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Three things you need to know when outsourcing IT development to companies abroad

So far, we have seen companies outsource IT development to different countries including India and China.
There are times the output is useful and there are also times when it’s not, but I’d like to take a closer look into the patterns.

Failure #1: Selecting talents as if outsourcing development to a Japanese company

First of all, the overwhelming majority of outsourcing activities are directed towards overseas companies instead of local Japanese companies, due to the lower cost abroad. In this case, when things don’t go well, customers simply switch to another vendor, and during talks with them, the customer unknowingly gives out a sense of superiority because “hey you’re getting a job from Japan”. On a similar vibe, the vendor sees the customer as only temporary, and the project goes on under the presumption that the relationship with the customer is only short term. As a result, control measures established in Japan seem not to work at all, even if the tasks or projects are simple. Even simple ideas feel unmanageable, you get low quality for low cost, and project management becomes difficult. Deliverables are not completed according to specifications, communication is bad, delivery is not on time and the project ends up in failure.

Failure #2: Imposing Japanese style management when outsourcing

When outsourcing, micromanagement – managing thoroughly every detail – is done due to the belief that what can be done in Japan can not be done abroad. Quality control, project, schedule, and specifications management are all Japanese-style methods. For this reason, understanding the Japanese working style and management style is enforced. Furthermore, since it is a Japanese job, vendors ought to do it the Japanese way, adjust to Japanese holidays, and accept the Japanese working style with no questions asked. As a result, the team members feel isolated, unproductive, unsettled, having no independence at all, and are only waiting for orders.

So what kind of approach leads to success then?

Companies who have experienced failure as mentioned above, or those who have business experience in a diverse environment, take a completely different approach.

Instead of just managing short term work engagements, try to see vendors as long term partners, and put an emphasis on team building (independence, self-growth, and development perspectives) while engaged on a project. In this case, the project will progress with members’ career, skillup, sense of value, and manner of interaction in mind. As a result, the kind of relationship built is where the company gains a mutual understanding with the partner company, and independent proposals or improvement actions come out proactively.

I strongly think that in the very difficult collaboration so-called IT development, unless we can discuss our vision, with our development partners through the project, we will not be able to solve engineering problems in the true sense of the word. For that reason it is necessary for the vendor to be prepared. It is then very important to outsource development to overseas partners not for the sake of delegating development alone, but also to make it our concern to train and retain members, and to treat development teams as in-house staff through team building activities.

To reiterate, what is important when partnering with overseas companies, is the approach of coming from the perspective of building an in-house development team located abroad, growing together, and not from the perspective of procuring human resources. Some exemplary companies treat their partners in the same way as their employees, sending gifts during Christmas. Yet another company makes effort in sending to Japan once a year outstanding members who has achieved great results, to foster a sense of unity. Such efforts naturally make the relationship between a company and its partner longer term, and reduces employee turnover rate, resulting to great benefits for the customer.

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