Offshore Outsourcing Projects
Offshore Outsourcing Models: Introduction | Outsourcing Road Map | Relationship Management | Staff Augmentation | Project-Based Deployment | Dedicated Offshore Staffing | Build Operate Transfer (BOT) | Managed Subsidiary | Captive Offshore Subsidiary | Joint Venture
BACKGROUND
Completing a modest project offshore is often used by many companies as a pilot exercise undertaken before transitioning to a more closely coupled model. It allows you to:
- Establish the necessary internal controls and disciplines
- Assess your selected supplier's capabilities, strengths and weaknesses
- Assess the true cost benefits.
A project-based engagement may also be suitable when:
- There are irregular but on-going project requirements
- One-off requirements (suggested minimum 3-6 man months).
With irregular on-going requirements you should be looking for a supplier with whom to build a long-term relationship. In this way, you gain the benefit of a good working knowledge of each other's needs and working practices. This will ultimately cut down on project time, reduce the management overhead, and require less re-work.
One-off projects can be considered for smaller projects than those indicated above, but this is only recommended where the requirement and the deliverables have been very carefully and completely defined. For example a small research project.
Often an on-site presence will be required at the start and end of the project. At the start to facilitate estimating, specification and relationship management, and at the end to complete testing and installation.
The on-site presence may be an individual representative or a team from the supplier, depending on the size and complexity of the project. Some projects may require an on-site presence for the duration of the project. In this case the on site team can act in the same way as a resource augmen-tation team, acting as the conduit to the offshore team and providing the local, on-site point of contact for them and the customer. The on-site team will provide and interpret requirements, give technical leadership and liaison, and provide support. Critically, the on-site team can provide an extra layer of quality assurance, performing pre-checks on material delivered from the offshore team before it is handed over to the customer for acceptance.
Project based deployments may be Fixed Price or Time and Materials (T&M). Most customers opt for the former, placing the risk with the supplier. However this can result in 20% - 30% project mark-up depending on the risk perceived by the supplier.
Advantages
- Good stepping off point to offshore delivery
- Constrained relationship
- Provides rarely used specialist skills and satisfies one-off requirements economically
- No long term commitment
- Potential cost savings.
Disadvantages
- Careful requirement analysis and specification essential
- Supplier management
- No guarantee that previously deployed resources will be available for future projects
- Relatively higher cost than some other models.
Criteria For Using Project-Based Deployment
Consider using a project-based deployment when:
- There is a single large requirement
- There is a small well-defined requirement
- There is an ad-hoc requirement for project work
- Existing staff can be re-deployed in customer facing rôles
- The existing staff is unable to meet the demand of ad-hoc projects and customisations.
POINTS TO CONSIDER
- How will support and maintenance be provided after the project is completed? For example if a book is transcribed and a revised edition needs to be produced, or a diagram is found to be incorrect at a later date
- If your project work requires specialist skills and knowledge of your company or business, what effect will this have if your selected supplier cannot guarantee to be able to re-deploy resources for a subsequent project?
- If a project based deployment forms part of an overall strategy, is your selected supplier willing and able to transition to another delivery model at a later date? In particular, will they be willing to transfer resources?
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Outsourcing Books
These offshore outsourcing books provide a detailed insight into the successful planning, establishment, maintaining and conducting business and projects offshore.
