Managing Offshore Software Development Projects Presented by Orlando Moreno Phone: web:

2 What Is It Offshore Development is the term most often used to describe the outsourcing of software programming and engineering services to facilities located in foreign countries with lower labor costs Offshore outsourcing is a viable sourcing option for IT departments Early 90’sMid to Late 90’sPresent Mundane work: mainframe maintenance Time critical: Y2K, re-engineering Business critical: sophisticated new applications, integration

3 Where Is It India is the major player in offshore development Ireland, Israel, China, Philippines are also key players Russia has stepped onto the world stage as a source of highly skilled, low cost developers Each generation of outsourcing countries has its own advantages and shortcomings

4 Why Do It Execute projects at significantly lower cost Leverage large pool of highly skilled resources Accelerate project delivery schedule Reduce on-site contracting Ability to scale up/down quickly Produce more and faster for less

5 Why Not Do It Language nuances Cultural differences Geographical distance Time difference It is not simple…

6 Companies Doing It Intel, American Express, Lucent, Aetna, U.S. Healthcare, Compaq, General Motors, Home Depot, IBM, Microsoft, Motorola, Philips Semiconductors, Shell, Sprint, 3M, Sun Microsystems, Boeing, Northern Telecom, Target, Xerox, … Synxis, Videos.com, Smucker, The Principal Financial Group, Farmer's Insurance Group And many more, and smaller ones too

7 What they outsource R&D Development Maintenance Support Help Desk Operations All kinds of projects and services High Size Complexity Low High Offshore In-HouseSimplify

8 Should You Consider It Do you have a perfect need for offshore outsourcing?  Tight budgets  Not enough people  Backlog of projects  Business is changing  Competition demands agility  Management expects delivery  Technology is evolving Maybe you should… AND AT THE SAME TIME

9 If You Decide To Do It Senior management buy-in Right offshore vendor/partner Win-win long term relationship Clear project scope and requirements Strong project management Well defined and documented processes Effective communication Remember these success factors

10 How To Select It Define requirements for offshore outsourcing Establish evaluation criteria Research potential candidates Identify initial list of candidates Prepare RFP Request proposals Evaluate responses Check references Select short list of candidates for face-to-face meetings Conduct vendor meetings Visit vendors’ offshore development centers Make final selection Negotiate a win-win contract Carefully, with all possible attention

11 Evaluation criteria Are they a viable vendor/partner?  capabilities and services, location, political stability, culture, size, financials, references Do they have required delivery capabilities?  staff skills and experience, resources availability and retention, ability to ramp up, software development process, infrastructure, knowledge management, quality focus Is their pricing model competitive?  fixed price vs. time-and-materials, offshore and onshore rates used for estimations Three major areas of assessment

12 Relationship Models Outsourcing individual projects Offshore development center with dedicated resources Joint venture with offshore vendor Wholly owned offshore subsidiary Benefits Level of Engagement Additional “bodies” Start small, but think long term…

13 Managing Vendor Senior management champion is critical Separate vendor/contract management from project work Put in place an effective process to manage the relationship Require single point of contact from vendor Clearly define roles and responsibilities Start small, learn to work together Understand cultural differences Involve vendor in planning process Measure vendor performance Provide feedback Establish win-win relationship

14 Managing Projects Assign dedicated project manager Require single point of contact from vendor Establish “one team” Maintain a positive environment Clearly define projects scope and requirements Follow well defined and documented processes Control scope Use appropriate collaboration tools Communicate, communicate, communicate It is all about people…communication…and deliverables

15 Offshore/Onsite Mix Offshore Onsite More Small team from the vendor company is located at customer’s site Vendor’s project manager is located at customer’s site Vendor does not have any onsite presence Development team is always offshore

16 Offshore/Onsite Mix (cont.) Onsite: 1. Planning 2. Analysis 7. User acceptance 8. Training Offshore: 3. Design 4. Coding 5. Testing 6. Documentation Implementation Project management ONE TEAM All good project management practices apply…

17 Q&A Are you ready for offshore outsourcing ?