Outsourcing / Offshoring

You can outsource the work, but you cannot outsource the responsibility for delivering the work.

Talk to executives about offshore outsourcing and the perception is that it usually means IT and manually intensive support functions being undertaken in a lower cost environment - enabling the business to concentrate on revenue generating activities that will assist with competitive positioning.

How this perception will change as offshore outsourcing gathers pace over the next few years is open to question.

But in today's business environment, offshore outsourcing is seen as a methodology for implementing a more competitive strategy, reducing fixed costs and improving customer satisfaction. It is supposed to allow organisations to concentrate on core business activities whilst the outsourcing company looks after other activities. Whilst this may turn out to be true for many companies that use off shore outsourcing of application development and maintenance none will achieve this without some level of pain to make the change.

Who is responsible for what?

Good practice dictates the necessity of having clear contractual arrangements with offshore vendors as well as service level agreements where possible.

What cannot be outsourced is the responsibility of managing the chosen supplier to ensure that the correct quality of product and service is being delivered. This responsibility remains with the same executives who took the decision to implement offshore outsourcing in the first place. Therefore, as with any outsourcing arrangement, the quality of the deliverable from the outsource partner must be managed. Executives must direct and govern the offshore vendors to make sure they deliver what is required.

Retain Control with Quality Governance
Selecting an offshore partner who is accredited to Capability Maturity Model (CMM) Level Five does not guarantee they will deliver the development results required. The mature processes they use to develop and maintain systems will provide a framework in which an effective Quality Governance approach can be implemented. This will ensure that quantifiable benefits are actually delivered and the quality of the deliverable is proven and appropriate.

Quality Governance of this maturity is actually required to take advantage of CMM Level Five processes to implement a highly structured and deliberate approach to quality management. This is an attractive opportunity for change within organisations that will have benefits beyond the cost efficiencies of offshore outsourcing. The approach works well with onshore outsourcing projects as well as in-house projects. Strict adherence to this approach is necessary in an offshore model. Offshore delivery of projects will introduce many additional factors and project dynamics that are difficult to understand for project managers unfamiliar with this model. These factors include:

So, how do we manage the quality of deliverables from offshore outsourcing to deliver the needs of the business, meet the targets set for improvements in the business case for outsourcing and accrue the benefits predicted in the risk/benefit analysis?

Quality Governance
The framework of effective Quality Governance needs to consider four complementary but different aspects of the business operation:

The framework will deliver as part of an effective process:

To understand the relationship and interaction of these four parts to the overall concept of Quality Governance it is necessary to understand in brief their content and function.

Quality Management System
The Quality Management System (QMS) comprises:

Integrated Lifecycle Management
Integrated Lifecycle Management (ILCM) comprises:

Leading to optimised development, testing and implementation processes as well as reduced development costs across the lifecycle.

Independent Quality Management
Independent Quality Management comprises:

Leading to higher quality results with an independent and objective viewpoint

Testing
Testing practices comprise:

Leading to optimisation of test and defect identification costs. It is interesting to note that many organisations that have successfully moved to offshore outsourcing have found that using a different and separate vendor to test the development results of the offshore development vendor is good practice. Not only does this keep the offshore development vendor at his best performance, it is far more efficient at finding and fixing problems before offshore development is delivered for onshore testing. This dimension of vendor relationships is leading to independent quality assurance companies that work onshore and offshore.

These four components support each other to produce a strategic quality governance control system that regulates and controls all quality related activities. These will assist with the alignment of business strategies and objectives and provide the basis for an executive level Quality Governance framework.
The aspects of Quality Governance are 'filtered' through the Enterprise Hierarchy as outlined in Figure 2.

So what does this all really mean?

The trend to out source application development and maintenance seems irreversible. Offshore centres currently present attractive advantages but have been implemented as an Us versus Them arrangement. Realising that quality governance integrates processes and people while satisfying the responsibility of executives to make sure the right systems are delivered to the business can break down this divisive approach. Independent quality management and testing will keep all vendors efficient and effective. This enforced check on offshore work will benefits buyers and suppliers as well.