outsourcing 3.0
TRANSCRIPT
Outsourcing 3.0
Why leading IT executives are embracing the combination of
Nearshore outsourcing and Agile project management
IT Situation Today
CIO/CTO’s Face Stiffer Challenges:
• Demand to achieve more with less• Greater adaptability required to support rapidly
changing business environment• Hiring is restricted due to budget constraints• Greater transparency required to meet risk
management oversight• CXOs are leery to consider outsourcing because
of reputation of failure
Most projects fail!The statistics across the board establish that 70% of IT projects fail.
oAn IT project is more likely to be unsuccessful than successful
oAbout 1 out of 5 IT projects is likely to bring full satisfaction
oThe larger the project the more likely the failure
Software Development is Tough
Now Add Offshore Outsourcing…12+ time zones away They are asleep when you are awake – very
little live communications.
20+ hour flight plus 1 day of jet lag each way
Long expensive trips are required to be face to face.
May have no experience with your applications or business
Inexperienced developers replace trained ones, and you start all over again.
Typically have higher attrition than you do
They follow instructions but have a hard time asking questions, being a creative contributor to the process
Requirements must be documented in greater details
Additional effort to document project in great detail
From a totally different culture “Yes” means “I’ll try”“Done” means “Almost there”
Hidden Costs of Outsourcing
• Attractive low hourly rates distracted CIO/CTO’s from hidden costs which result in higher Total Cost of Engagement
Travel costs
Low Hourly Rates
Cost of transition
Cultural cost
Risk Management cost
Productivity losses due to poor communication
Cost of Vendor’s attrition
Hidden costs
Cost of management overhead
Isn’t there any easier way?
How can IT executives find a way to lower development costs without the risks and hidden costs of offshore AND improve development processes with Agile?
Welcome to Agile and Nearshore
• Agile development saves money because it produces higher quality code that meets customer needs.
• Nearshore development offers the cost benefits of offshore outsourcing without the challenges of offshoring.
Outsourcing 3.0
• Why leading North American businesses are combining Agile development processes with nearshore development in Mexico for software development outsourcing:
1.Better Customer Experience - Agile project management provides better time-to-benefits, quality, efficiency, and responsiveness to change
2.Lower Total Cost of Engagement - Mexico is closer, cheaper, and shares the similar culture and time zones
Benefits of Agile Processes
Agile is better than Waterfall
Why nearshore outsourcing?
Better Customer Experience - Forrester states the benefits of nearshore outsourcing are best recognized in "projects with intensive collaboration requirements, internal domain expertise requirements, or a medium to high degree of end user participation are often more suited to nearshore outsourcing models, as travel between vendor and client is easy and time zones permit real-time collaboration"
Offshoring and Neashoring Compared
Focus on Total Cost of Engagement
• Recognizing the additional risks associated with offshore outsourcing, experienced executives are looking at the Total Cost of Engagement rather than just the hourly rates.
Why Mexico?
30-50% Lower Rates
2-6hrs direct flight from most US cities
+/- 2hr time zone difference
Cultural similarities (“Yes” means “Yes”)
NAFTA (IP protection and work visas)
Large pool of qualified English speaking resources
Lower management overhead required
Combining Agile and Nearshore
• IT organizations must optimize their processes and partnerships to better support the business, reduce costs, improve quality, and improve time-to-market.
• Thus combining nearshore outsourcing with Agile project management allows companies to achieve lower total costs while improving the customer experience.
Incremental Gains of Combining Agile and Nearshore
Nearshore Team - Reduce Costs
Add Nearshore development- Further reduce costs without
increasing communication issues
Agile development team
- Align IT/business
Add Agile processes-Respond to changing
requirements-Align IT/business
Winning Equation
How can we help?• More on the benefits of nearshore development
– http://www.sciodev.com/engagement/agile-development-practice • More on the benefits of Agile project management
– http://www.sciodev.com/engagement/nearshore-development-lab/benefits-of-nearshore-it-outsourcing-in-mexico-
• Case studies of successful partnerships– http://www.sciodev.com/clients-a-projects
• More about the Neashore Customer Experience– http://blog.sciodev.com/2009/03/06/outsourcing-the-nearshore-customer-experience/
• Contact us at:– http://www.sciodev.com– [email protected]
– +1.408.404.3897 Ext. 301