Gartner’s outsourcing tip: “Don’t just seek the leaders blindly – determine which vendors are the right fit for your organization”

The debate on the success of outsourcing as an industry seems to last endlessly. Over the years outsourcing contracts underwent a lot of changes – as the result we now see more multi-sourcing engagements and smaller focused contracts. In fact outsourcing contracts shrank in length or value per contract, but the relationship with the client has endured. Indeed, it’s relations, not size that matters. So, recently the issue of a choice of a right vendor for an outsourcing contract has become even sharper and vital for a larger number of companies in IT industry.

Many organizations that want to outsource IT services are intimidated by the task of determining which location in general and vendor in particular would best suit their requirements. Many researches in the field have been made. If in the early days of outsourcing price level was the weightiest criterion, now determination of an outsourcing partner and their geo-location is based on a whole system of criteria including not solely cost competitiveness based ones but key statistics on resources and skills level, country’s business and economic environment. Among them you may see English (French, German, etc) language skills, educational system quality, cultural compatibility, political and economic environment, global and legal maturity, and data and intellectual property security and privacy.

Historically such low-cost locations as India for instance were very popular offshore outsourcing destinations, still recently with the maturation of IT domain and with recent wage inflation and educational challenges these locations have receded their position as outsourcers now expect more “added value” to their projects and business. In this respect more attention is paid to Eastern European region, especially by Western and Northern European companies. Germany, Switzerland and Austria along with the Nordics in particular perceive Eastern Europe as a favored nearshore destination. Eastern Europe ranks high in terms of efficiency of technical education, work ethics and cultural sensitivity adding to the region’s geo-attractiveness as a base for outsourced activity.

Many respectable researchers think in the next ten years it is likely that Eastern Europe will move out from being an ‘emerging destination’ to a ‘key destination’ for outsourced activity: even though facing continued cost pressure from Indian market and despite being largely ‘overlooked’ by US based outsourcing providers, it is expected to proceed receiving its share of traditional high end software engineering and other IT services, from Western and Northern Europe. Many who experienced outsourcing there are characterizing Eastern Europe (Lithuania, Russia, Belarus, Ukraine, etc) as [a good place to find low cost, technically superb coders,.. generally hard workers, honest in answers to any your questions and strategically thinking].

Anyway, all these ratings of outsourcing locations are just generalization – anywhere you may find good and worse executors. As Gartner tips: “Don’t just seek the leaders – determine which vendors are the right fit for your organization”.

Well, perhaps very generally it would be a bad idea to hire designers from South East Asia if you expect a Western looking result :), still efficiency of an IT service provider should be checked in each particular case. There are a couple of advises helping to choose a good provider:

• Choose companies who have good feedback, ratings and recommendations. If a company follows market trends, makes marketing and technical researches, has good recommendations, especially from the companies from your geo-region, these all mark quite a solid level of credibility.

• Be careful about generic responses. This mostly concerns a stage when particular project details/requirements are already discussed. The tip considers both parties actually 🙂

• Start cooperation with a relatively small test/pilot project to evaluate provider’s competences. Altabel Group’s experience shows it’s natural for our clients to develop a pilot project with us to confirm our competences and then organically move on to Dedicated Development Team model for further cooperation.

• Try to meet your partners personally at initial stages of cooperation. Arrange short trips to visit a provider and especially meet your team members face to face.

• Think “potentially”. Keep contact information of those companies whose responses you liked for future references even if they do not fit your current project requirements.

And what are tips from personal experience? When does outsourcing have the best chances to succeed or fail? Do you have any preference in terms of a region to outsource from?

You are welcome to share your opinions here.