Should You Ever Visit Your Outsourcing Provider ?...Here Is What You Need To Consider

Big corporations with budgets of millions of dollars do it all the time..they visit their outsourcing provider...wherever they are located.   Often times, and if the budget warrants it,  they actually have a representative embedded with the outsourcing team..or at the very least have a local rep which looks after the relationship.

There are significant advantages to be realized...which is the reason why they do it.

The question I get asked sometimes if smaller scale projects are worth while to warrant a visit.

The short answer it "Sometimes"..and it depends. 

There are a few things which go into the evaluation of whether or not a visit can make a difference. 

That travel in almost every case leads to second or even third world countries and cities which require connecting flights. As such the decision to travel requires a more significant investment as it relates to time and money.

Below are some of the considerations a small business owner with a smaller project might want to consider to decide if the trip is worth his/her time.

Consideration 1

How long is the estimated time to completion of your project?

If the project is estimated to be completed within 6 weeks even a substantial overrun in time to completion might no be material to your business.  If on the other hand estimated time to completion is 8 months..then a visit might make it more likely that the project will be on time.

Consideration 2

How expensive is your project...and are you responsible for cost overruns ?

This might be the cardinal question...if your project is only 5k...even a 40 % cost overrun amounts to only a 2 k difference. From a financial cost/benefit analysis it might make no sense to visit. If on the other hand the project is spec'ed out at 100 k...a 40 % increase would add an additional 40 k in expenses. Avoiding the additional expense might make it worth your time to go.

Consideration 3

When should you go and visit?

Assuming you have a time to completion numbered in months and a budget which, if there  were a significant cost overrun, would  make it economically feasible to plan a visit...you need to decide when you should visit. As a general rule..the earlier in the process you visit ..the better it will be. Your outsourced software development team will not get a lot of client visits. If you visit them you will l leave a definite mark on their thinking and they will be much more attentive to your needs for the remainder of the project. 

Consideration 4

Will my visit make a difference as it relates to schedule and costs?

The short answer is unequivocally ...YES. It will. I can assure you that there is a pretty good chance that you might be the only client visiting the developers that year. If you buy them a meal, perhaps some drinks...you can be assured that there will be a lot of goodwill created. The Goodwill will translate into more diligence as to your project, saving you time and money.

Consideration 5

Do you have the time to go and spend at least a week with the team?

This consideration is something only you can decide. f you do have the time and like to travel to areas / cities which are usually not mainstream travel destinations...it might be a good idea.

Consideration 6

Does it make financial sense to travel?

I briefly touched on it in consideration 2. There is obviously little point in spending 5k on travel if the total project is 5k. As such there is a relationship between travel expenses and expected benefits. There is though another way of looking at it...and a lot of companies are utilizing that strategy. An alternative way to look at the projects costs is to include travel expenses upfront in your calculation. The combined project cost and travel expenses then make up the Total Project Costs. If the total Project Cost is sufficiently below what onshore development will cost you..then u have found the economic justification for travelling to your Outsourcing Provider.

At the end of the day the decision to travel is an individual one every business owner needs to decide for him/herself.  I can attest to the fact that it will be beneficial.

Some people like to travel...and some do not. I have a client which always makes it a point to travel overseas to visit the software development team. For him it is a vacation in disguise, fully tax deductible.

That reasoning might not appeal to other business owners...but if you do have the time and like to explore different countries..this is certainly one way to make it tax deductible. And this is often times all the motivation a small business owners need.

Onshore, Nearshore or Offshore Software Development...here are some pros and cons

The day has come where you decide to outsource a software development project. There might be multiple reasons why but you now face the task of how to do it and get it done.

For someone who has never outsourced software development this might seem like a rather daunting task. After all...how do you get from idea to conclusion without having major hiccups on the way.

Business is all about proper execution of strategy...and you should treat your outsourcing approach the same way.

One of the first decisions has to be the geograpic which decision as to what type of outsourcing you want to pursue. There are 3 different categories of outsourcing available to you. Each comes with positives and negatives associated with their relative geographic area.

The table below provides some insight into some of the considerations you may want to entertain. The point of vies used is from a US perspective.

If you are based in Europe the geographic point of view  provided below are obviously  somewhat different.

Definition	The Pros	The Cons
Onshore Any development partner which resides in your country is typically considered an outsourced onshore development	No cultural issues which can lead to misunderstandings Same time zone, cooperation during the day is a breeze Easy to visit the development partner, domestic flight, train or car trip Consequently it is easy to supervise	Onshore development is the most expensive. Reputable firms easily charge well above 150 US-$ for contract work Onshore software development firms frequently outsource their work to offshore providers. As a client you might never learn about it. Hence you might overpay. In some cases onshore firms are very much tied into business networks which are closely aligned with your business. Ideas or concepts you deem as confidential are leaking to other companies in your space. This can happen through staff attrition or related development work
Nearshore A company which resides in neighboring countries with a time zone difference  of perhaps up to  4 or 5 hours is usually considered Nearshore. Examples are South America, Canada, Jamaica	The provider is removed but you still have between 4 to 6 hours of overlap in the time zones, enabling you to efficiently cooperate throughout the day. Pricing will be significantly cheaper than onshore pricing. There is a certain cultural alignment. Developers in nations mentioned as nearshore providers are used to the US way of thinking.	Nearshore development is not a radical solution. It is more expensive than offshore development as such a lot of the advantages are mitigated. Nearshore provider are not easy to reach. Travel times are frequently more than 8 or 10 hours and flight is the only option. Nearshore providers might have significant language barriers.
Offshore Offshore Development is usually associated with development done on other continents with significant time zone differences. Examples are Asia and Europe	Offshore providers are usually the cheapest by a wide margin. Not unusual to find development companies with big product portfolios and a lot of related work  experience. Because true offshore development companies tend to be bigger in size they usually have defined processes to manage a relationship	Offshore Development centers reside on the other side of the clock. Time zone differences are usually 8 hours or more. The command of the English language is often times average. Only Project Managers and Senior Developers speak good English. Work hours usually only overlap up to 4 hours.

At the end of the day it really comes down to what the company is prepared to pay...and the trade off the company is prepared to accept if it decides to pursue a lower cost provider.

 There is little doubt that onshore development is the easiest one to manage. The downside is of course that the expense is by far the highest.

Conversely, true offshore development in Asia is usually the cheapest. A lot of corporations are comfortable with offshore development and are prepared to accept some of the difficulties working with a company on the other side of the clock.

Technical Support Outsourcing Continues To Grow...forecasted to grow at 6.53 % CAGR

There has been some anecdotal evidence that outsourcing is slowing down. Some of the major providers of BPO services have been making some noise that there is a deceleration in outsourcing contracts and revenues.

However, one of the top Market Intelligence Firms has released a report which counters that perceptions with some hard facts. They analysis shows the market has been growing and they forecast Compound Annual Growth Rates of 6.53 % for the period 2016 to 2020.

The full report, released by Market Study Report  can be found here.

The report specifically covers a sub section of the BPO market. Technical Support is what it is all about in there. As such he report might not provide a full overview of the global BPO and KPO industry...but it makes clear that a significant chunk of it does not need to worry about a deceleration in revenues anytime soon.

If you would like to read the full report..there is one small problem.Market Study Reports are known to be somewhat expensive. This report is too..they are asking US-$ 2500.00. Fortunately they are open to negotiate a  discounts and perhaps even a free sample report.