The Evolution of the Offshore Model

As with manufacturing outsourcing, the offshoring of IT and application development services has developed its own set of risks and hidden costs as well as falling short on providing expertise in areas lacking in the client organization.

In July 2013, referenced a joint survey from KPMG and HfS Research that indicates continued disappointment by buyers in their providers’ analytical capabilities and innovation.

Fundamentally, offshore providers need to evolve their approach from a provider to a partner in order to meet the high demands of innovation in today’s market.

Challenges with Offshoring

Today, cost reduction and standard delivery performance are at satisfactory levels, but US companies are not seeing the promise of competitive advantage they had hoped for from their offshore providers.

This is largely due to the fact that many companies have turned to outsourcing to access new technologies and innovation that can not only develop new software products and services but bring them to market faster.  But not all providers are effective in delivering in these areas.

Here are some of the issues impacting the offshore model overall:

  • Balancing Cost and Technical Experience
  • High Attrition Rates
  • Floating of Developers across multiple projects
  • Language Barriers
  • Time-Zone Differences

The Outsourcing Model That Feels Like Its In-House

Today’s technology innovators realize that the value of outsourcing is far beyond cost savings. They are partnering with outsourcing organizations that not only deliver on new technologies but do so with a commitment to the business’ success.

In 2004, Augusto Cavalcanti, CEO, Daitan Group decided that it was time for a new outsourcing model. “I started Daitan Group to give companies another offshore development option.  I could see that what was missing was the partnership approach to the business relationship between a company and the offshore provider,” explained Cavalcanti.  “It should ultimately feel like the offshore team is part of your in-house team with the same level of commitment to the product’s on-time development and overall success.”

Daitan was formed based on the promise to match the quality and productivity of in-house development at a lower total cost of engagement while avoiding traditional outsourcing drawbacks.

Key Elements of the Daitan Model

The Daitan approach is based on a very simple premise – to work with each client as an extension of their in-house team and includes:

  • Shared Responsibility – We share the responsibility not only in the development process but also in the outcome and even the risks so that there is a true building of one team.
  • Transparency in Communication –Open and frequent communications at all levels within the team gives our clients the opportunity to make decisions and avoid compromises in the outcome.
  • Reliable Development Process – Using the Agile methodology, the development process is iterative so that output and reviews are more frequent and course corrections are done along the way to keep the project on track. At Daitan, we combine Agile with proven test automation processes for frequent and rapid release cycles.
  • Long-Term Relationships – With the Daitan Model, initial projects quickly demonstrate the quality, performance and ultimately the lower total cost of engagement.  This inevitably leads to ongoing development projects, team stability and long term relationships.

For an extended discussion on this topic, please download the Daitan Paper: “Software Development Outsourcing: Provider or Partner? The Evolution of the Offshore Model