Managing and Implementing Outsourced Projects

Using an offshoring management framework

Management of IT projects executed from offshore destinations has brought a lot of attention to offshoring, which is being recognized as a megatrend [1] in some quarters. There is an increasing focus on managing and executing IT projects with geographically and culturally dispersed teams. Best practices, theories and a body of knowledge [2] on managing projects are well established, but there is a distinct void when it comes to the practices of managing offshored projects. Emerging research on successful working models, practices, and the application of strategies and operational tactics are expected to reinforce the body of knowledge.

Executing and delivering IT application development and maintenance projects involves several layers of complexity, and the chain is only as strong as the weakest link. Managing projects gets more nebulous when it involves orchestrating the efforts and schedules of individuals, teams and resources from across the globe. There are several key actors in globally distributed projects, and the project manager acts as the fulcrum, orchestrating the aspects pertaining to delivery and development. Managing offshored projects entails regular project dynamics and the use of many of the tools and techniques described in the Project Management Body of Knowledge Guide (PMBOK), albeit with added dimensions of managing cross-cultural and geographic issues. We will attempt to look at some of the intricacies of offshore outsourcing with a specific emphasis on managing and executing projects and initiatives using an offshoring management framework (OMF).

Offshoring Management Framework

An OMF attempts to address some of the most common managerial issues and challenges and may be used as a frame of reference for planning projects spanning geographic and cultural boundaries. The management imperatives in global delivery of software applications include buy-in and sponsorship from senior executives, program and project management, managing the operation of the development and maintenance life cycles, and creating an environment of open communication across the teams. The OMF, depicted in Exhibit 1, will attempt to address four major areas of focus:

  • Governance layer
  • Management layer
  • Technical layer
  • Communication layer

The underlying assumption behind the OMF is that the generally understood body of knowledge, industry best practices and organizational processes will continue to form a basis for most of the IT managerial and planning and developmental functions. The key extension to this pertains to aspects of globalization and global project management. Before we continue to examine the individual layers in the framework, we should attempt to define offshoring in the context of offshore outsourcing.

Offshoring translates to a strategy of relocating business processes, services and work to overseas locations where it makes most business sense by capitalizing on the global skill pool, advances in communication technologies and the benefits of cost arbitrage.

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Exhibit 1: Offshoring Management Framework
Exhibit 1: Offshoring Management Framework

Please click on image above to view a readable version.

Governance Layer

Executive sponsorship of offshoring initiatives is a key to successful development, delivery and deployment of projects and programs. Governance of the steady state of offshoring may involve the typical challenges of executive management, including benchmarking and ensuring that the projects and programs remain on track. Executive sponsorship is essential to facilitate global management and to address challenges, and access to senior management will ensure that any escalations and problems are resolved before they get out of hand. Offshoring governance teams will typically include executives from both the sourcing (on-site) organization and from the vendor (offshore) organization. Some of the common areas of focus for executives involved in offshore governance include the following:

  • Offshore development strategy: Executive management of both the client and vendor organizations need to be clear about the strategic objectives of offshoring that could include reduced operating costs, shifting IT risk to a service provider, freeing IT management from operations management and staying ahead of the technology adoption curve.
  • Define the working model: It's the responsibility of the governance council to ensure that the teams work toward building a flexible, collaborative environment. Relationship and business goals change over time; therefore, the executive focus should be on creating an environment that's adaptable to changes rather than on a view of the future based on the facts at a given point in time.
  • Articulating, measuring and monitoring the service-level agreement (SLA): A clear definition and understanding of the SLA by the governance council is essential to drive the expectations of the offshore and on-site teams.
  • Stakeholder management: Offshoring is a very sensitive issue, especially since it involves reorganization of the group/department during the transition phase, and in many cases it affects the lives of people in communities where an enterprise conducts business.
  • Dispute resolution: Though all the stakeholders need to be optimistic about the success of sourcing, conflicts and dissent may appear from time to time. The governance council will also act as arbitrators of disputes arising out of individual contracts or performance of projects and programs during a sourcing initiative.

Governance of an offshoring initiative includes aspects of managing, reviewing, and monitoring the activities of teams and projects.

Communication Layer

The key challenge in managing any project is communication, and this is even more true with projects spanning geographic boundaries. Since there is a vast repository of knowledge on management of communication, we will not revisit the fundamentals. The focus of this layer in the OMF is on laying a foundation for communication between stakeholders and across the executive, management and technical layers. The key goal is to bridge the "on-site versus offshore" gap that surfaces in most offshoring initiatives. The focus areas may include the following:

  • Defining communication protocols: Challenges of managing communication between individuals and teams may be magnified due to complexities of culture and geographies. A well-laid-out protocol for communication¿including regularly scheduled meetings and publishing the minutes of meetings in different formats including using tools accessible by distributed teams¿forms a basis of successfully managing communication across offshoring teams.
  • Communication infrastructure: There are several tools and technologies available to facilitate global communication. E-mail, voice over IP, instant messaging, video/teleconferences, travel, face-to-face meetings and use of Internet-based project management tools are already prevalent in the industry. Selection of appropriate tools and defining an acceptable mode of using them is one of the key success factors behind managing global communications.
  • Optimizing time difference: Bridging the on-site/offshore gap, including time differences, is perhaps the biggest challenge in the OMF. Scheduling regular meetings at overlapping times and ensuring successful translating of agenda toward clear communication is just one way to mitigate communication risks.

Technical Layer

The technical layer details the workings of global teams and projects functioning toward execution, development and delivery of work products. The key management imperative in the technical layer of OMF is to define, articulate and manage the different roles and responsibilities of team members on-site and offshore. In the illustrative team structure (Exhibit 2), it can be observed that the team is bigger and has more technical and functional focus at the offshore end. The key actors in the hierarchy include program and project managers, delivery managers, business development managers and the core technical teams comprising the module leaders (ML) and developers (DV). Project managers and on-site coordinators manage the delivery and work products of teams, lead by module leaders.

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Exhibit 2: Offshoring Team Management
Exhibit 2: Offshoring Team Management

The goal of managers is to abstract the interactions of end users and teams on-site and offshore. The project managers at both sides synchronize the efforts and abstract the teams and users from the dynamics of communication. Smaller projects may have only an on-site coordinator, basically a module leader who coordinates the technical, functional and communication aspects with the offshore team. Larger projects will typically have a more intricate team structure and hierarchies. Clients with multiple projects being executed by vendors may also have program managers coordinating the activities across the projects, the activities of which will be highlighted in the management layer.

Management Layer

The success of offshoring lies in the consistent and predictable delivery of projects and products. It's important to begin planning any outsourcing initiative by facilitating a strong project and program management process. Application of the available body of knowledge in project management areas, supplemented by an appreciation of globalization and management of disparate teams, is perhaps the key success factor in any outsourcing initiative.

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Exhibit 3: Inputs for managing global projects
Exhibit 3: Inputs for managing global projects

Global managers draw inputs from various sources, including the general project management reference, books and literature. An application development project manager also has a wide array of tools and techniques available as he manages the development cycle. Refer to Exhibit 3, which depicts some of the key sources of input available to managers. The five key process groups highlighted in the exhibit extend from the PMBOK that managers may already be comfortable practicing. The next few sections will examine the key inputs for global managers, including aspects of general body of knowledge, organizational practices and tools, experience and knowledge, and globalization and cultural awareness.

General Body of Knowledge

There exists a vast body of knowledge on general management that managers can tap in order to further their knowledge and reference while planning and executing projects. The Project Management Institute has developed an extensive collection of best practices, A Guide to the Project Management Body of Knowledge. Universities and academic institutions regularly provide refresher courses on specific areas including finance, marketing, operations management, technology management, business strategy and other areas of management. Books, magazines and journals dedicated to the field of study, along with inputs from professional bodies, can also provide insight to managers. Web search engines are gaining popularity as tools of research and information gathering. Bulletin boards, discussion groups, newsgroups and other online forums also act as bouncing boards for ideation.

Globalization, offshoring and outsourcing, along with emerging trends in internationalization, are entering the radar screens of management thinkers and academics. There is a lot of literature emerging from business and academic publications on practices related to the project management spanning global boundaries. Best practices are also emerging from the field and from service delivery organizations that are observing and developing practices that can be replicated elsewhere. Consulting organizations and analyst firms are beginning to provide offerings tailored toward offshoring including insightful white papers, templates and other reference collaterals.

Organizational Practices and Tools

Organizational practices and tools play a key role in enabling managers. Use of the right tools and methodologies ensures consistent delivery and helps integrate the systems being developed faster and better. There are scores of software vendors offering tools to manage the various facets of project management and development. Finding the right tool or mix of tool kits along with adequate training and access to best practices is also essential to consistently deliver quality output. Organizations use tools and templates for different aspects of project management including:

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