The sellers dilemma in an outsourced environment

Whenever people speak about ”challenges in outsourcing”, they generally look at things from the buyer’s perspective only, ignoring the seller’s perspective completely. Being from India, the outsourcing hub of the world, and after spending almost three decades in I.T industry as a programmer, consultant, manager and business owner, I have been hearing, solving or living with these challenges most of the time. I strongly agree with the statement ”Projects fail at the beginning, not at the end”. By confronting these challenges during the planning stage itself (project manager takes control only at the planning stage), the probability of success of projects can be improved. Here are some of the key challenges one has to address collectively (both the buyer and the seller) especially for outsourced / off-shored projects;

  1. Selection of a wrong contract type – How true PMI is, when they say ”Project’s fail at the beginning, not at the end”. Very often the pre-sales team, without much awareness of the customer’s awareness level of the scope of work, and the kind of technology being used, recommend a fixed price contract along with a waterfall model to a customer who is not very clear about his requirements (high volatility) and the technology is very new to the team and customer. Not much thought is given to the contract type and the development life cycle. Once fallen into this trap, it is very difficult to recover, unless someone shows the grit to admit this problem as early as possible and correct it.
  2. Wrong estimation by the pre-sales team – The project manager comes into the picture after the organization has bagged the order from the client. By that time, the end date of the project, the contract type and the major milestone dates are already finalized by someone, and is imposed to the project manager. Now the project manager is bound to abide by these constraints. If a WBS (work breakdown structure) based estimates are not available during the planning stage, the project manager must initiate a WBS based estimate. At the end of it, one may realize that either the estimates imposed on to the PM by the pre-sales team or the WBS based estimates are correct. If there is a mismatch between these two estimates, it has to be confronted, and the right one must take precedence over the wrong one. No project management methodology will help us to recover from a wrong estimate which is on the lower side :-).
  3. PM being accountable for profitability – Most of the services organizations make the project managers believe that they are accountable for the profitability of the project. This is terribly wrong. For all fixed price contracts, Price = Engineering cost + Margin. As a project manager, ones responsibility ends with engineering cost. If the engineering cost is lower than the quoted price, the project will make a profit, else it will end up in a loss. As a project manager, if one has completed the project within the ”agreed upon cost”, then he is successful.
  4. The project management methodology is also dictated by the client – Very often, the customer chooses the project management methodology as well. If the client is from USA, most probably they will ask for either PMI based or Agile. If the client is from UK, their preference will be either PRINCE2 or Agile. For the rest it could be anything, with a bias towards ad-hoc project management. That means, I want absolute freedom to indiscipline. I will tell you what to do, before I go to bed, and when I wake up, I want to see it.
  5. Tailoring the processes for better control than collaboration.
  6. Forget about co-location, most of the product owners have not even seen all their project team members even once.
  7. Intellectually obedient crowd– Most of the outsourcing destinations are English speaking and the reason for this was colonies. The hangover continues still. The only way out of this is co-location of all the team members including the product owner (customer’s representative) at least during the early stages of the project, and the celebrations of the early milestones.
  8. The blind, leading the blind – Very often we hear things like, we are following SCRUM, but….(scum buts). We are following scrum, but a tailored version of SCRUM, and the tailoring has removed the pillars. This is not uncommon. Both the customer and the supplier do not understand the method completely, and the supplier is willing to listen to the customer in the name of customer satisfaction.
  9. Lack of respect for time – In most of the outsourcing destinations, working overtime without additional pay is the norm. Most of these organizations have time accounting systems which captures the time utilization of the team members on a daily basis. Irrespective of whether one has worked for 6 hours / day or 14 hours/day, what is captured is only 8 hours/day. In the longer run, this affects the physical fitness and the morale of the team.
  10. Everyone talks like a CEO – Every one is wrongly mentored to talk about cost and profitability only. No one is talking about project strategy, execution, engineering cost..May be an offshoot of the fixed price contract type. In the process the focus on scope and time gets a back seat. Encourages the sellers to cut corners to make profit, even if it is to the discomfort of the project manager. Here, a project manager who is ‘flexible’ scores over the project manager, who is ‘right’. This can be avoided by ‘demonstrable product increments’ linked payments based on time and material with a cap. The contract type can be a combination of T&M and fixed price as well. Till one gets a hang of the technology and scope it should be T&M, and the rest could be fixed price.
  11. Lack of understanding of the business case – Very often, the team, including the project manager is not aware of the business case of the project (Why the customer is doing it?, What is the impact of the project on the customer’s business?). This deprives the team of the opportunity to look at the project from the customer’s perspective, and for each and every change/suggestion the contractual terms gets precedence over the value of the change to the customer’s business, leading to frustrations building up at both ends. By understanding the business case and by sharing it with the team, the project manager can change the perspective of the team from ”Carrying stones” to “Building cathedrals”.
  12. Country club manager’s outlook – Very often I have to drive this point hard to the Indian project manager. Professional project management is all about doing the right things for the success of the project, than doing the nice things to please people. Majority of the project manager’s from the outsourcing hubs are inclined to please people than doing the right things for the success of the project. They are unable to say ‘No” ‘to anything. Even when they disagree, they say ”Yes”, and if you mistake it for a real ”Yes”, you are in trouble. The new generation in these countries have changed a lot, and do have own views about things, both engineering and managerial, and about the whole world itself. That is a welcoming change. Unfortunately they are oppressed by the manager’s who belong to the previous generation, who are still aligned to ”pleasing people than doing the right things”.
  13. Cultural differences – In India, the focus is always on protecting the weak, and very often it happens at the cost of the strong. In highly capitalist societies, the trend is towards protecting the strong. For an Indian manager, sacking someone very weak at work is something very painful, where as for a project manager from some other capitalist society, that is very normal. So, even when the head count is high in project team, all need not be productive, and the strong will end up compensating for the weak, leading to the burn out of the strong. The associated risk is the lack of transparency into the real teaming issues. Only those nice to get discussed gets discussed. The chronic problems and the associated corrective actions will not be encouraged. This has more to do with the culture than anything else, and anything linked to the culture takes a lot of effort to get sorted out.

Conclusion

By the time a project manager takes charge, the contract type with the customer is already decided, the effort/cost estimates, milestone dates are already agreed upon. The product owner (customer’s representative) remains as a voice or image. Very often, the customer imposes their way of working to the project teams. Man with money always get an upper hand, when it comes to decision making, ending up with poor project management decisions. The customer even tries to impose their work culture to the team, and the Asian project manager, very often is in the business of pleasing people than doing the right things. Most of these things are detrimental to the project. The only way out is developing mutual respect, and that is possible by;

  • Co location of the product owner
    with the team during the early stages of the project
  • Celebration of successes, even small ones
  • Explaining the place holder of the project to the customer’s business strategy
  • Re-estimating the project efforts, during the planning stage, and confronting the issues upfront
  • Understanding the cultural differences
  • Setting up a stage for fearless communication by promoting ‘we are in the business of doing right things and not the nice things’
  • Applying the collective wisdom to develop the project strategy
  • Aligning the contract types and payment terms to match the project strategy
  • Work planning for only 7 hours / day, excluding holidays and leave
  • Developing (gaining) in-depth understanding of the project management methodology for the project, before implementing
    them
  • Projects do not fail at the end, projects fail in the beginning. By taking care of the above points, we can reduce the probability of failures.

Happy Christmas to You!

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PMdistilled PMP preparatory program schedules for Bangalore & Kochi 2011

Season’s Greetings!. Start the New Year on a positive note – Become a PMP certified project manager. Attend the proven PMdistilled – PMP preparatory program.See the 2011, Bangalore & Kochi schedules and block your seats  ASAP.

After training around 3000 professionals on professional project management based on PMBOK, I must say that no one has ever regretted by becoming a PMP certified project manager, and at the same time I have heard many incidents where many lost great career breakthroughs because they did not have the required qualifications (PMP certification) or sound knowledge on key project management concepts like critical path, earned value management, human resource management, quality management, risk management, procurement management, communications management etc, or both. The PMdistilled PMP preparatory program, designed and perfected by me over 300 deliveries during the last 4 years is aimed at;

  • Imparting the key project management concepts to the participants from a practitioners perspective, which will give them an edge at the work place, over those who are ignorant about professional project management concepts.
  • Preparing the participants for the PMP exam by;
    • Providing hands on exam tips and techniques, demonstrated through mock exams during the class and through easy to remember examples.
    • Providing access to an online test simulator (500, hand picked questions which has semblance to the real questions), for 90 days from the completion of the classroom training.
    • Post course, online doubt clarification opportunities with me.
    • Crisp, 126 page reference material, which is easy to read and understand.
    • 98% of our students have cleared the PMP exam on the first attempt itself.

Believe me, impacting this world positively, by transforming the work places through competent and qualified project managers is something I really enjoy and take pride in. So, take that first step to an exciting and achievable professional goal, which will take us closer to our professional dreams.

My PMP workshop schedules for the year 2011 (Bangalore & Kochi)

Bangalore

January 28,29,30

March 4,5,6

April 7,8,9

May 26,27,28

June 24,25,26

July 21,22,23

August 19,20,21

September 23,24,25

October 20,21,22

November 18,19,20

December 16,17,18

Kochi

January  19,20,21

February 25,26,27

March 31st, April 1,2

April 28,29,30

June 2,3,4

June 30, July 1,2

July 28,29,30

August 25,26,27

September  29,30, October 1st

October 27,28,29

November 24,25,26

December 19,20,21

How to register?.

Please block your seat by emailing your details, including your contact phone number and the preferred date of the program to abrachan@pmrinstitute.com Cc : abrachan@gmail.com. You can also call me at  0091 9447209070, 9895372115. Skype,Gtalk,FB,Nimbuss ”abrachan”.

The course fees is Rs.12,500/– inclusive of all taxes (do not include the exam fees). Special discounts for batches of 3 and above.

Instructor details

Name : Abrachan Pudussery B.E,M.S,PMP,Prince2,CSM,CSP

Blog :   www.abrachan.com

Other trainings & services

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Phone : 0091 9447209070, 9895372115  email : abrachan@pmrinstitute.com, abrachan@gmail.com


from the PMdistilled program at Kochi