Quality SoftwareThe Ultimate Guide to

through Offshoring

Several factors come into play when deciding on offshoring software development. While

weighing the offshoring options you may wish to know how this would fit in your business

strategy. You may be interested in finding out what the impact on quality and ROI would be,

how it would be implemented and if there would be any issues related to people, processes

and projects.

At coMakeIT, we believe in making offshoring a successful and easily achievable goal for

ISVs. In this book, we’ve outlined the best practices of offshoring that we’ve learned from over

fifteen years of working directly with ISVs across the globe. The ideas and strategies offered

in the book are based on our experience and expertise in partnering with different ISVs in

realizing their business goals. We encourage you to explore and implement them

appropriately. You may wish to reach us if you are looking out for a partner in your offshoring

engagement.

Kiran MadhunapantulaCOO

Steven ten Napel CEO

We assure you resounding success.

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Preface

Cont

ents

Balanced sourcing

Culture doesn’t matter. Good processes do.

Cheap is expensive?

Shuttle diplomacy

Copyright is never a right to copy

Keeping it right 3

Introduction

Quality Software Through Offshoring

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Introduction

Offshoring is, at the core, a practice that involves moving a part or all of a

company’s processes to a foreign country for a plethora of reasons ranging

from lowering costs to increasing efficiency. It has been an immensely

effective go-to solution for ISVs at various stages of growth:

ISVs that have a well running R&D department, but need to expand

capacity

ISVs that want to migrate to new technology, but do not have the

resources to actually do it

ISVs that want to innovate, but do not have the right people or can't get

them locally

Not surprising then, that over 80% of the world largest software vendors are

already offshoring!

The choice of a model usually is a balance between customer intended sphere of control and vendor-offered flexibility.

Whenever an organisation is looking to outsource or go offshore, various

questions arise. These are centered around where to start and which

engagement model to follow. Most of these questions originate from either

the fear-of-the-unknown or case studies of successes and failures in

offshoring or outsourcing endeavors.

Owing to the highly competitive nature of the market we thrive in, there

is an inherent need to seek out new ways to increase productivity and

efficiency. It should also be noted that the success and failure of a model

doesn’t depend entirely on the model itself but also, and more importantly, on

its implementation. Let’s consider commonly engaged models in the

software offshoring and outsourcing industry.

Own offshore

Outsourced ProductDevelopment Services

Outsourced software Service Providers

Introduction

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Offshore Development Center

To truly succeed in your offshoring initiative,

ensure that your choice of an engagement model

is based on strategic intent. As mentioned earlier,

certain basic questions and concerns still bother

decision makers when embracing an offshoring

or outsourcing strategy. Here is an attempt to

demystify some of the popular concerns in a very

practical and unbiased manner.

Introduction

6

High

Flexibility in engagementSphere of control

LowHigh

Own offshore Offshore development center

Outsourced product development

Offshore Services providers

BalancedSourcing

ShuttleDiplomacy

Cheap isexpensive ?

Culture doesn’t matter.Good processes do

Copyright is never a

right to copy

Keepingit right

Solving a problem within the mindset that created it can be difficult. However, in outsourcing, assuming that others will solve what you can’t can be a difficult proposition. Look for competency compatibility in your partner so that you can focus on your strengths while allowing your partner to do what they do best.

A different culture is not a difficult culture. Focus on competency compatibility rather than cultural compatibility so that time and energy is well spent focusing on things that yield substantial business benefits.

A common perception is that since you get several rupees for a Euro, you can buy more. But, when the result of this investment is that you spend more Euros to repair your product, the cost advantage quickly disappears. Hence, you need to set the right quality and invest accordingly and cost savings will be a positive outcome from it.

Software development is a people and knowledge-centric business. The process of setting up and operating a distributed innovation involves aligning people, their knowledge and the overall business ambition of the company.

It is crucial to have shared values and principles when it comes to respecting each other’s intellectual property. Choosing an outsourcing or offshoring partner should be a very meticulous and well thought out decision because it is much more than just a regular transaction.

When pursuing offshoring or outsourcing endeavors, it is crucial to make decisions based on context. Determine with certainty your reason for offshoring the software development process. While there is always going to be an uncertainty factor, contextual decision-making in offshoring will help drive better results.

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BalancedSourcing

Solving a problem within the mindset that created it can be difficult. However, in outsourcing, assuming that others will solve what you can’t can be a difficult proposition. Look for competency compatibility in your partner so that you can focus on your strengths while allowing your partner to do what they do best.

Insourcing offers a brilliant opportunity for the customer to amplify existing business.

Traditional strategies of offshoring and outsourcing were dominated mainly by

financial leverage which meant they were focused on high volume and low

cost.

Yet another common element in the traditional outsourcing thought leadership

was to outsource those processes that posed execution challenges. While

there is nothing inherently wrong or right about a certain strategy, timing does

impact its effectiveness.

Before one can make a call as to which strategy to adopt, it is crucial to

identify its alignment with broader business goals. Getting the team set up

based on your requirements and needs can be a time-intensive process and

hence it has to have a direct link with your business strategy.

6z

Balanced Sourcing

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A popular strategy is to go the insourcing route, thereby augmenting the

existing process rather than choosing to outsource by giving a part of the

process away. Insourcing offers a brilliant opportunity for the customers to

amplify existing business through their choice of skilled resources and as

much degree of supervision and participation as they see fit. It also makes

available additional customer-friendly features resulting in high quality

products and long-term engagements, while simultaneously also raking in

with it all the attractive benefits of outsourcing.

That brings the discussion to what should drive the decision on which model

to choose. Well, while there is no particular size that fits all, there are

however some guiding principles that can help steer the decision making

process.

It’s all about striking the right balance between the following factors:

ControlDetermining how much control your company is willing to transfer and how much it wants to retain

CompetencyFocus on core competency and partnering for ancillary competencies

Balanced Sourcing

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Balanced Sourcing

RiskDetermining the risk appetite of your company in terms of not just investing money but also investing management attention and the governance mechanism

Outsourcing problemsFinally, the most important balance is having clarity on whether problems are being outsourced or opportunities are being insourced. Taking an analogy from the manufacturing industry, let’s try to put this perspective as an offshoring decoupling point.

Don’t outsource your problemsSolving a problem within the mindset that created it can be difficult. In outsourcing, assuming that others will solve what you can’t can be a difficult proposition. Look for competency compatibility in your partner so that you can focus on your strengths while allowing your partner to do what they do best.

Model Businesses

to Order

Execute

to Order

Sta�

augmentation

TraditionalOutsourcing

ProjectOutsourcing

BusinessExtension

Flexibility

High

Pa

rtne

r

Customer

Low

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Culture A different culture is not a difficult culture. Focus on competency compatibility rather than cultural compatibility so that time and energy is well spent focusing on things that yield substantial business benefits.

Culture can be seen as a super set of accepted norms in a society/country /region based on various parameters that influence life.

It is said that in India, dialect, culture and food habits change every 100 kilometers. You may find a similar scenario in other countries as well.

First of all, different cultures are not difficult cultures. For reasons of historic importance, cultures have come into existence independently and almost involuntarily. Culture can be seen as a super set of accepted norms in a society/country/region based on various parameters that influence life.

So, there is good reason to respect different cultures and not try to dissolve or deny them for a specific business or a personal relationship.

However, there is still an unresolved issue of how to deal with culture in different geographies.

Let’s think of a culture neutral scenario. Let’s define culture neutral as a state that we assume in business or personal relationship, where two parties want to deal with each other. It’s not a ‘my way or the highway’ thing.

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Business is just usual when you want it to be.

Culture

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A few basic tips for creating a culture neutral state:

ObjectiveIt should at least be clear what is expected of a collaboration involving different cultures. This can be business expansion, growth, personal relation or a new business idea. This is the component that will create the basic ‘click’ in the relationship.

TrustEasier said than done. There needs to be a basic level of trust between parties on aspects such as, opportunities, possibilities and willingness. This keeps things moving forward.

ContractWhen beginning a relationship, the understanding should be in a formal contract, with due legal applicability.

CommunicationLanguage is not a barrier for communication, but an enabler. Finding ways and means of communicating when needed is an essential step-in understanding each other.

Culture

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Culture

FunSeeking lighter moments to share a joke or two is never a bad idea.

We can create a culture neutral state by adopting mutually agreed upon norms. This can also be described as a new culture that sets the base for a relationship. Such a state should be able to handle what weoften refer to as ‘business as usual’.

Business BehaviorDon’t try to do things that you are not used to. Focus on following common norms and make use of them for normal and usual business behavior.

Constructive FeedbackOffer and expect objective feedback on process and results instead of being critical of people’s behavior. Humans can and do adapt.

It’s best to behave in a normal fashion than attempting to do something we are not used to. Collaboration is beneficial to every member, so there is no reason to assume or imagine that possessing more power in a relationship gives an advantage.

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A common perception is that since you get several rupees for a Euro, you can buy more. But, when the result of this investment is that you spend more Euros to repair your product, the cost advantage quickly disappears. Hence, you need to set the right quality and invest accordingly and cost savings will be a positive outcome from it.

Cheap isexpensive?

1700

20

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Cheap is expensive?

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The early days of outsourcing had one common theme: count the number of 'hands' engaged in programming and then search for a place to get it done in the least expensive way possible.

People didn't realize that software engineering was not just slapping together a few lines of code but a full-fledged profession that involved elements such as purpose, relevance, fool proofing, future-proofing, fault tolerance and use that determined its true value. Here are some interesting facts about the evolution of outsourcing:

The early 90s and later the Y2K era saw a need for additional capacity to cope with rising demands of automation and an even higher demand for 'fixing' processes when they went awry.

Emerging nations like India were abounding in qualified young people with exemplary communication skills and so, became the obvious choice of destination.

Transaction outsourcing emerged as both time and cost effective, thus becoming a best practice for all future generations, even after the context of outsourcing changed. For a few nations that had adopted transaction outsourcing, this process had set a benchmark of expectations, however low it was.

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Cheap is expensive?

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In the last decade, the offshoring industry matured and gave rise to ‘project outsourcing’. This increased expectations of companies that wanted to gain time and cost benefits.

Project outsourcing did not take into consideration the fact that the outsourcing service providers were not automatically capable of coping with the constantly changing demands of the customer. Consequently, the end product often did not match specifications and there would be cost and time overrun, which lead to tremendous frustration.

In India, however, several companies emerged stronger during this phase by exceeding customer expectations. Since competitor companies were unable to catch up, they started playing the price card. Eventually, companies started to focus solely on cost savings which led to various negative consequences and offshoring started to get a bad reputation. Most companies that went east to save ended up spending more to repair than to produce.

However, India, being the earliest outsourcing destination, had gained a tremendous amount of experience in software development. The Indian government, upon realizing this potential, also invested heavily in ICT education and infrastructure sectors. Indian software companies became international players and software product companies emerged in the international market at an enterprise level.

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Cheap is expensive?

While expansion and extension are extremely necessary for companies, especially in today’s networked economy, it is more important to properly choose who to partner and work with. There are several distinct parameters of assessing a partner, almost like testing for a DNA match, that are crucial for success.

Proven capabilities are better than unproven possibilities. It is important to leverage the experience of people in the partner company, who have been there and done that.

Software engineering is a profession. This principle needs to be the core of the partner organisation. Developing software products is a complex branch of the software engineering profession. Experience and maturity of the partner is of vital importance here.

Price is an index of experience and outcome. The brand may not just justify price. Lower price does not mean low quality. In effect, so many rupees for either a Euro or a Dollar is a measure but not the driver.

Cost is an important measure in offshoring or outsourcing but it is not the same as equating with currency exchange rates. Focusing on effectiveness of the offshoring / outsourcing solution, selection of the right partner and implementing governance, will produce the right results, and as a consequence of all these measures, cost efficiency as well.1700

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Invest in quality and cost savings will follow.

ShuttleDiplomacy

Software development is a people and knowledge centric business. The process of setting up and operating a distributed innovation involves aligning people, their knowledge and the overall business ambition of the company.

Borders? I have never seen one. But I've heard they exist in the minds of some people.

Thor Heyerdahl

Overcoming barriers of mind is critical in offshoring engagements. Often people get stuck with the perils of traditional thinking such as the ‘not-invented-here’, ‘too-far-from-my-bed’ and ‘us vs. them’ syndromes. This thinking saps away all the incredible potential offshoring can actually bring- a combination of top-notch skills and opportunities that can be gleaned from working with a trusted offshoring partner.

It is true, of course, that offshoring brings challenges. These range from new geography, different time zones, language/dialect/accent issues and so on. But, it is important to note that this arrangement is no different from operating out of two different cities in the same country.

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The process of setting up an offshore team can be exciting. For an entrepreneur, this can even be great fun!

Shuttle Diplomacy

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Shuttle Diplomacy

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Software development is a people and knowledge-centric business. The process of setting up and operating a distributed innovation involves aligning people, their knowledge and the overall business ambition of the company.

Offshoring endeavours thrive in the atmosphere of trust and transparency. It is crucial that trust is established mutually and there is no better way to accomplish this than by being honest and transparent from the very beginning. Irrespective of your location, when you create a collective ambition, people will be at their best in contribution.

In our experience, the alignment from the people perspective precedes all other elements. In the early days of offshoring, certain practices were followed, perhaps in relation to time and possibilities, that did not help explore all the benefits of the offshoring process.

This involved:

Unequal distribution of work: Unfair decisions on who does routine and mundane work and who gets to work on the cutting-edge aspects of the task at hand

‘Us vs them’ culture: Passing the buck quickly to the other side and focuing on "who" rather than "what" in cases of failures

Fire fighting attitude: "Let me jump into the airplane and fix things”

Task management: Lack of percolation of ownership coupled with a very distant sense of purpose In order to make teams work in a geographically distributed setup, it is important to let teams feel each other’s pulse. The best way to achieve this is by allowing team members from all locations to meet face-to-face once in a while. Just as a picture says a thousand words, in-person meetings will work more wonders than a well documented communication process.

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Shuttle Diplomacy

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Shuttle Diplomacy

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From a practical stand point, this can be implemented quite easily. At coMakeIT, we call this process Shuttle Diplomacy. It comprises the following key stages:

When the teams are in their forming stage, certain management staff and key team members should be involved in the selection of offshore team members. This will help improve acceptability amongst members.

Next, we implement what we term as 'shuttle diplomacy' between the teams. Offshore team members travel during the seeding stage to get acquainted with their counterparts and engage in a knowledge transfer process.

When the teams start to perform, some of the senior colleagues should visit the offshore teams, at least a couple of times in a year, to interact and learn from each other for improvement.

Executive management must pay close attention to the offshore teams, otherwise they lose connection with the business and the ambition. A town hall or an all hands meet, once a year is highly recommended for the chief executive, during the visit of their offshore teams.

Most importantly, it is worth investing in communication tools for video conferencing. They are very powerful in strengthening and intensifying the existing connection.

Copyrightis never a

right to copy

It is crucial to have shared values and principles when it comes to respecting each other’s intellectual property. Choosing an outsourcing or offshoring partner should be a very meticulous and well thought out decision because it is much more than just a regular transaction.

It is said that those who dream of changing the world just might do it one day. It all starts with an idea that could stem from literally anywhere- schools, garages, innovation centers or venture capital world, when you set out with a mission to change the world's perspective on things. It could be a process or a product but the common element is always the uniqueness behind the concept. This uniqueness deserves a definite right to be protected, before someone else imitates it, because it is easy once they know how.

When it comes to an idea, the first and foremost rule is being able to prove that you were the first to conceive, design and develop it.

Intellectual Property (IP) can be thought of as a mapping of inherent intelligence on to a real world challenge resulting in an explicit form of knowledge. The real value of IP is in its use, how widely and frequently it is used and how big the impact is in reality and as a potential. It would be a shame to lose out on that opportunity through someone's malicious intentions!

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Copyright is never a right to copy

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For every IP developer, there is much more in the game than just money. There is also the thrill of accomplishment, an iron will to succeed and an anxiety about the outcome and a great degree of risk appetite. The last thing they need to deal with is a sense of insecurity about their IP.

Intellectual property protection should be taken seriously. As the common saying goes, things can be made fool-proof but not idiot-proof. For example, a casual tweet or a Facebook status can inadvertently expose highly confidential information. So, it makes it all the more important to be careful about IP protection.

Software offshoring adds a complex dimension to IP security since it crosses not just the physical boundary but a legal and jurisdiction boundary as well. It is natural for ISVs and software product development companies to have concerns about IP protection when it comes to offshoring their software development work to other geographies.

8

Copyright is never a right to copy

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Copyright is never a right to copy

For an ISV, there are a few strategies to overcome the fear of the unknown in offshoring their software product development abroad.

Product DNAThe partner of choice has to have product DNA. Unless the management and the promoters have been there and done that, they wouldn’t know the value of your IP. A majority of offshoring choices fail drastically in this area because although they get a team in place, there is a lack of proper understanding and agreements in place. Trust and transparency are vital in any offshoring engagement. Your organisation must always ensure that these two core elements are in place when deciding to engage with an offshore partner. At coMakeIT, we firmly believe that transparency is the breeding ground for trust.

Laws of the landLaws of the land play a very crucial role in the whole process of choosing the location for offshoring. Applicability of international laws around intellectually property must be in the system. Partnership with WIPO (World Intellectual property organisation), IPR based education and research, demonstrates the country’s commitment to complying with global treaties and agreements.

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Copyright is never a right to copy

Track recordIn the end, a law or a treaty is merely a deterrent. The attitude of respecting each other's IP shows in the business atmosphere. An infringement can, of course, be contested in the court of law. But the business attitude of never having to test the laws is the essence of a true partnership. The number of law suits on IP rights can never be the measure as to how strict the enforcement is. So, it is important to choose the partner based on their track record. Because, if they don't have it inside, they can't have it outside.

ContractsHaving a number of contracts can be helpful in ensuring that the IP is in safe hands. It is most important to have in place a Non-Disclosure Agreement (NDA) protected under the laws applicable in both countries Another NDA between the partner company and the employee in the engagement will further strengthen the agreements from either intentional or unintentional leakages from the employees of the partner's company.

Choosing an outsourcing or offshoring partner should be a very meticulous and well thought out decision because it is much more than just a regular transaction. The best plan of action is to ensure that you and the offshoring company have shared values and principles when it comes to respecting each other’s intellectual property.

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Keepingit right

When pursuing offshoring or outsourcing endeavors, it is crucial to make decisions based on context. Determine with certainty your reason for offshoring the software development process. While there is always going to be an uncertainty factor, contextual decision-making in offshoring will help drive better results.

8

Keeping it right

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When offshoring, there are three factors that you have to get right:the right process and the right partner and within the right business context.

Your decision-making process should take two key components into consideration: context and the uncertainty factor.

Let's consider an example here. You are about to go on a holiday to a country you've never been before. You are considering hiring a tour guide to ensure that you hit all the right spots. When making this hiring decision, you would con-sider the context because your interests may vary from wanting to visit muse-ums and historical sites to beaches or perhaps, you want to go trekking on the mountains. Your choice of a tour guide would depend on both his/her expertise and whether or not it aligns with your own interests.

This logic also applies to software offshoring. Decision-making has to be extremely contextual because while there is going to be a certain level of uncertainty; you can ensure that your decision will drive results by implementing it in the right context.

If your company is looking to rapidly increase headcount to meet time-to-market demands, your solution would be different from if you were looking for break-through innovation in a certain business area. Applying the same solution in different contexts does not necessarily produce the same results.

Your context for offshoring is also determined by factors such as a lack of talent in-house, difficulties in hiring the right talent, time to market necessity, growth of the company or achieving the same results (or more) with less time and effort. The context is also going to vary for a services based organisation as opposed to an organisation that is focusing on developing and selling software products. It is crucial for a company to have the context defined and shared with the partner to be able to establish a perfect working relationship.

Keeping it right

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Keeping it right

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When pursuing offshoring endeavors, focus on the following basic principles:

Right partnerAs an innovative ISV, your company would have expertise in a business or technology area that is so distinct that others may not fully know about it. This is where your guidance and mentoring would add immense value to your partner's productivity and efficiency. As you help them understand your business better, they can bring you closer to your goals.

Often quantity is confused with quality. It is not about how many people are available who can perform a particular aspect of work; rather it is about how many people there are that are already doing the work. Numbers can be deceptive. It isn’t just about the knowledge anymore, it is about application.The true spirit of partnership can be experienced when both parties are willing to stick their neck out and go out of their way to make the endeavor successful. This go-getter spirit goes beyond mere purchase orders and invoices.

The most effective indicators of how successful your partnership will be are:

Capability of the partner in the eyes of his or her existing relations

Past experience and maturity of the leadership team

How the partner conducts his or her business

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Steering mechanismEstablishing a governance mechanism is a very important step in the offshoring process. Organisations often mistake the governance to be progress reporting. While progress reporting is part of a project, governance has a wider jurisdiction over the contract and relationship.

In order for a relationship to yield right results, a formal governance structure and process will be of great help. Here is an indication of how such a structure and process could be setup Ensure the purpose is met: people expect information to be shared and decisions to be made in a governance process! Executives from both sides, who hold accountability for the results of the partnership should be part of the governance board Identify a few critical milestones and goals of the partnership that must be met; make those goals agenda items for the governance process Identify key elements in the contract and ensure that there is an emphasis on them; this will help prevent surprises (often what’s written in the contract is forgotten until an issue surfaces) Establish the frequency of the meeting; most ideal is once-a-month and a willingness to meet about an escalation within one-day notice Plan to meet in person at least once or twice a year

There may be several companies and people who claim the know-how, but as a company, if you want to ensure that your results are a resounding success, look for do-how people!

Keeping it right

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In this book, we’ve seen that quality software through offshoring has the power to transform your business model in ways you have never imagined before.

We believe that true globalization is only possible with business networks organised as long-term partnerships. We believe in the power of business ecosystems that are built with relationships that run deeper than the bottom line results.

This is why we do offshoring differently. We really coMakeIT together.

We have pioneered the concept of distributed innovation by helping companies set up high quality development teams to extend and scale up their R&D pursuits. India has a fantastic pool of highly qualified and bright software developers, from which we recruit, retain and develop your extended team, ensuring that you achieve better results with less effort. As a preferred partner for specialised software offshoring, we have always emphasised on building long-term relationships with ISVs in their growth and sourcing strategies.

We are backed with over 15 years of experience in developing quality software that is built to last. At coMakeIT, we are entirely committed to making software offshoring easy and achievable to every ISV in the world.

Conclusion

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