Addiction To Cheap Outsourced IT Vendors
Addiction To Cheap Outsourced IT Vendors
The systems a business use is often a reflection of their business process. It is the fundamental identity of the business. However, what happens when a company attempts to outsource such a core part of itself out to vendors who come from an idea with a reputation of being cheap? In this article, KW Tech Solutions would help further the trend of in-housing expertise by demonstrating through a case study of our experience helping business who struggle with their cheaply sourced IT vendors.
Background
Company A is a multi-billion dollar company who is addicted to the idea of “Why hire two competent engineers to do the job well, when we can hire one supposedly good enough person who can manage and talk, to free up the rest of the budget to outsource the work to twenty engineers from a low-cost country?” This mindset resulted in them being fully reliant on their vendor to handle any and all parts of their systems, while their in-house IT team being solely in charge of coordination.
Their headquarters’ internal IT department had under twenty in-house staff (with the vast majority of which not being local to their location), despite having a team with the capacities of hundreds on paper.
Approach
Based on our prior experience interacting with such cheap outsourcing firms, KW Tech assumed that such vendors providing the service would definitely be facing the issue of a brain drain, ultimately compromising the service offering. This stems from an extremely simple understanding – a firm who charges so little for the work offered must be paying their staff even lesser, or, they are cheating their customer in some form.
KW Tech Solutions also understood the other side of the coin, and hypothesized that since Company A has been hooked to outsourcing for such a long time, their internal capabilities would surely start to degrade from a lack of practice. This would ultimately result in a poor ability to perform adequate quality assurance and due diligence on the work delivered by their outsourced cheap labour.
From the above two points, KW Tech Solutions assumed that the work delivered by the vendor under usually tight time pressure would be assigned to essentially random people, without a clear owner or expertise. This would further compromise on the quality of the product.
With that in mind, we set out to
- audit whether the product delivered were acceptable to the end users
- verify whether Company A has sufficient in-house expertise to manage their IT processes
- build human capital in regard to their expanding and reviewing their current system
Challenge
When initially on-boarded to review the systems, there were strong push-back against giving third parties access to the system to audit the finer details of the work done. The initial expectations from the relevant stakeholders were a simple “go through a checklist without looking closely, to allow everyone to happily move on”.
Once pushing through with the third party consultant driven tech audit, KW Tech Solutions discovered that there was an extremely limited understanding of what exactly exists within the company’s system, especially in regard to how the various parts of its interplay. This led to a poor understanding of exactly who in the company was responsible for which function that is supposed to be available in the system.
There was exactly zero documentation that was made available with the code (or what was done); this goes against conventional programming practices. This resulted in a need to invest excessive effort in piecing together how the system functions behind the scene, solely from looking at the tables (raw data), coupled with the system’s frontend (web portal).
Furthermore, no source code was made available from the vendor.
Findings
After a thorough analysis of the company, we discovered some rather pressing issues.
- There was significant misreporting and calculation of very key financial data. The various stakeholders were aware of such an issue happening, however, no action was taken as it was simply “not their responsibility” due to poor understanding of data/system ownership.
- When some files were reverse-engineered and extracted from their system, it was clear from the digital fingerprints that every update (for even tiny functions) were not done by the same set of people.
- Most code that was signed off and approved were only functional on the surface (they produced some data), however, no unit testing or any other relevant quality assurance practices were done. This resulted in rushed out, entirely incorrect solutions.
- When highlighting such discrepancies, board meetings with the board of directors (which required preparation of extremely detailed explanation of what went on) were requested – showing myopia and cover up, resulting in upper management not being aware
- In-house team lost the ability to develop or deploy any significant solutions without relying on external vendor support
Solution
Sadly, the situation for the company festered beyond the point of a simple quick fix. There was a need to invest significant sums to rebuild core components critical to aspects of business planning, effective wiping out more than what they saved from outsourcing the job cheaply (in terms of both cash out of pocket, and lost productivity).
The concept and importance of data ownership had to be reintroduced to the company, with significant effort spent to realign the business processes with the IT systems empowering it. Such cultural change required a significant investment in man-hours – much more than what would have been spent having proper user acceptance testing.
Lastly, a road map highlighting how to align and encourage in-house capabilities through human capital building was prepared and instilled as a must-have among the management.
Conclusion
It is extremely important to trust the development of your system with vendors who are committed to ensuring your business gets what it deserves – quality with a commitment to growing alongside you. Costing should not be the main (and only) concern, always remember that if an IT “expert” is selling you something so cheaply that they cannot survive, how can you trust that your systems are created in a robust manner? Furthermore, if they are so cheap (and somehow survive), they must still earn their money somehow. This would usually come from you down the line. Corners will be cut. Quality would be compromised.
If you or any business you know is facing this situation, feel free to reach out to KW Tech Solutions for a free, no-obligation consultation.
