Monday, November 14, 2005

The non-obvious benefits of outsourcing

All names changed to confuse the hell out of readers.

Outsourcing, the bugbear of modern IT. Companies all over the world are outsourcing software development jobs to cheaper locales, resulting in redundancies. This makes it a very, very emotional topic for some people.

I'm working for a company that is currently outsourcing it's support infrastructure. They aren't doing it for cost - the outsourcing company isn't any cheaper than their current cost structure (within 10%). They are doing it because the outsourcer is able to hire substantially more software developers than are available in the markets that my employer operates in.

I think that my employer will see substantially more benefits than just in scalability. They are actually starting to see some of them already.

Since they're outsourcing support and maintenance, the majority of work done by the outsourcee is self-inflicted: fixing bugs. All of a sudden, there's a new push to add quality to the software. Bugs have a definite bottom line effect. More customer discovered faults result in more charges from the outsourcing company.

This also shows the company what happens when they let projects slide. If a project delivers quickly, but with poor quality, it's visible. If they fail to meet customer requirements, it's visible. If they develop a system that can't be maintained, yep, it's visible. All these things were visible before, but now they're visible at the executive and board levels. It will be interesting to see if they start to track this.

It forces the company to also firm up their processes, procedures and communications. Since the outsourcing company is trying to do the least amount of work for the most money, if there is any reason to avoid doing work, they probably will. So, if they don't have ready access to an answer, or run into even the smallest problem, they will stop and ask a question. Since each question taking 24 hours to answer because of timezones, there is a lot of wasted time. The outsourcing company isn't a partner. They aren't going to say if the processes are bad or wrong, they are just going to charge you more.

It isn't yet apparent if the project will succeed. Depending on political power levels at the time, people could try and blame the outsourcing company for the increased costs, calling the outsourcing project a failure. This is, in fact, already starting to happen. We've even got people subtly changing development procedures to make it harder for the outsourcing company to do their work.

However, with a little effort, the project should help force the original company to grow and change. It's hard to ignore substantial amounts of money going out the door. Hopefully it's easier to find the root cause than blaming the person charging the money.

Time will tell.