourcing.
Technology Services Outsourcing
Companies that utilize technology require sophisticated, quick-responding computer systems and software that are flexible enough to respond to the increasing capabilities of technology and the rapid changes in business models. Selecting the right technology partner is an integral part of many successful ventures. Following are the specific types of technology services.
Electronic Commerce (“eCommerce”)
Website Development & Hosting
Business Process Outsourcing
With globalization, enterprises have been challenged to find the niches where they add the greatest economic value to the world’s economy. As a result, enterprises have looked for ways to avoid making investments in employees and infrastructures that do not have a high yield. As service providers witnessed this development, they began to create whole enterprises based on narrow business processes. The term “BPO” (Business Process Outsourcing”) was coined in about 1995 and became popular a few years later, accelerated by the explosion of Internet business.
Customer Contact (Customer Relations Management)
Finance / Accounting
Procurement / Supply Chain Management
Human Resources, is becoming another sought after outsourcing area. Other areas of who and what is being outsourced is Document, Utility, Insurance, Secretarial, Consulting, Healthcare, Manufacturing, News and Media outsourcing.
Advantages of outsourcing
Proponents of outsourcing cite a variety of reasons for “letting others do it. ” Here are some of the most important
Cost savings – By outsourcing functions that were previously performed in house, companies are often able to reduce their employee levels and related costs, such as recruitment, supervision, salary and benefits. By outsourcing a capital intensive function, you can also reduce the costs of equipment obsolescence and depreciation. A portion of your cost savings will go to the outsourcer, but outsourcing vendors have a tighter control of fringe benefits and run leaner overhead structures. They also know how to deal with vendors serving the function they are providing and therefore, are able to pass on to your company the benefits derived from bulk purchasing and effective leasing.
Quality of service – Because your company is the outsourcer’s customer, you will likely experience a “can-do attitude,” which may not always be exhibited by an in-house staff.
More capital funds – Outsourcing reduces the need to invest capital in non-core business functions, thereby freeing capital to invest in profit-making aspects of the business.
State-of-the-art technology – Outsourcers have to spend time and money on the most current equipment and on employee training to remain competitive. By outsourcing certain areas, you are assured of receiving the most efficient services and the latest technological advances within that particular function.
Price stability – By signing a contract to outsource, you will likely be able to obtain stable pricing, eliminating the future need to shop around. Stable pricing allows the company to budget operating expenses and capital purchases more accurately, while potentially preventing the likelihood of surprise expenses.
New business partners – Outsourcers clearly wish to be viewed as your business partner. And as a business partner, they share in the desire to keep your company operating at its maximum potential. Through this business partner arrangement, outsourcers are eager to introduce you to other outsourcers to assist in that goal.
More time to focus on core business activities – You cannot overlook this intangible benefit of outsourcing. If a company is to be successful and profitable, management is needed to spend time planning and directing the company’s business strategies and not wasting time worrying about managing certain administrative or ancillary functions.
India continues to be the most attractive destination for offshoring of services such as information technology, business processes and call centres, a global management-consulting firm has said. It remains the best offshore destination by a wide margin even if wage inflation and the emergence of lower-cost countries decreased its overall lead, the annual ranking by consulting firm A T Kearney has said.