Yesterday an article in ET caught my attention on outsourcing model adapted by Wipro “Toyota lean lessons for Wipro” which encouraged me to write my view on outsourcing.
Welcome to the world of outsourcing. The use of global IT services offer the potential for compelling cost savings, but also brings increased risk of problems in communications, quality management and control. Media reports have highlighted some of the difficulties and the possible negative impact on UK jobs. However companies operate in an increasingly competitive world and cannot afford to ignore a sourcing strategy that might deliver major benefits. At time when more companies are gaining experience both good and bad – with offshore firms and outsourcing contracts, fewer companies are willing to share experiences.
Let’s take the example of Wipro learnings from Toyota. As per my experience (based on my little work experience) there are 3 challenges to project management
• Where is the requirement?? – I have seen that some clients change the requirements continually. The challenge is “ How does vendor standardize processes when the processes change rapidly ?” The ultimate goal for any project manager should be to create efficiency by removing variance.
• Where is the process?? : Often employees do much of the work using “ the knowledge in their heads” ( I am one of them). Whereas the knowledge should not be in the head but in open. It should be discussed and put on piece of paper so that everyone understands clearly.
• Where is the value?? : Solve the customer’s business challenges by adding value; Like Toyota did by introducing Toyota production system in its core manufacturing process & Wipro learning the best practices from TOYOTA and implementing in their work culture.
Adopting Toyota’s lean process to software services: Lessons for everyone
While many of the procedures just didn’t apply, TPS ( Toyota production system) cardinal rule of lowering inventory wasn’t direct issue for a software services company; many of the ideas were valuable. E.g if there’s a problem on the production floor, Toyota workers will pull on an andon cord. This signals a manager to come running to help the worker solve the problem. Wipro didn’t install these cords into the offices but it did put the structure/process in place to provide immediate assistance to worker who faces work challenge.
In any operation managers have to find the tools that can identify problems “as early as possible. Then have the person who made the mistake fix it immediately, right where it went wrong. Having that particular employee make the correction is important for two reasons
1. He/She has the relevant knowledge to actually fix it
2. It’s learning for the employee and he/she won’t make the similar mistake in any other project.
Another challenge is for the offshore team to understand in detail what is happening at the customer location. To overcome this challenge Web EX can be used & vendor can watch the meetings/ training.. etc from home location.
Another adaptation was modifying the Toyota’s visual control board, which the manufacturer uses to track progress on the shop floor. “It’s graphically tracks the progress and productivity of the organization” To adapt this project manager puts every team member’s name on blackboard on the vertical axis. The days of the week make up the horizontal axis. The manager fills in the squares with the work each member is supposed to accomplish each day. The employees fill in what they actually accomplished each day before going home.
Control board helped manger see whether team member is performing as per expectation or not. If someone is not performing, it doesn’t mean that team member is incompetent. What it usually means that person hit a problem and needs other members help in solving it. The project manager can assign others to help, so the team gets the job done. Another benefit is everybody gets to see what everyone else is doing. Employees often feel that they are doing more work than everyone else. Sometimes they are !! But after seeing the board they realize everyone is busy and working hard. This information is good for team motivation.
Lets come back to outsourcing issues.
With outsourcing becoming easier, more readily available, common clients fail to appreciate the enormity of the outsourcing industry. Clients spend more time drafting what they want done and negotiating costs than they do on researching how to do it, when to do and with whom to outsource. Unfortunately for clients that don't research, the outsourcing industry is truly colossal and far more intricate than one may think. Popular outsourcing destinations span cross continents, from China in the Far East to Ukraine in Eastern Europe and Ghana in West Africa.
Gartner has described the move towards offshore sourcing as an ‘irreversible mega trend’ companies are increasingly moving work overseas to cut costs and free up resources to focus on new opportunities and innovation. When it comes to vendors there are several outsourcing giants like Wipro, HCL and Infosys, hundreds of different SME (small to medium enterprise) outsourcing service providers and tens if not hundreds of thousands of individual remote outsourcing freelancers. What can be outsourced now also appears to have no boundaries. The outsourcing industry caters to almost everything and anything one can think of, from call centers to programming ,to legal, engineering and accountancy services. You name it & it can be outsourced . Furthermore, some outsourcing companies specialize only in certain sectors whilst other vendors mould to your specific outsourcing needs.
Even countries have built sector specific reputations; the Philippines has made a mark in voice process call center outsourcing and India's dominance in programming looks to go unchallenged for at least another decade or so. There is no less diversity when it comes to the mode of outsourcing. Certain outsourcing companies work on projects, other companies provide remote staffing solutions and some companies work only on long term contracts. The point is very simple; there are many different methods and ways, permutations and combinations by which one can outsource. Whilst it is very important for clients to know what they want, it is even more important for clients to know what for them is the best method of outsourcing, what they need from an outsourcing provider and what type of outsourcing vendor they require. If clients outsource not knowing these important factors, things can go wrong because success then hinges on chance and luck as opposed to facts and knowledge.
The good news for clients that do their homework is that the outsourcing industry offers a wide range of different services. The benefit of this is that clients have a lot of choice and so can find a method of outsourcing that most appropriately suits their exact needs. Hence, from Microsoft to a one man brand everyone can outsource and do so successfully. When clients outsource in a manner that is ideal for them it is then that companies attain very high levels of cost effectiveness and efficiency.
The rewards of outsourcing can be significant but to achieve this client must first know what they are doing. In conclusion, when outsourcing goes wrong more often than not it is because the method of outsourcing or outsourcing vendor was not appropriate for that client. It is not that outsourcing does not work, if it didn't the most successful companies in the world wouldn't be outsourcing. Rather it is a lack of research, and selecting the wrong outsourcing vendor. If one puts the wrong fuel into a car, it is pointless placing fault with the engine when the car doesn't start. So do your Homework ( as you use to do in school) and then select vendor ooops partner.
Special Thanks to my IMT professor : Dr. Reema Khurana
Source: http://economictimes.indiatimes.com/quickiearticleshow/7977127.cms
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