Success Factors for Outsourcing Companies

Two days ago, I wrote about the kind of adversarial relationship possibly implicit in using requirements. I have started looking for research on what that relationship looks like and one of the first articles I came up with was a recent (April 2011) systematic literature review on success factors for companies hoping to win outsourcing contracts. Unfortunately, the article was published through a high cost publisher so I have only read the abstract. The authors (Khan et al.) identified three major factors and one minor for a successful contract winner:

• Skilled human resource,
• Appropriate infrastructure,
• Quality of products and services and
• Finally and perhaps not most importantly cost savings

Based on my own experience and on what is reported in the literature the actual of cost savings of outsourcing to a low cost country is often only slightly lower than keeping the development in house would have been. I have seen figures of around a 15% saving for a successful offshore. It is nice to know that we have reached the level of maturity where we realize that the lower hourly costs are offset by higher communication costs etc.

Finding and retaining highly qualified staff is a major bottleneck in the operation of many companies today (link, link). Outsourcing of course gives access to a larger pool of resources.

Most of what is said in the article is nicely summed up by the following quote from Meyer:

Successful outsourcing companies like to say that customers come for the price and stay for the quality.

References

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