Professional Tester
August 2006
StarBase Managing Director Stephen Davis comments on "Outsourcing, Offshoring and Value" in Professional Tester magazine.
Outsourcing of non-core services is nothing new. The attractiveness of outsourcing experiences bouts of popularity, but in some form or other it is definitely here to stay. Typical arguments in support of outsourcing include increased specialisation, cost reduction and the introduction of variable costs to replace fixed costs and flexibility.
These arguments all have some basis in fact. At the same time, though, so do the criticisms of outsourcing. Collectively, criticisms tend to be based on perceptions of outsourcing not delivering what has been planned, together with limited accountability and unexpected problems associated with communication and responsibility.
Into this somewhat confused debate a new, powerful trend has emerged: that of ‘offshoring’. The manufacturing sector has adopted this trend with some vigour. Whilst not without its problems - in particular ethical problems relating to conditions and age range - outsourcing has resulted in nothing short of a revolution in terms of manufacturing location. In the services sector, there has also been a comparatively recent rush into offshoring for everything from call centres to word processing.
However, the manufacturing sector has fundamentally different market dynamics to those of the service sector. As such, the ‘offshoring’ trend will probably be less dramatic than that experienced within the manufacturing sector. There is also some suggestion that the forecasted cost savings are not being achieved.
Service Sector Market Dynamics
In most service organisations and especially within the professional services sector, a large proportion of the workforce has direct regular contact with the end customer. In the manufacturing sector, there is little direct contact between the manufacturing employee base and the final customer. Indeed, for many, the buyer is more likely to have more contact with a retailer than with the manufacturer. This means that cultural and communication issues associated with remote production are largely removed from the relationship between the manufacturer and the customer.
In the service sector, the relationship is much more immediate. Perceptions of quality and capability - and, indeed, of value - can all be influenced dramatically by largely intangible issues associated with service delivery. There have been several examples of offshoring comparatively low-skill services, such as call centres, that have encountered major customer perception problems on the back of basic communication problems. There can, of course. be availability issues associated with differing time zones across the world, although some would argue that this can be accommodated.
In the broad IT sector it is logical to suggest that manufacturing will continue to find its way to the lowest-cost location, assuming that location has a significant pool of available labour. It is also likely that a greater number of low-contact, largely mechanical IT services will drift offshore, but at this stage it is hard to judge accurately how far this trend will go.
Testing
On the surface, it would appear that testing services are a good candidate for offshoring. By tightly specifying the testing software and functionality of the test agenda, it is possible that a distant team of comparatively low-level testers could support a major IT deployment.
However, recent high-level client research performed by StarBase on its own client base suggests that it is the largely intangible issues relating to experience, communication, ongoing personal support and responsiveness that clients tend to regard as being most valuable. There is also a suggestion that clients are increasingly seeing testing as an extension of their business-critical Quality Assurance and Risk Management procedures and processes. In this environment, the interaction between the testing team and the client team is a critical interface that should not be underestimated. Clients often expect the testers to be able to work within and alongside their organisational structure and adopt their cultural framework.
IT application deployment, no matter how well-planned, requires flexibility and an ability to respond quickly and knowledgeably to changing priorities. It is hard to envisage a scenario where remote teams operating as something of a ‘bulk resource’ could operate in a genuine outsource capacity or even provide the level of personal interaction required during project-specific deployment.
To gain the necessary level of insight into a client’s business processes, there is no substitute for working closely alongside a client. This creates opportunities for knowledge transfer and the ability to add value through innovation and interaction with the client team. It is possible that what we may see is some form of ‘back office’ offshoring with that team having little direct contact with the client, while on-shore teams perform a client-facing role.
To paraphrase Nietzsche, that which does not kill the onshore testing sector will make it stronger. Those companies that prosper will be those that continue doing what they have always done best: shaping the right testing solution that is framed in the context of the clients’ business environment and operating culture and offering the client genuine added value through the knowledge of its team.
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