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Making It Work

How to avoid some common offshoring blunders -- and what to do when you can't.

Poor communication and low morale resulted in a large amount of software with code-writing errors that required “rework” by the team of 60 developers back in California. Training alone didn’t seem to solve the problem. “Even after two years of getting the rework rate down in India, it wasn’t [low] enough,” recalls Dickey. While domestically the rework rate was about 30 percent, “when we first started [in India], we experienced error rates of about 70 to 80 percent.”

When Mehta first arrived, he replaced E-mails with frequent phone calls to California. He also took over the job of assigning Blue Star employees to various Business Engine jobs. Because labor in India is relatively cheap, error rates often can be lowered by simply assigning more people to double-check the work. Mehta set up a system in which each code-writing task “would get reviewed and tested by a peer, who would sign off on the code and the task.” He also installed monthly measurements showing the number of tasks completed on time — factoring in the difficulty of each task — and citing reasons for lateness. By using Business Engine’s own management software to measure offshore performance, he was also able to let onshore managers track some offshore functions on a daily basis. That effort, he says, brought “accountability to the work being done by the people offshore.”

Knowing what functions lend themselves to good measurement, and then tracking them effectively, are the keys to successful outsourcing, according to professor Ravi Aron, an expert in BPO at the University of Pennsylvania’s Wharton School. “There are many processes that cannot be codified,” he says, “but when you find processes that can be, you see how easy things are” (see “Measuring the Miscues,” at the end of this article). At Business Engine, Mehta’s efforts at improving communication and measuring error rates are credited with tightening the operation significantly. Rework is no longer sent back to California, but performed in Mumbai. Better yet, notes Mehta, “that rework is now down to 5 percent.”

“Having someone on the ground there has made a big difference,” according to Dickey, who says that the airfare spent flying Mehta back to California for a week or two every several months is well worth it. “He has a much better handle on what we’re striving for.” That’s important in an environment geared less to design work than to performing repetitive tasks, because Mehta can explain why a particular product specification is important to a customer. “Once you have good specs written, the rates improve dramatically,” says Dickey. Indeed, the level of rework is now the same as it is in Ontario.

Dickey says the company can now build on its success, and is considering moving some business processes offshore. For example, he expects to create several quality-assurance positions in India by the end of the year.

When Things Go Wrong

While the lessons learned by IndyMac and Business Engine now allow them to contemplate moving such higher-level functions as finance overseas, privately held Everdream learned a very different lesson: when to pull the plug on an offshoring deal.

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