You may have decided to outsource or offshore some of your product development or other business processes. But how do you decide what processes to outsource and what partners to use?
The Outsourcing Map is a tool that helps you select the right resources. It uses a framework for evaluating your options based on strategic and technical considerations. The tool optimizes decision-making at any level of the organization through a matrix that determines the best source of skills for your requirements.
- Provides a checklist for selecting a partner
- Reduces risk by determining the best approach to outsourcing given the dimensions of the project
- Provides objective criteria for choosing outsourcing partners based on needs
To apply the Outsourcing Map, first answer the following questions using the scale of one to three. You should apply this process individually to the different types of work you intend to outsource. For example, outsourcing software development would produce a different map from outsourcing payroll administration.
For each question below, assign a numeric value based on this scale:
- 1 = No or low
- 2 = Sometimes or medium
- 3 = Yes or high
- Is this process a key component of your strategy?
- Will subsequent programs use it again?
- Is it an important part of your product’s differentiation?
- Is it technically sophisticated, using cutting-edge components?
- Does it rely on internal patents or deep company know-how?
- Would you like to capture the IP for future use?
Average the answers for the strategic and technical dimensions to yield two numbers from one to three. The results of your ratings will appear on the Outsourcing Map by plotting the center of a circle using the averages as X and Y coordinates. The circle will then encompass the suggested outsourcing choice.
In the example used in the graphic above, a team wanted to outsource a piece of code for a new product. After discussion, they decided that the program was of low strategic importance ( = 1 on the strategic axis) and of medium technical complexity ( = 2 on the technology axis). The tool convinced them that they would find the best outsource partner by using a crowdsourcing service such as oDesk, Top Coder or Elance.
You can enhance the Outsourcing Map by considering the questions below. These questions help you to assess specific vendors within the categories suggested by the map. Again, use a scale of one to three for each answer, but don’t average the answers. Instead, use them to refine the selection in the Outsourcing Map so that you can choose between competitive options.
- A very large effort?
- A long-term effort?
- Development cost is important?
- Requirements are specified well?
- Enough justification to have regional presence?
- Requires English to be spoken?
- Challenged by weak internal program management?
- Is short time-to-market critical?
Which Business Problems Does the Tool Solve?
This tool catalyzes action. It provides a roadmap to staff your project quickly by leveraging global resources. The map takes some of the guesswork out of the process and minimizes risk by providing meaningful recommendations. Finally, it helps provide justification to management, speeding up approval when necessary.
What Else You Should Know
While it is not possible to reduce this complex decision to a set of black-and-white rules, the Outsourcing Map will help you to come to a decision rapidly. However, you should also consider factors such as internal culture, sensitivity to intellectual property, cost, and prior experience.
If you are new to outsourcing or remote development, be aware that there are a broad range of issues that can affect the quality of the resources you consider, including communication problems and resource turnover. The Outsourcing Map will help to minimize these risks.
Tip: if you are using low-cost resources on small projects, hire two individuals at the same time to work in parallel on a small time-bound task. Then choose the one who provides the higher-quality output.