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Setting  Up  A  Successful  Outsourcing  Model  

 
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ROCKET  DIGITAL  MANAGEMENT  
  
 
 
 
 

Outsourcing  Overview  
Businesses  are  looking  to  other  parts  of  the  world  to  leverage  talent,  infrastructure,  innovation,  and  
agility,  in  addition  to  more  attractive  labour  costs.    Technology  has  enabled  this  globalization,  and  has  
helped  erase  any  sense  of  geographic  distance  among  people  and  industry.    Today,  the  practice  of  
outsourcing  has  infiltrated  every  facet  of  business,  and  some  of  the  largest  companies  in  the  world  rely  on  
outsourced  partners  to  deliver  complex  and  critical  services  and  products  both  internally,  and  to  their  
customers.    While  many  have  been  able  to  reap  the  rewards,  others  have  experienced  the  heartache  and  
disappointment  of  outsourced  projects  that  have  ended  in  failure.    While  outsourcing  may  be  the  answer  
to  many  organizational  challenges,  it  is  not  a  sure-­‐fire  solution.    Outsourcing  is  a  venture  that  cannot  be  
taken  lightly.    It  requires  investigation  and  diligence,  governance  and  refinement.    It  is  a  commitment,  not  
only  in  the  initial  stages,  but  through  its  entire  lifecycle.    In  order  for  outsourcing  to  succeed,  a  company  
must  have  a  clear  plan,  select  the  right  partner,  and  govern  the  relationship  with  very  explicit  
documentation  and  communication.      When  executed  properly,  outsourcing  can  generate  tremendous  
success  on  a  number  of  levels,  and  can  allow  businesses  to  extend  capabilities  and  profit.  
 
At  a  high  level,  outsourcing  poses  a  challenging  predicament.    It  requires  an  organization  to  select  a  
company  from  a  sea  of  many  unfamiliar  vendors,  and  to  entrust  the  chosen  company  with  processes  or  
products  that  may  be  critical  to  a  business.    The  outsource  partner  may  be  continents  away,  may  never  be  
seen  face  to  face,  and  may  not  even  share  a  common  language  with  you.    To  complicate  matters,  your  
outsource  partner  may  know  nothing  of  your  business  or  of  the  clients  they  are  proposing  to  help  serve.  
As  a  whole,  this  can  make  for  a  very  tenuous  arrangement,  steeped  in  anxiety  and  uncertainty.    The  key  to  
success  with  outsourcing  is  to  overcome  these  gaps  by  building  a  foundation  of  understanding  and  explicit  
expectation,  and  to  begin  by  establishing  a  clear  objective  that  outsourcing  will  serve  for  your  business.        
 
 

The  Drivers  of  Outsourcing  

It’s  important  to  understand  factors  that  may  motivate  a  company  to  consider  outsourcing,  since  the  
reasons  vary  greatly  from  company  to  company.    Identifying  why  your  organization  should  outsource  will  
help  bring  a  focus  to  the  endeavor,  and  may  help  set  an  underlying  corporate  objective  everyone  will  
work  towards.    
 
 Agility  and  Efficiency  -­‐  Working  with  outsource  partners  means  access  to  specialized  skills  a  
business  needs,  when  they’re  most  needed.    This  on-­‐demand  labour  model  can  give  companies  
increased  agility  and  speed  to  market,  without  the  persistent  overhead  costs  of  internal  
employees  that  may  be  underutilized.    Reducing  the  under-­‐allocation  of  salaried  staff  directly  
increases  the  efficiency  and  profit  margin  of  a  business.    Outsourcing  also  allows  the  internal  
resources  of  an  organization  to  focus  on  other  pressing  business  needs,  potentially  allowing  
multiple  critical  projects  to  be  executed  concurrently.              

 
 
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 A  lack  of  internal  skills  or  infrastructure  –  Most  companies  are  continuously  seeking  new  sources  
of  business  and  revenue,  which  means  new  opportunities  are  very  rarely  ignored,  even  if  they  fall  
outside  the  core  competencies  of  the  organization.    After  all,  if  a  business  can’t  meet  a  need  in  
the  market,  a  competitor  will  identify  a  way  to  deliver,  and  leave  the  pack  behind.    In  order  to  
keep  up  with  the  competition,  businesses  must  continuously  evolve  through  ongoing  research  
and  development,  learning  and  growth.    This  cycle  can  be  very  expensive,  and  when  the  skills  and  
infrastructure  a  company  requires  exist  within  another  organization,  a  case  for  outsourcing  
exists.    Leveraging  the  experience  and  skills  of  an  external  company  without  having  to  invest  in  
learning  or  development  of  new  infrastructure  is  a  major  driver  of  outsourcing.      
 
 Costs  –  The  overhead  associated  to  keeping  a  business  running  can  often  make  providing  specific  
services  and  products  cost  prohibitive.    This  can  be  particularly  true  in  unstable  and  changing  
markets  that  push  prices  beyond  what  the  market  is  able  to  bear.    Reduced  labour  or  material  
costs  in  other  geographic  locations,  however,  can  allow  a  company  to  continue  providing  the  
same  services  and  products  more  effectively  at  a  competitive  rate.    Note:  Outsourced  projects  
typically  require  an  increased  allocation  of  internal  Project  Management  time.    Factor  these  costs  
into  the  budget  of  any  outsourced  project.  
 
 Business  development  opportunities  -­‐  Forging  relationships  with  companies  that  can  support  your  
business  can  also  result  in  opportunities  to  reciprocate  referred  business.    If  your  outsource  
partner  is  located  in  a  different  part  of  the  world,  they  may  be  able  to  introduce  you  to  an  
entirely  new  market,  along  with  a  new  set  of  clients.    Explore  the  possibilities  that  exist  and  talk  
to  your  partner  about  how  you  can  help  each  other  grow  your  respective  businesses.  
 
There  are  many  compelling  reasons  why  outsourcing  may  be  the  right  solution  for  an  organization.    Do  
not  pursue  outsourcing  blindly.    Understanding  why  it’s  the  right  choice  will  help  reinforce  the  decision  
when  challenges  arise.    Have  conviction  in  your  outsource  model  -­‐  commitment  is  paramount  to  long-­‐
term  gain.  
 
 

How  To  Get  Started  

Once  an  organization  has  determined  that  outsourcing  is  an  appropriate  approach  for  the  business,  it’s  
time  to  begin  the  process  of  building  an  outsource  model.    The  first  step  will  be  to  identify  the  best  
partner  based  on  the  specific  organizational  needs.    Ultimately,  the  partner  will  play  a  major  role  in  the  
overall  success  of  the  model,  so  extreme  diligence  must  be  dedicated  to  this  process.    While  selecting  the  
right  outsource  partner  can  be  a  daunting  task,  there  are  key  criteria  that  will  help  maximize  the  potential  
for  success.              
 
 Write  a  good  RFP  –  Good  outsourcing  is  rooted  in  clear  communication,  and  your  first  touch  
point  with  a  prospective  vendor  should  be  a  request  for  proposal.    This  document  is  an  

 
 
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opportunity  to  demonstrate  business  savvy,  and  to  set  the  bar  for  quality,  professionalism,  and  
protocol.    Sadly,  I  can't  count  how  many  RFPs  I've  read  cover  to  cover,  only  to  wonder  what  the  
party  is  actually  seeking!    Be  as  clear  as  possible  about  what  you  expect  from  your  vendor.  The  
RFP  process  shouldn't  be  a  game  of  decryption,  testing  respondents  on  their  ability  to  
comprehend  a  convoluted  document.    Use  language  that’s  appropriate  to  the  services  you’re  
seeking.    Be  explicit  and  thorough.    If  you’re  issuing  the  RFP  internationally  or  overseas,  identify  
the  language  skills  you  expect  your  vendor  to  possess,  as  well  as  the  response  times  and  time  
zones  the  vendor  must  work  to  service.      
 
 Do  your  research  -­‐  The  international  market  is  flooded  with  companies  claiming  to  have  
capabilities  in  every  aspect  of  business  outsourcing.    While  these  claims  may  not  be  made  with  
malicious  intent,  realize  that  many  are  hungry  to  get  a  piece  of  the  pie,  and  will  overstate  
experience  and  skill-­‐set  to  win  your  business.    Ask  for  examples  of  their  work,  speak  to  some  of  
their  other  clients,  and  always  request  a  detailed  breakdown  of  their  own  workflow  process  and  
contact  strategy.    How  do  they  ensure  quality?    What  infrastructure  exists  within  their  
organization  to  ensure  connectivity  and  up-­‐time,  security  and  reliability?    Who  do  they  employ,  
what  are  their  on-­‐staff  skills,  and  what  are  their  contingency  plans  for  employee  attrition?    How  
often  will  they  communicate  with  you  and  what  documentation  can  you  expect  to  track  their  
work?    What  is  the  time  difference  and  who  will  respond  to  after-­‐hours  emergencies?    If  they  
cannot  immediately  respond  to  these  questions,  consider  that  the  company  may  not  have  the  
experience  needed  to  uphold  a  successful  outsource  arrangement  with  an  overseas  client.      
 
 Consider  the  differences  among  international  talent  –  Professionals  who  are  experienced  working  
with  outsource  partners  speak  to  the  variances  in  work  style  and  competencies  based  on  
location.        Comparing  India  to  Ukraine,  for  example,  reveals  some  fundamental  differences  in  
outsource  experiences.    Elizabeth  Cooper,  CIO  and  founder  of  Intelligent  Pipeline  Inspection  
Gauge  (iPIG),  a  California  based  dedicated  service  for  the  oil  and  gas  industry,  needed  help  
debugging  highly  technical  software  that  analyzes  the  risks  of  oil  pipelines  and  vessels,  and  
making  improvements  to  its  overly  technical  interface.  Working  with  Ukraine  based  SoftServe,  
she  found  the  high  level  of  mathematical  expertise  of  the  programmers  invaluable.  “The  ability  to  
deal  with  highly  computational  software  with  long  derivative  algorithms  was  essential  to  the  
project’s  success,”  says  Cooper.  “The  Ukrainian  developers  we  worked  with  had  true  
mathematical  expertise,  not  just  with  software.  This  enabled  them  to  demonstrate  after  they  
debugged  the  software  they  had  left  the  mathematical  algorithms  intact.  We  couldn’t  have  done  
it  otherwise.”      
“I’ve  worked  with  a  number  of  offshore  companies  in  India  and  China,”  says  Wade  Person,  
Director  of  Software  Development  at  Avery  Dennison.  “My  experience  with  the  Indian  companies  
I  worked  with  was  that  they  would  always  do  exactly  what  you  wanted  them  to  do,  no  more,  no  
less.  What  I  really  appreciated  about  SoftServe,  the  Ukrainian  company  I  worked  with  was  their  
level  of  involvement,  sense  of  ownership,  and  willingness  to  make  suggestions.  We  would  give  
them  directions  on  how  to  do  a  certain  feature  and  they  would  sometimes  come  up  with  a  better  
way  to  do  it.  They  were  always  very  open  and  tactful.  With  the  Ukrainian  company  I  felt  that  we  
were  much  more  on  the  same  wavelength.”  

 
 
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Selecting  the  right  partner  is  a  key  factor  in  outsourcing  success,  so  the  process  should  not  be  rushed.    
Remember,  outsourcing  is  about  long-­‐term  value.    Look  for  a  company  you  like  and  that  could  grow  with  
your  needs  over  time.  
 

Staying  On  Track  

Governance  and  relationship  management  are  fundamental  essentials  if  any  success  is  to  be  had  from  an  
outsourcing  arrangement  long-­‐term.    As  is  customary  with  internal  staff,  your  extended  (outsourced)  staff  
must  be  evaluated  and  monitored  for  consistent  performance.    In  fact,  this  becomes  more  important  with  
a  team  that  is  geographically  distant.    To  achieve  a  true  partnership,  however,  an  organization  should  
never  manage  an  outsource  vendor  harshly.    The  quality  of  the  relationship  will  affect  the  outcome  of  the  
work  a  partner  produces.    The  partner  must  feel  integral  to  the  business,  not  like  the  hired  help,  whose  
efforts  are  replaceable  at  the  slightest  hiccup.    Cultivate  trust  through  professionalism  –  treat  your  
overseas  partner  the  way  you  would  a  local  associate,  and  have  solid  agreements  in  place  to  rely  on  if  the  
arrangement  turns  sour.          
 
Demand  a  thorough  service  level  agreement  -­‐  At  the  end  of  the  day,  regardless  of  what  you  thought  you  
were  getting,  or  what  the  vendor  thought  you  wanted,  the  only  thing  that  really  counts  is  what's  in  
writing!  The  SLA  must  detail  the  guidelines  of  the  entire  working  relationship.    What  are  the  assurances  of  
quality  and  the  standards  that  must  be  met?    What  is  the  availability  of  the  outsource  team  and  how  will  
they  respond  in  situation-­‐critical  times?    How  will  they  pass  back  the  intellectual  property  they  develop  
over  time,  which  may  not  exist  within  your  own  organization?    Service  level  agreements  must  be  
negotiated  so  that  the  interests  of  both  parties  are  satisfied.    Do  not  be  pressured  or  rushed  into  signing  a  
long-­‐term  commitment  until  the  SLA  has  been  approved.          
 
Give  your  outsource  team  context  –  Outsourcing  is  a  two-­‐way  street,  where  both  parties  must  work  to  be  
good  partners  to  one  another.    Something  that  is  vital  to  the  success  of  your  partnership  is  transparency.    
Once  a  team  is  brought  on-­‐board  to  provide  outsourcing  services,  they  must  be  considered  an  extension  
of  your  organization.    Providing  them  with  as  much  background  information  and  context  as  possible  about  
the  initiatives  they  contribute  to  helps  clarify  their  end  deliverable,  and  paints  a  picture  of  how  their  
contribution  will  impact  the  success  of  your  business.    Engaging  your  outsource  team  with  the  details  of  
project  builds  a  sense  of  association  and  contribution,  and  your  partner  will  appreciate  seeing  ‘the  big  
picture’.    
 
Recognize  the  need  for  strong  Project  Management  –  Regardless  of  what  other  recommendations  you  
choose  to  follow,  dedicating  a  Project  Manager  to  govern  the  day-­‐to-­‐day  relationship  is  the  single  most  
imperative  rule  of  successful  outsourcing.    The  Project  Manager  will  craft  detailed  project  specifications,  
develop  a  strong  relationship  with  your  partner,  and  will  monitor  progress  closely  enough  that  potential  
challenges  can  be  identified  and  resolved  before  having  any  major  impact.    The  geographic  distance  can  
make  outsourcing  very  challenging  to  the  service  provider  –  having  a  dedicated  point  of  contact  they  can  
communicate  with  as  needed  will  reinforce  a  sense  of  teamwork,  and  will  foster  their  commitment  to  
your  business.        
 
 
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ROCKET  DIGITAL  MANAGEMENT  
  
 
 
 
 
 
Make  quality  the  end  goal  for  all  –  The  internal  Project  Manager  must  state  and  reiterate  that  the  goal  of  
the  outsource  relationship  is  quality  of  the  end  product  or  service.    Cost  savings  and  other  benefits  should  
never  overshadow  the  need  for  absolute  quality,  or  your  vendor  will  shift  focus  to  speed  above  
excellence.    Losing  quality  in  a  vendor  who  is  across  the  globe  creates  an  immediate  sense  of  
powerlessness  and  fear,  and  will  quickly  erode  the  profitability  of  the  partnership.    Above  all  else,  quality  
must  be  positioned  as  the  collective  goal.      
 
Establish  a  contact  strategy  –  Be  explicit  about  how  often  will  you  speak  with  your  vendor.    Identify  what  
days  you  will  communicate,  and  what  the  purpose  of  each  exchange  will  be.    Don't  let  the  project  get  
away  from  you.  Stay  in  close  contact  with  your  vendor  -­‐  participate  in  the  project,  and  everyone  will  feel  
more  of  a  responsibility  to  one  another.  
 
Commit  to  it  -­‐  One  of  the  classic  fatal  errors  any  organization  can  make  is  not  fully  committing  to  a  
project.  Own  it  -­‐  understand  it  -­‐  stay  on  top  of  it.  If  you  don't  have  the  time  or  know-­‐how,  hire  a  
reputable,  specialized  outsource  management  group.    These  groups  exist  to  help  select  an  appropriate  
vendor,  or  to  manage  the  outsource  process  to  a  vendor  they  will  be  responsible  for.    Make  sure  they  
have  experience  and  will  stand  behind  the  work  of  the  vendor  if  they  bring  them  to  the  table.  
 
Learn  from  it  -­‐  Whether  the  project  was  a  smashing  success,  or  left  something  to  be  desired,  consider  
why.  Discuss  the  project  with  your  vendor  and  your  colleagues  to  understand  if  you  would  change  
anything  moving  forward.    Conduct  a  post-­‐mortem,  where  all  parties  are  given  an  opportunity  to  discuss  
the  project  frankly.    Document  the  changes  you  agree  to  make,  and  ensure  the  Project  Manager  
incorporates  the  revisions  to  process  into  any  future  projects.  
 
 

Understanding  The  Risks  

While  outsourcing  can  obviously  provide  many  benefits,  it  does  not  come  without  risk.    Outsourcing  has  
created  a  modern-­‐day  gold  rush,  where  every  company,  big  and  small,  is  looking  for  ways  to  cash  in.    
Being  aware  of  what  can  go  wrong  is  critical  to  ensuring  the  outsourcing  model  is  developed,  and  that  
risks  are  minimized.  
 
Lost  IP  –  Over  time,  your  outsourced  team  will  come  to  learn  facets  of  your  business  intimately  –  perhaps  
at  a  deeper  level  than  internal  employees.    This  is  a  natural  side-­‐affect  of  outsourcing,  but  it’s  important  
that  any  new  intellectual  property  is  captured  by  the  outsource  partner,  and  transferred  back  to  the  
organization.    How  this  knowledge  sharing  takes  place  largely  depends  on  the  type  of  work  being  
conducted,  but  written  reports  and  ongoing  status  updates  are  two  effective  ways  of  ensuring  knowledge  
is  documented  by  the  outsource  partner.      
 
Poor  quality  –  A  lack  of  quality  is  probably  the  most-­‐reported  issue  with  outsourcing.    The  problem  may  
be  due  to  varying  standards,  a  lack  of  clarity  regarding  what  was  expected,  and  sometimes,  an  
 
 
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incompetent  vendor.    For  all  these  reasons,  a  thorough  review  of  progress  must  be  conducted  very  soon  
after  engaging  an  outsourced  partner.    Do  not  allow  a  significant  amount  of  time  to  pass  before  
requesting  to  see  the  end  product.    Get  your  vendor  used  to  these  check-­‐ins,  do  them  frequently,  and  do  
them  consistently.    If  issues  with  quality  arise,  work  with  your  vendor  to  determine  an  appropriate  
solution.    Engaging  the  extended  team  in  making  improvements  will  shift  responsibility  for  better  work  to  
the  outsourced  team.    
 
Unexpected  surge  in  internal  Project  Management  time  –  Outsourcing  projects  requires  more  Project  
Management  time  than  if  the  work  was  completed  internally.    Remote  teams  require  more  
communication  and  status  reporting,  so  the  Project  Management  role  will  see  an  increased  allocation  of  
time  spent  on  outsourced  projects.    Ensure  the  bandwidth  exists  internally  to  manage  such  projects,  and  
budget  accordingly.    A  good  rule  of  thumb  is  to  allocate  an  additional  5%-­‐10%  Project  Management  time  
then  what  is  typically  budgeted  for  internally-­‐executed  projects.  
 
Geography  shouldn't  limit  the  potential  of  your  business.  International  talent  offers  alternative  means  to  
deliver  products  and  services  -­‐  rapidly  and  cost  effectively,  without  compromising  quality.    In  the  current  
economy,  outsourcing  is  not  only  viable,  it's  often  needed  to  maintain  a  competitive  edge.    If  you  have  not  
yet  tried  outsourcing,  expect  a  steep  learning  curve  for  the  initial  six  months.    As  with  any  other  new  
business  practice,  learning  how  to  navigate  unfamiliar  territory  can  be  intimidating  and  very  challenging.    
Outsourcing  is  a  strategy  that  can  bring  long-­‐term  gain,  so  maintaining  a  commitment  over  time  will  see  
many  initial  issues  overcome,  and  much  new  opportunity  on  the  horizon.  

 
 
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Contact  Rocket  Digital  Management  

 
Head  Office  
 
103  Old  Colony  Road  
Toronto,  Ontario  
M2L  2K3  
Main  number:  647-­‐728-­‐0961  
Finance:  647-­‐448-­‐5900  
 
Email:  Talk@RocketDigitalManagement.com  

Web:  http://www.RocketDigitalManagement.com  

 
 
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ROCKET  DIGITAL  MANAGEMENT