Managing A Successful Nearshore Outsourcing Engagement

Sept. 17, 2009 - PRLog -- Nearshoring is an alternative to offshoring, which involves sourcing to distant, but more cost-effective locations. In a European context, nearshoring would indicate moving the work to one of the new EU member states (such as Poland) while offshoring typically indicates Asia (in most cases India).

Top reasons for nearshoring

Potential benefits of nearshoring include:
•   Reduction of costs associated with IT staff.
•   Increased resource availability - most outsourcing vendors keep some personnel "on the bench" for team increases and replacements.
•   Flexibility - short and long term assignments, replacements during vacation times.
•   Development infrastructure built by the vendor (e.g. servers, databases, software licenses, video conferencing facilities and others).
•   No recruitment fees and cost-free staff replacements.

Verax Systems' advantages

The majority of near-shore services delivered by Verax Systems come from Poland. In the Ernst Young European Attractiveness Survey for 2007, Poland was ranked 7th in the world, 3rd in the EU and 1st in the "new" Europe, with key advantages including:
•   An EU membership (no EU-visa requirement).
•   Largest pool of skilled IT engineers in Central Europe.
•   Competitive IT labor costs.
•   Good transport connections with EU.
•   Large and growing economy.

Building a business case

When calculating a business case a number of items have to be taken into consideration, including:
•   What kind of contractual model will fit the work best (time and materials or fixed price)?
•   In case of fixed price projects, can the work be firmly scoped? If no, can the outsourcing vendor provide analysis capabilities and build specifications?
•   How complex are the tasks to be done - do they require training, knowledge transfer? Can relevant documentation be provided?
•   What is the expected length of the engagement?
•   How to conduct the knowledge transfer (if required)?
•   What kind of infrastructure is required?

Challenges, best practices and management models

According to our experience, the biggest challenges while building a near-shore engagement, lie within the areas of communication and team management.
Based on our experience while providing near-shore services to American and European companies, Verax Systems has developed as set of recommendations.
•   Plan first - take your time to schedule preliminary activities (such as trainings, infrastructure setup, etc.).
•   Treat nearshoring engagement as a project on its own with deliverables (e.g. infrastructure set up) and milestones (e.g. operational readiness achieved).
•   Engage vendors' managers into planning phases - the vendor usually has a lot of experience and can provide good solutions to the problems encountered.
•   Start small and grow from there - nearshoring engagements need time to mature in order to be successful.
•   Build management structure and clearly define responsibilities and authorities.
•   Mix teams - at Verax Systems we strongly believe that the right mix of in-house development with nearshoring is the key to success.
•   Make nearshoring team members feel as a part of the organization and challenge them just as you do with your own employees.
•   Promote direct communications - phone, instant messenger and penalize unnecessary e-mail usage.

Summary

Verax Systems is an experienced near-shore partner with the following key advantages:
•   Experience – Verax Systems is a spin off from a public US company (Vertel, formerly Retix) established in 2003 (core team from 1998).
•   Proven engineering workforce – well-balanced growth of skilled, experienced and dedicated engineers and consultants (over 70 permanent in October 2007), and a substantial, proven network of subcontractors.
•   Availability – offices in Poland, The United Kingdom, Ireland and Germany, good transport connections worldwide.
•   Stable, skilled team – the continuity of team members helps to begin projects faster, and ensure the protection of investments and long-term relationships.
•   Standards conformance – the team of professionals are aware of the Customer’s standards and procedures, which ensures adherence to those standards.
•   Advanced communication facilities – video-conferencing, dedicated leased lines, permanent VPN tunnels.
•   Security – security policy to enforce protection of sensitive customer data (such as call data records).
•   Technical and project management capabilities from design to implementation and SLA-based support.

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Verax Systems is a software house and a consultancy & solution provider specialising in advanced and innovative IT solutions for the telecommunications, banking and enterprise markets.