Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
But while your large competitors can take advantage of lower cost offshore services to help meet these needs, you may be unfamiliar with these resources and understandably concerned about depending on a long-distance supplier. After all, horror stories abound about overseas IT projects gone awry and these were for large businesses that can weather big losses. Your business cannot risk that.
Small businesses run leaner than big businesses, making it difficult to spend time researching and vetting offshore IT service suppliers. But there are ways to access the rich resource base of IT development that exists globally, from your onshore base.
First, determine if offshore services are right for you. Going global for IT services may be a great solution for you, or it may not. It could even be good in some instances and not in others. So ask yourself the following questions for any information technology project where you are considering going offshore:
1. What are your costs? Know your needs and your budget before you start looking for any resource, onshore or off.
2. What human resources will you need to manage an offshore project? Your IT partner should be able to help you with this, but realize that you will have to invest on your end too.
3. Is the project timeline tight, or can you afford time for increased coordination and communication?
4. Can you afford NOT to go offshore? In other words, does your budget and/or your competition require that you find a less expensive solution?
Second, develop a checklist; the one below is a start. You may need to look for familiarity with your industry or project, for instance.
Rates. In general, offshore billing rates are directly related to productivity and inversely related to oversight costs. If you are quoted a very low billing rate, the project will probably take more hours to complete, as well as more oversight from you. Ask about total project hours.
Consultancy experience. Small businesses cannot afford to be anyone’s guinea pig. Look for consultancies with a minimum of five to six years of experience.
Consultant experience. Likewise, you want to ask about the level of consulting experience on your team. Senior people are more expensive, but junior people may take longer. You want at least some senior involvement to mitigate risk as well.
Attrition. Look for an offshore supplier with an attrition rate roughly equal to your own. You want your team to stay cohesive for the length of your project, so those who start on it are invested in a successful ending.
Communication. Ask about language skills across your entire team, not just a liaison. Everyone should be at least minimally conversant in English so they can be accessible. Beware of suppliers who want to impose a rigid model in which all communication must filter through a single person. This can lead to unaccountability of team members.
Local project management. Look for an IT supplier who provides a local project manager to work closely with your in-house team. This person should facilitate, not funnel or block, communication between the onshore and offshore teams. .
Contracts. Run, do not walk, from suppliers who want you to commit to a long-term agreement with a hefty cancellation fee. You should be able to terminate your project with reasonable notice.
Legal considerations. You may want to work with a company that is incorporated in the United States and has a wholly owned offshore subsidiary. This will give you legal recourse in the U.S. court system if you are dissatisfied. Since going to court is your last resort and won’t improve a project gone wrong, pay special attention to the last two items.
Cultural fit. Small businesses, by their nature, tend to have small IT staffs and minimal process controls. Relationships matter more than controls when you can walk over and talk to whomever is working on your project. But the fewer internal controls you have, the more you need a supplier who shares your company’s world view. Cultural similarity and a workday overlap of 3-4 hours help. Daily stand-up and occasional Skype meetings all help to create a cohesive, multi-national team.
Do a test project. Find an IT supplier who will work with you on a small test project before you each commit to a riskier, larger one. There is nothing like first-hand knowledge to tell you whether the relationship is a good fit.
Sending an important IT project overseas can be scary for a small business that cannot waste time and money. But with careful planning and project oversight, you can go global, achieving efficiencies that will help your business grow.
Robert Duff,
Coherent Solutions:
612.279.6263
ro*****@***************ns.com
www.coherentsolutions.com
