New to outsourcing?

Our Caveats for First-Time Outsourcers

Companies that have been outsourcing will continue doing so, and many of those that haven’t are now ready to take the plunge. For first-time outsourcers, many of whom are small and mid-size enterprises, the opportunities are incredible if outsourcing is managed properly. Below are a few tips that will help companies new to outsourcing maximize their gains and avoid some common pitfalls:

Do the Math
Small and mid-size companies that decided on IT outsourcing are often driven by short-term cost reduction goals. Offshoring allows greater savings than local outsourcing, but to achieve those savings it helps to do your homework. Spend time investigating if outsourcing will actually save time and money, or if the job can be done just as efficiently in-house. Allow for extra time needed for management transition and ramp-up. Outsourcing is not a universal solution, but can be a life-saver when applied properly.

Know Thy Vendor
Before you place your trust in a company across the ocean, you should subject candidates to a thorough selection process. Look for service providers that have your domain expertise and a track record to prove it. A comprehensive portfolio of complete projects and third-party references are a must. Take time to conduct interviews with the key members of a vendor’s team. If your project is a large one that will likely span a few years, hop a plane and visit your vendor’s development center. Finally, it is wise to run financial background checks to make sure a selected vendor is stable enough not to be affected by the current economic crisis.

Set Clear Expectations
We cannot overstress the importance of a clearly outlined scope and scale of work that needs to be outsourced. A major stumbling point in offshoring projects is a misunderstanding of the exact scope of the project, which can create frustration on both sides. This can be avoided by both careful planning and structuring of the project’s scope at the initial phase and by consistent project management later on. The rule of the thumb is - the more relevant information you make available for a vendor, the smoother your project will proceed.

Offshore Safely
From the initial Request for Proposal (RFP) to the Service Level Agreement (SLA) to the Statement of Work (SOW), clearly defined IP protection and data security requirements must be an essential part of each document. Do not simply rely on your vendor to do it for you. It is better if your legal department gets involved to make sure your specific concerns are met. Select a bidder whose best practices include data security and IP protection policies, and who can meet your jurisdictional requirements in particular geographies. Our advice is  to resist the temptation to cut security and IP protection requirements to reduce costs. The good practice is to spend at least 1% of the total contract value on these critical elements.

Manage and Measure
Continued two-way communication is essential in ensuring steady progress on your outsourcing project. Set project milestones and dedicate time for regular conference calls with your offshore vendor. This will help you avoid unpleasant situations when the deadline looms, but the project is way behind schedule. At the same time, you should leave room for initiative on the part of the vendor that can help accelerate the delivery and improve the end product.

Thank you for taking time to read these tips. We hope that you found them helpful and now feel more confident about navigating the offshoring seas. This is what Luxoft can do for you to make your first offshoring experience a smooth ride.

Luxoft’s Value Proposition for First-Time Outsourcers

• Our goal is to maximize your ROI and help you gain a competitive advantage in the market.
• We speak the same industry language as you do and understand your concerns and challenges you face very well. Luxoft has accumulated years of in-depth expertise in banking & finance, automotive, telecom & datacom, e-commerce, embedded wireless, energy management, aerospace and other business areas. We can easily apply our extensive knowledge base to your project.  
• Engineering excellence is at heart of everything we do. Our engineers know how to think ‘outside the box’ and apply cutting edge technology to ensure best solution possible. If you are looking for an innovative solution, Luxoft is the right partner for you.
• We take your IP protection and data security seriously. Luxoft has developed numerous internal policies and procedures to ensure the highest level of your IP protection. World leading companies like Deutsche Bank, UBS, Boeing, Avaya and more, trust us with their sensitive data.
• Over the years, Luxoft has perfected the rock solid execution of the clients’ projects. Our best-of-breed processes have been recognized by numerous industry awards and certifications, including Europe’s first CMMI® 1.2 Maturity Level 5. All this and our proven track record ensure surprise-free progress of your project – all the way from putting together a SLA to the final stages of product testing.
• We treat you as a valued partner, giving you our full commitment, regardless of the project size or scope. We always communicate with our clients honestly and in a straightforward manner, and never hide any facts. At the same time, unlike many vendors, we do not hesitate to suggest changes to the original requirements if we believe they will benefit our client.
• Finally, we are ready to go extra mile to deliver the right solution to you in lieu of a formal approach.  

Contact a Luxoft representative close to you and start exploring how partnering with Luxoft can help you achieve your business goals, maximize your ROI and gain a competitive edge during these difficult economic times.