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While India has a large pool of talent at an affordable price, choosing the right partner from the sea of providers is not a walk in the park. Unfortunately, the market is very competitive and quality/productivity measures are uncertain. So, the key to your success lies in finding the right partner.
My experience is in IT Web Solutions, so I can talk only about it. If you follow the three-step process I am recommending in this article, there is a very good chance your relationship with the partner will go the distance.
FIRST STEP
The FIRST STEP is to have clarity about a few things at your end:
1. You need to be clear on what work you want to do in-house and what you want to outsource.
Answering below questions would help you find it:
a. Do you know what exact problems you want to solve?
b. Do you know the solutions to those problems?
c. Do you know how to implement those solutions?
This would help you identify the scope of outsourcing work.
2. Primary goals of outsourcing: You should list those in order of its importance e.g. cost reduction, focusing on core business, scaling up, get specialized skills, etc.
3. Stability and clarity in requirements
4. Volume of work and approximate engagement duration
5. Approximate budget you have in mind and ROI you are expecting
6. Criticality of project/Risk taking capacity
7. Control/Involvement you want in the project
8. Sensitivity of your data and need of security standards
9. Your comfort to deal with multiple vendors (in case of large or multiple projects)
10. Your familiarity with outsourcing and delegation skills
11. Support of your Management/Team for outsourcing
SECOND STEP
Once you have this ready, the SECOND STEP is to identify the right segment to focus on. At a very broad level, with a lot of assumptions, I am listing the 4 segments of IT services companies in India. Make a note that, India is too big and diverse to generalize. There are many exceptions for my below observations.
1. Freelancer
While there are some great freelancers, majority of them get into freelancing because of one of the below reasons:
a. Not getting the job
b. Not committed for a full-time job
c. Doing it along with a full-time job for extra income
In any case, your project can be at stake because of lack of skills or ownership. You should have complete control over things while working with freelancers.
On the positive side, there is a huge talent pool available. Since there are no overheads, the cost is significantly low. If you have a very specific short-term need and you have the bandwidth to closely monitor, then you may think about this option. If you are lucky enough you can get the things done.
However, you will have to find and manage multiple freelancers as you would be needing experts with different skills.
There are websites which not only help you find freelancers but also manage the agreement, payments etc.
2. Startups/Small companies
Majority of the Indian IT professionals go through “Midlife Career Crisis” and some of them choose to start their own. However, they don’t understand being good at something and doing the business of it, are two very different things. That results in closure of more than 90% of the businesses within the first five years. Keep this risk in mind while working with startups and be ready with plan B.
At times a good programmer gets introduced to you and in the background, somebody else works on your project. Such proxy is quite common. It’s very difficult for small companies to hire the skilled people and retain them. Like freelancing engagement, here also you need to be invested in the project.
On the positive side, they will treat you like a king. You can dictate your terms/conditions. They would be happy to work on short duration assignments which mid-size companies are not comfortable with.
Some companies create their niche successfully but those are often acquired by big companies.
3. Midsize companies
These companies have overcome the difficult phase and now are quite stable and reliable. They are customer-centric but at the same time have their own processes and way of working. They are nimbler compared to big size companies and normally ready to work with customers of all sizes.
Employees tend to wear more than one hat and often paid better. Some companies have strength in Customer service, some in Technology or Business domain. It is rare to find the combination of all. So, you can decide your priories for the trade-off.
My experience is that they are more up-to-date with the new technologies and trends. If you need a set of brainy people and not expecting a huge scale up, then I would recommend you go with midsize companies.
4. Large companies
If you prefer to be the small fish in a big pond instead of big fish in a small pond, then this can be a better option for you. You will come across some experts who understand your business/industry better than you. They believe more on specialization. So, there would be a different individual for a different activity. It helps but increases the cost substantially.
On the flip side, they won’t talk to you unless you have a multimillion deal. They are highly organized, and process driven. The budget in which you may complete the entire project with a small or mid-size company, a large company will consume it in requirement analysis/design phase only. Adopting any change or initiating any new practice is often a very difficult process. So, you must go with traditional legacy way.
Their biggest strength is scalability. If you need to align a few hundred team members on short notice, you should go with large companies.
THIRD STEP
Once you identify the segment of your suitability, the THIRD AND THE LAST STEP is to select the right partner. There are just too many providers in the market and it can be overwhelming. I am listing few important sources you can look:
1. Your personal and professional Network
2. Advisors/Consultants working in vendor sourcing
3. Business/Geography/Technology specific free and paid websites which list the companies along with their reviews and other necessary information
4. Websites specific to freelancer
Before you start talking with vendors, you need to have your selection criteria along with the weightage listed. You can do it in two phases. In the first phase, you can take few ‘must have’ criteria which are easy to validate e.g. Geography, Business model, Experience in technology/domain etc.
With this, you will have your shortlist created. You should limit your list, so you can give sufficient time to all of them to explain your need and also able to evaluate them on all criteria you have listed.
I will write separately to explain various selection criteria and questions you should ask to give the ratings against each.
Finally, selecting the outsourcing partner is like finding the soulmate. Along with all the data points you need to believe in your intuition and go for it. If your head is in the right direction, then don’t worry about your feet.
