The provider’s sales team has gone, all site visits have been conducted, and the contract has been buttoned down.  It has been a smooth transition but, now it’s time to put offshore delivery and support to the test of meeting business demands. But, in the new outsourced environment, how do you know whether the objectives against which the provider’s teams are managed, are favorable to your goals?
 
In this business, the key raw materials are people and their abilities. Delivery teams are incentivized to control the cost of people through a series of measures. By understanding these measures, you can better examine whether or not the objectives established for the offshore team will be aligned to your best interests. Below are some of the success criteria typically applied to offshore delivery teams by their management.  

Revenue
It isn’t just the provider’s sales and account teams that are given the objective of maximizing revenues – this permeates down to the delivery teams as well.  Your goals of year-on-year efficiencies and lowered costs may come second to the provider’s revenue objectives.

Gross Margins
This objective has an enormous effect on team behavior and will control their resourcing decisions for onshore vs. offshore, dedicated vs. shared, in-scope vs. out-of-scope, and the like, especially when there are limited contractual opportunities for additional revenue to be billed.  

Revenue per Hour Worked
This is an interesting metric used by provider management to control how much leeway your assigned team has in deploying Shadow resources to your engagement, or drawing support from their various Centers of Excellence. Unless contractually obligated to maintain a certain percentage of shadow resources, the provider’s delivery team is incentivized just to draw the minimum needed to ensure that they will not lose billing through unforeseen absences.  

Billable Utilization
Related to Revenue per Hour Worked, this metric controls how proactive the delivery team will be in hiring, training and maintaining a bench of suitable resources that could be drawn on to combat attrition issues and for future expansion.

Effective Cost per Hour
This is calculated for the deployed team as a whole – the lower, the better for provider teams to meet their objectives.  

No. of Team Members per Lead, Engineers vs. Non-engineers, and Minimum Percentage of ‘Trainees’
Delivery teams are usually mandated to include a specified number of each of these in their staffing mix. These metrics appear to run contrary to how things were done pre-outsourcing, when people with many years of experience were deployed, and are now replaced by resources that appear to be many years junior.  In order not to have conflicting client objectives, it is important for there to be smooth transition and adaptation to standardized processes, so that the need for ‘specialists’ is minimized.  

Client Satisfaction
The final objective that is important for the Provider’s Delivery team is ‘C-Sat’, or Client Satisfaction, this objective is in perfect harmony with the client’s goals, but it also represents the ‘tightrope’ over which the delivery team attempts to balance itself.  Providers have put in sophisticated systems to gather and report on client satisfaction data, as it is a key element towards the growth of their business, and a way to demonstrate their strength in a specific industry vertical.
 
So, as one moves from a pre-outsourcing to an offshore outsourced environment, it is useful to recognize what makes the provider tick, and to allow suitable changes to occur behind the scenes, while managing the relationship based on outcomes. Alsbridge employs consultants who are uniquely positioned to align you with the provider in an offshore outsourcing relationship.  These consultants, who are equally at home in multiple cultural habitats, bring about the alignment of objectives through Sequoia – our time-tested methodology of client transition and supplier governance support services.