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A vast majority of SMBs are either contemplating offshoring part of their IT, or have already done so, often to India or China.
An outsourcing provider focusing on SMBs, I am always trying to refine our market segmentation.
I would classify SMBs looking to outsourcing their development / maintenance into 3 different categories, each of them yielding to very different results:
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Companies in the first category (the largest one by far) are obsessed by paying the lowest price. I call them the Wal-Mart buyers: they want more for less. When a prospect belongs to the first category, I walk away from the deal, as a deal purely based on cost savings is set for failure. Interestingly enough, the bulk of outsourcing companies are fighting for these customers.
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SMBs who fall in the second category are often first timers, therefore with a very limited experience of outsourcing. There are so afraid of potential failure that most of the time, they choose a supplier based on its apparent stability: the larger the better. The worst part of this choice is that a SMB is too small to be strategic for a large provider; [I elaborated on this risk last year].
Being obsessed by the potential downside, they do not pay enough attention to the upside, an attitude yielding to mixed results at best.
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Companies in the third category usually already have a solid experience of outsourcing, and make their decision based on a series of benefits they want to get from the operation. Unlike the companies of the second category, they want the highest upside possible, and will only work with suppliers that can guarantee their expectations will be met.
This last category is the one on which I focus my efforts; the risk of failure is extremely low, since expectations have been clearly stated at the beginning. In addition, and that is the icing on the cake, there is little competition on these accounts since a very few outsourcing companies are in fact able to demonstrate their ability to deliver.
These customers are fun to work with; the employees assigned to these projects are very loyal and will do whatever it takes to make these projects a success, no need to ask and/or push.
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Sometimes, its just that the country you do business in.. just does not have the right people. A situation I’m facing actually..
Left by Saravanan Sahadevan on September 16th, 2008