The Dao of Outsourcing

Traditionally outsourcing vendors place coordinators on the customer site to facilitate communication with the offshore team.   This article discusses a different approach to coordinating offshore outsourcing projects where the client places a coordinator on the outsourcing vendor site to manage the offshore project.

I recently read a good blog post on Pragmatic Outsourcing titled The Myth of the Onsite Coordinator. Often offshore software outsourcing vendors place employees on the client site as part of the offshore engagement.  As Nick Krym mentions in his blog post, there are disadvantages to having an onsite offshore coordinator, the main being cost to the client.  An alternative approach that can be more effective is for the client to place an employee on the outsourcing supplier site.

Although an offshore coordinator could be employed by the outsourcing vendor or client, for the purpose of this post when I refer to “offshore onsite coordinator”, I mean a client employee or contractor managing the outsourcing initiative offshore.  This offshore onsite coordinator is responsible for managing the communication and coordination between the client and the vendor and may also be responsible for managing the vendor.

Advantages for the offshore outsourcing client

Improved communications - Their are two main reasons communication is difficult with a offshore team, mode of communication (phone, chat and email vs face to face), and cultural differences.  Without the offshore coordination role these factors compound resulting in communication issues.  An offshore onsite coordinator, who is a native English speaker and understands western business culture is communicating with the American office, so there are few communication issues between these two groups.  The onsite offshore coordinator then communicates directly with the offshore team face to face, which will decrease communication issues.

Improved offshore efficiency - The most efficient offshore teams I have worked with in China have had offshore onsite coordinators.  I believe the reason for this is motivation of the offshore employees.  When the client is onsite working with the offshore team, the teams have direct contact their customer and are more motivated to perform up to the clients productivity expectations.

Offshore team ramp up time - The offshore onsite coordinator brings much needed domain experience to the offshore team.  Having a domain expert in the office to answer domain related questions substantially decreases the amount of time to ramp up the offshore team on the clients domain.

Clarity into offshore operations - Because an offshore onsite coordinator is a client employee, they will accurately report issues and challenges back to America.  This creates a higher level of trust between client and vendor which is essential for a successful outsourcing initiative.

Improved vendor-client relationship - While onsite, the coordinator will learn the difficulties offshore outsourcing companies face and transfer this knowledge back to home office.  This will improve understanding between the client and vendor, thus improving the relationship.

Risks of using an offshore onsite coordinator

Vendor backlash - For the most part, I find that the offshore employees welcome the offshore onsite coordinator however, the vendors management team may not be as welcoming.  This is not always the case, and needs to be dealt with carefully.  If the vendor is resisting an offshore onsite coordinator, there is probably an underlining issue between the client and vendor that needs to be addressed.

Turnover - Living in a second world country like China or India is not for everyone.  All expatriates experience culture shock when moving to a new country, how well the offshore onsite coordinator will deals with culture shock is the question.  Sometimes employees initially excited at the opportunity to gain experience overseas will get homesick after a couple of months and request, if not demand to be transferred back home.

Choosing the wrong offshore onsite coordinator - A significant amount of patience and cultural sensitivity is need to work side by side with an offshore team.  An offshore onsite coordinator who becomes impatient with the offshore team, or fails to respect the culture will decrease the productivity of the offshore team rather than increasing it.

Many offshore outsourcing destinations like China have developed substantially in recent years.  There are more facilities and services geared towards foreigners than a couple of years ago.  Having a native to the clients country acting as an onsite coordinator has several advantages and should be considered as an alternative to having the vendor send a coordinator to the client site.

Related posts:

1. 5 things to know before offshoring software outsourcing to China
2. Advice for selecting a Chinese software outsourcing company
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