Offshoring and outsourcing Featured

8:00pm EDT September 25, 2007

There are numerous new outsourcing and offshoring issues that need to be recognized and dealt with before a company jumps on either practice’s bandwagon.

“Company executives are always looking for ways to lower costs and increase services delivered,” says Al Solorzano, practice manager in Application Delivery Infrastructure at Agile360. “Outsourcing and offshoring are ways to increase efficiencies, however, the shift to globalization isn’t without pitfalls.”

Smart Business talked with Solorzano for his insight on some of the things executives should consider.

What should be my first concern as I consider outsourcing and offshoring?

You have to be realistic in your expectations. Your organization must have the infrastructure and systems in place to maximize the efficiencies expected or you will never get the best return on your investment. In order to maximize the potential benefits to your company, you also will want to partner with an adviser who has done this before who can help you think outside the box and analyze the pitfalls on both sides. Realize that the person or company that you are dealing with to supply the offshore work force has more experience in this field than you have. Consequently, he or she is going to have more experience in developing a contract. Doesn’t it make sense for you to partner with someone who is looking out for your best interests?

What about security concerns?

Security is definitely an issue. You have to consider security of data — electronic and print — and security of communications, with an emphasis on access rights and user authentication methods. Along with that, you have to think about turnover — how it relates to security and to customer service. Training is another issue. What systems does your organization currently have in place to allow new employees to learn their tasks quickly and accurately? Are your account provisioning systems and security auditing tools efficient? The higher the turnover rate the offshore work force has, the more an inefficient IT infrastructure can result in increased costs for your organization. It is also always best to plan for more turnover than initially expected.

How do I know what I am going to receive from a potential supplier?

Both service-level objectives (SLO) and service-level agreements (SLA) should be developed. Understand which is which. An SLO lays out what you want to accomplish and what is needed to meet those objectives. An SLA is the agreement by the supplier of what is actually being supplied and usually comes with financial compensation for not meeting the agreed-to terms. An SLO is analogous to the postal service and standard mail delivery. There are posted terms on standard mail delivery, in this case the service-level objective. You agree to those terms when you send standard mail by using a stamp on your envelope. If the postal service takes another day or two to get the mail delivered, the postal service does not compensate you.

However, the SLA is more analogous to a higher-level service like next-day delivery. You contract for a certain service and, if the postal service misses its obligation, you may receive a refund. In some cases, if you don’t receive what is agreed upon, you may even be compensated damages that are specified in the contract. Be careful though; in our example, you could also be liable for damages if you don’t meet your obligations based on the contract, such as trying to send a 10-pound package when you only paid for a 5-pound package. Make sure you understand your contract and whether you have SLOs or SLAs.

Most organizations have issues supporting local desktops, much less desktops halfway around the world. How is this addressed?

Managing desktops is a concern, but there are many methods to get the users access to the applications quickly and efficiently. Centralizing your data, access methods and applications would be the most efficient way of getting users access to the tools they need to perform their work. Efficiencies are going to have to first be internal. The more efficient the organization is, the easier it is going to be to make the outsourced and offshore tasks efficient. The reverse is also true, but your organization must be efficient first. To really optimize the return on your investment in an offshore work force, your IT infrastructure must be able to adapt to changes and scale as additional requirements are identified or as new opportunities to out-source are identified.

What kind of technology infrastructure should be considered to make an organization efficient?

An application delivery infrastructure that utilizes remote display capabilities makes the most sense. You want centralized application, centralized data and IT control maintained by your organization. You should also have rapid application deployment that is adaptive to changes in requirements while, at the same time, keeps all data securely on your network and does not traverse other networks. Combine these solutions with desktop virtualization infrastructure and your organization will be ready for globalization. Spend time with an organization that is knowledgeable in these solutions, and you are well on your way to achieving an efficient offshoring and outsourcing plan.

AL SOLORZANO is practice manager in Application Delivery Infrastructure at Agile360. Reach him at (949) 253-4106 or