In some cases, we had the funding and it was part of our growth strategy. In other cases, it was part of a strategy to do more with less—so cost effectiveness. In either case, I found it useful to establish a strategy for our efforts. Often the strategy elements involved:

• Global efficiency
• Skill augmentation
• Cost reductions
• Quality improvement
• Productivity

Rarely did I focus on the following within our strategies

• Innovation
• Core product evolution
• Architectural evolution
• Customer UX

Not to say they can’t be outsourced, but I rarely focused here as we considered them more central to our competitive positioning and product essence. Point being, knowing what goals you’re driving for is essential in your strategy development.

A key lesson I learned though is that developing a strategy is fairly easy as a one-off task. Where many drop the ball however, is in reevaluating it. Or another mistake is waiting too long to realize that it isn’t delivering on the goals and recognizing that its time for reevaluation and adjustment.

Strategy Reevaluation

I’m a firm believer in running my outsourcing strategy through a periodic assessment or reevaluation. Here are some of the key considerations when I reconsider things—

1. Given the events in the Ukraine, is the geography of your partner stable and sound? Not just politically, but economically as well. Is there overall stability so that the teams can focus on the work?
2. Are you getting the quality deliveries you expect? And is the quality trending positively? And this isn’t just bugs per se, but it’s also the testing, the designs, and the technical review aspects. I also include how things integrate as well—so do the outsourced components and deliverables seamlessly integrate with internal work?
3. Do the technical skills still align with your evolutionary strategy? Often you go with a particular vendor because of their technical expertise and track record. But technical direction often changes and are they changing with you? And not just re-learning, but do they have the same strengths that once drew you to them?
4. What about staff attrition levels? And the cost / impact of replacing team members – is it getting more or less costly over time? I’d include here new member acquisition and ramp-up time as well. And finally, are you still getting the same quality of individual on your teams?
5. Is the collaboration what you expected? I know this is a soft metric but I’ve found it to be quite important. Here the focus is—do we “get along”. Do we enjoy working together and have we truly established a partnership?
6. Cultural connection—there is always a cultural element to outsourcing as the two cultures collide. How is this developing over time? Has it improved and are we better at understanding each other? Status quo probably isn’t a good thing here.
7. Finally, what is the reality of the costs to sustain the partnership? Implying travel costs, on-shore vs. offshore costs, and communication costs. There are always start-up or initial costs, but what is the ongoing model? And is it sustainable?

I personally like to revisit my strategy annually OR when some of the evaluation points above hit a risk threshold.

I realize that many firms are somewhat entrapped by their existing partnerships, fearing the cost of change over the cost of continuing a so-so relationship. While I’m empathetic to that, I’ve always driven myself with the belief that my organizations should be accelerating year-over-year, both internally and externally.

Point being, you’re either getting better OR you’re not, so falling behind. It’s this continuous improvement attitude that has always driven my assessments and adjustments.

Single Source?

Another consideration point is whether to “place all your bets” in a single vendor or to diversify. I think at small scales, single sourcing probably makes the most sense. But as you scale, I like to add a bit of breadth and diversify across vendors. A good part of the diversification is time zone, culture, and methods based.

For example, if you’re currently investing in Ukrainian outsourcing and you want to try diversifying, I might:

• Look for a more nearshore partner;
• Whose teams have more western cultural dynamics;
• Closer time zones to improve real-time collaboration;
• And perhaps someone who isn’t married to waterfall practices.

I know, I know, I’m clearly describing something close to the Velocity Partners model, but I think we’re very different in these dimensions from Eastern European teams. I would make the same claim from an APAC or India based cultures perspective.

A Little Competition isn’t Bad

At the end of the day, we all need our teams to be producing results. One of the things I like about agile metrics is the focus on value and results. You can measure hundreds of functional characteristics of your teams and many do—getting bogged down in the metrics and the real story behind them.

In your strategy reassessments, the ultimate measure is the results. Are you happy with them? Are they trending higher? And, are they at-risk for any reason? Based on the answers, you may want to reassess things and creating a bit of competition might be helpful.

Wrapping Up

This post is clearly inspired by the latest events in the Ukraine. I have quite a few friends and colleagues who have outsource partnerships there. Historically, many of them have expressed mixed feeling about the partnerships and value proposition. But many haven’t had the motivation to get over the inertia.

Perhaps the regional instability can inspire them to reassess things and to shine a light on the partnership, the value delivered, and potential strategy gaps. At the very least, they might want to consider dating again.

If you would be interested in learning more about Velocity Partners and our agile nearshore model please contact us.

Stay agile my friends,

Bob.