It mainly started with few big corporations outsourcing their Y2K projects and now many Small and Medium Businesses take advantage of the overwhelming benefits of reduced costs and increased flexibility, the trend toward offshore work is likely to continue.
Software service providers have been evolving and refining their Project Management processes for software development for many years. Most companies follow similar delivery practices because basic project management methodologies followed have same basis but lot of service providers have their own home grown processes tailored for their specific customer base and their expectations.
Poor communication, cultural differences, inadequate preparation and several such issues have compromised the success of projects, and raised the very costs that companies had hoped to trim by sending work abroad.
Clients spend time and money evaluating vendors, managing the contract, enhancing security, traveling to offshore sites (if needed) and potentially paying severance packages for laid-off employees. For a typical medium size organization, after the contract is signed and the work begins, companies can expect to spend an average of $300,000 per year managing the IT outsourcing contractor, according to Barthelemy's study.
"People often underestimate the amount of effort and energy and the resources it takes to manage the relationship properly," including the transfer of in-house and outsourcing staffs, says Praxair's Hill. His company's South American facilities outsource some computer operations, and its U.S. sites outsource functions such as desktop support.
In addition, for each outsourced project, Nielsen relies on about three people from the outsourcing company to serve as U.S. based liaisons and assist in project management. "This liaison team is more expensive per hour but is warranted to avoid extra time and effort losses due to project control and business knowledge issues," Ross says. In order to keep costs contained, it's important to have the correct number of people helping with contract management, he adds. Too many means higher-than-necessary fees; too few may lead to risks and possible project failures.
"You need to think through the scenarios and the what-ifs long term as well as short term" to anticipate what costs might emerge and ensure that the outsourcing provider is delivering the expected services, says Hill. "At the end of the day, an outsourcing relationship is a task-based performance contract, not a partnership. You need to think through the scenarios and the what-ifs long term as well as short term to anticipate what costs might emerge and ensure that the outsourcing provider is delivering the expected services, says Hill. At the end of the day, an outsourcing relationship is a task-based performance contract, not a partnership."
When project teams are in multiple locations and time zones, they get less face time, and the communication between team members is more asynchronous leading to additional challenges.
Challenges in Offshore Project Management
To foster collaboration and bring the needed oversight to offshore projects, companies must modify their Project Management processes and practices to account for:
- Decreased Communication due to Time Zones
- Decreased Visibility into Project Status
- Configuration Management and Integration
- Dynamic and ever changing project priorities
- Cultural differences between customer and vendor countries
In addition, offshore work adds other external factors that affect Project Management in companies:
a. As the number and scope of outsourced projects increase, projects are managed in the larger context of long-term contracts with vendors, the emphasis moves from project management to project portfolio management and vendor management
b. Offshore work changes the rules for managing security and privacy of data as well as protection of intellectual property
c. Companies may need to work with multiple vendors to leverage domain expertise and to reduce dependence on one vendor
Effective Processes, Tools and Best Practices Many project teams coordinate their hours with their offshore colleagues or vendors so that they have a few hours of overlap between their daily working hours. Given that the communication between offshore team members is more asynchronous, it becomes important to document tasks and project information such as milestones, status, discussions, meeting notes, and issues.
Coordinating Multiple Communication Channels
A typical project team has multiple channels of communication including phone calls, meetings, emails, fax, mailing lists, shared documents etc. Key information scattered across multiple channels of communication makes it difficult to coordinate and consolidate project information like Tracking Project Status and Reporting. A project management tool like Sharepoint service that allows integration of documents, tasks, workflows and key project information with Dashboards will be useful for integrating project information across different channels of communication.
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