It is not often that one reads stories about people one knows. So, when I read about ValiCert, I wasinterested. I happen to hhave known the co-founders. WSJ has a story on its outsourcing experiences to India:

When sales of their security software slowed in 2001, executives at ValiCert Inc. began laying off engineers in Silicon Valley to hire replacements in India for $7,000 a year.

ValiCert expected to save millions annually while cranking out new software for banks, insurers and government agencies. Senior Vice President David Jevans recalls optimistic predictions that the company would "cut the budget by half here and hire twice as many people there." Colleagues would swap work across the globe every 12 hours, helping ValiCert "put more people on it and get it done sooner," he says.

The reality was different. The Indian engineers, who knew little about ValiCert's software or how it was used, omitted features Americans considered intuitive. U.S. programmers, accustomed to quick chats over cubicle walls, spent months writing detailed instructions for overseas assignments, delaying new products. Fear and distrust thrived as ValiCert's finances deteriorated, and co-workers, 14 times zones apart, traded curt e-mails. In the fall of 2002, executives brought back to the U.S. a key project that had been assigned to India, irritating some Indian employees.

Software | PermaLink | Comments (2)

Hi Rajesh,

The outsourcing model has always made maximum impact when implemented in a phased manner.

a. Probing period
b. consolidation
c. notice tangible results

In the probing period companies typically outsource bits and pieces of work. This gives them a fair chance at evaluating the quality of work, pricing, effectiveness, etc.

Such small projects enable the IT service company to understand the partner better.

Then with more and more such projects the IT service company will have a better understanding of the habitat and will be able to address all desired issues.

Once beyond this phase, the companies can outsource end to end work and expect tangible results.

Outsourcing is not just a bandwagon to be jumped into, to appease shareholders and oneself. Its more a thorough exercise with a long term perspective. and not just cost cutting, companies are increasingly finding that having a a view of serving the local market also helps.

for e.g Valicert should have thought about having its products dispensed in the Indian market with the intention of making money.

my 2 cents in

Thanks,
Girish

Posted by Girish Iyer

Hi Rajesh,

The outsourcing model has always made maximum impact when implemented in a phased manner.

a. Probing period
b. consolidation
c. notice tangible results

In the probing period companies typically outsource bits and pieces of work. This gives them a fair chance at evaluating the quality of work, pricing, effectiveness, etc.

Such small projects enable the IT service company to understand the partner better.

Then with more and more such projects the IT service company will have a better understanding of the habitat and will be able to address all desired issues.

Once beyond this phase, the companies can outsource end to end work and expect tangible results.

Outsourcing is not just a bandwagon to be jumped into, to appease shareholders and oneself. Its more a thorough exercise with a long term perspective. and not just cost cutting, companies are increasingly finding that having a a view of serving the local market also helps.

for e.g Valicert should have thought about having its products dispensed in the Indian market with the intention of making money.

my 2 cents in

Thanks,
Girish

Posted by Girish Iyer

HBS Working Knowledge writes:

The process of transforming top management's goals into concrete sales typically breaks down for one or more of the following reasons:

- Lack of top management clarity about objectives.
- Difficulty translating objectives into an operational business plan.
- Vagueness communicating objectives and business plan to the sales force.
- Failure to align compensation with the objectives.
- Problematic individual sales plans and managerial coaching.

In order to reconnect sales management to profitability, address each of the points of breakdown. Managers can do this through a five-step process:
- Understand profitability.
- Translate into business objectives.
- Communicate the business objectives.
- Translate into a compensation plan.
- Create individual sales plans.