01 Oct 08 Buyer expectations – It takes two to tango

During the course of our research over the past few years, we have spoken to a variety of buyers and providers, across segments including BFSI, Telecom, Legal, Publishing, Research and Analytics, Engineering design, etc. Despite increased success and maturity in offshoring and outsourcing, many engagements are still riddled with a variety of problems, and buyers are often disappointed.

Some of the oft-repeated problems are listed below:

Respondent
 Quote
 Law firm I expected higher quality of work from India, simply because no language barrier exists and the Indian legal system is very similar to the US legal system. But that expectation hasn’t borne true.
 Magazine publisher  It is important to have confidence that the management team we are working with has the same outlook as us. They should be as committed to quality as we are. The factor of timeliness is also very crucial for us, as is quality. Our trust in the management team and their ability to share our vision and commitment to achievement is very important.
 Law firm The Number one difficulty of outsourcing is how do you get someone to trust you.
 Law firm The language barrier is a problem. Communication is always a problem if for no other reason than we do speak a different dialect of English. That adds a layer of difficulty to offshoring.
 Semiconductor company The cost savings did not justify the administrative burden of dealing with export issues. Other issues include difficulties of working with unknown offshoring companies and the Indian legal system, which doesn’t have a good track record of protecting intellectual property and employee mobility in India.
 Patent Attorney Things didn’t work as smoothly as anticipated. The idea was that these folks [in India] would acquire skills and be able to do 95 percent of the work. In practice, though, the coaching took far more time than anticipated.
 Investment banker I think that culturally Indians are taught to respect authority and not ask questions. Part of mentoring someone is that you get feedback, and they ask questions to increase their understanding of a project. It took quite a while before the people who I was mentoring in India were comfortable asking questions or challenging me in any way, and that ultimately stalled their progress and the training process.

 

As is evident, most of the reasons for buyer expectations not being met were linked to trust, cultural issues, poor quality and unanticipated (buyer) overheads in getting the relationship to work. The counter argument from vendors is that buyer expectations are sometimes unrealistic, as discussed below:

Respondent 
Quote
 Knowledge service provider  The biggest problem area is that buyers are often not realistic about timelines. Recently, we had a project where timelines completely crashed because there was not enough time for training resources. Buyers have to be convinced to build in ramp up times, training costs, etc into the agreement. Basically, they need to get a longer-term focus.
 Analytics firm  Buyers do not often have well-documented processes. They expect that the vendor help them do this. Often there is a process re-engineering component.
 KPO vendor  SLAs are typically very heavily weighed in favor of buyers – the wording and the metrics.
Recruitment Process Outsourcing firm  The biggest issue is the “timeline” – buyers often set unrealistic targets. This is especially true of new buyers, who lack a clear idea of performance metrics, or work with un-mapped processes. Others under-estimate the extent of internal resources required or do not provide enough time for “transitioning” the process. Buyers need to “understand that ‘transition’ is not an instantaneous process, and process re-engineering will take time, (or else) there will be repercussions in implementation.

 

Outsourcing is not a simple process, and takes considerable commitment from both parties to learn and make it work. To end with a quote from a large American IT company, which faced a lot of teething problems, but then managed to work through to a successful conclusion, “Some of the lessons learnt include: a greater need for frequent and regular communication, internal preparation, determining which tasks to delegate, determining pricing model and preparation of documents.”

ValueNotes Research
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