The outsourcing process works in five stages as shown in the figure below:

In the initial phase, an organization, directly or indirectly, has to identify their pain points. Pain points could be a host of reasons that cause damage to the organization. They could be skyrocketing internal operating costs, competitors lowering prices, or investors demanding increases in profits. Find out what are your pain points. However, this phase further extends to finding out how to reduce costs, improving your focus and gaining market share to make all stakeholders happy. Once the root cause of your problems is discovered, you can then consider about working on it internally - or giving it out to specialists.

In the second phase, you have to identify and 'try-out' an outsourcing partner. This is a massive task. Usually the geographic distance, unknown claims, and insufficient supporting data makes it very difficult for companies to source reliable partners. Many projects fail due to this - resulting in millions of dollars being wasted.

The third phase is to experiment with the identified partner. Experimentation is a wise approach for organizational learning and risk reduction because of the many difficulties in outsourcing. Savvy managers experiment to the point where they see measurable, positive results, and only then they give the go-ahead for the next stage.

In this phase you should identify an important, but less-risky task from your business standpoint, and outsource it to this partner with clear goals and responsibilities. This ‘experiment’ might fail as most organizations don’t possess prior experience in evaluating partners. This is where Quadwave steps in.

Once a company crosses the hurdle of 3rd phase, it can plan for Long term strategy, as companies begin to experience significant and consistent cost savings in their IT work. This opens up a new set of challenges - what should be long term and short term needs, in terms new hiring, onsite- offshore coordination, knowledge transfer, remote project management - planning and tracking, and many more. But all companies may not like that - as there are a new set of challenges in them. These issues need to be organized and addressed to realize long-term benefits. Organizations can plan for Captive centers at this point in the engagement to leverage more benefits out of the new-found territories.

 (Find out how Quadwave can help you set up Captive centers)

By the fifth phase, firms can correct early missteps and expand their offshore activity as measured by number of projects, staff, or budget. This is the Nirvana of outsourcing!