In this article, we explore the advantages of work outsourcing to India and China, specifically how it helped a company meet customer requests quickly, enhancing operational efficiency and customer satisfaction.
The bane of using a laundromat is that you have to hang around until your clothes are dry. No more if you use a dryer equipped with a wireless device from USA Technologies. The company’s eSuds program allows the machine to send the user a text message when the clothes are done.
The owner of the dryer is happy too because, if you paid by credit card, the money is already in his account.
USA Technologies develops technologies for unattended vending cashless payments, typically for use in vending machines, kiosks, laundry machines, even hotel lobbies. The device, which sends data over ATT’s GSM network, allows users to swipe a credit card. USA Technologies authorizes the card and then sends a message to the machine to approve the sale, letting buyers get their soft drinks or turn on the dryer. Then USA Technologies settles the transaction, so it appears on the buyer’s credit card and in the seller’s bank account.
USA Technologies designs and manufactures these ePort devices and runs the ePort electronic payments network, according to Bruce Shirey, vice president of ePort Services.
The business challenge
It was time for v2. The company needed to rewrite a series of applications for the network as well as make some hardware changes. In addition, it wanted to expand its software to take debit and credit cards in other countries. It needed to get the proper certification to do that in Canada, for example. Finally, it wanted to integrate its ePort network into its ERP system. There was some integration, but the company wanted to include more applications.
To achieve all this, the company needed a new data warehouse to provide more robust reporting. The ePort network monitors each machine, like noting how many cashless transactions occur, how many coins and dollar bills are in the machine, or whether it is on or off. “We pass that M2M (merchant to merchant) information on to our customers. Vending machines and kiosks are data intensive; they chew up bandwidth, especially if you have thousands of units. Our customers were demanding we include this kind of information in our reporting,” he explains. So USA Technologies was in a hurry to get the work done.
“We wanted to do the applications work in parallel but had limited resources,” says Shirey. And in these times, Shirey didn’t want to expand the head count.
The best way to meet the tight deadlines with the quality demanded was to outsource. It chose Sierra Atlantic. “Outsourcing allowed our internal staff to oversee the projects and maintain the current environment. We resolved several urgent issues at the same time,” he says.
It also provided “deep bench strength,” he adds. “We had 30 engineers working for us immediately. It would have taken me several months to find 30 qualified engineers. When it comes to resource availability, you can’t beat outsourcing,” Shirey says.
Work outsourcing allowed USA Technology to have work cross time zones. It also found the costs “appealing.”
Supplier selection was relatively simple because Shirey had worked with Allen Deary, vice president of OPD Services for Sierra Atlantic, previously. “I liked their style, quality, and delivery,” he says.
Sending the work to both China and India
But this engagement had a new twist. Last time, Sierra Atlantic sent all the work to China. The Indians are strong in Oracle work, so the Oracle projects went there. The Chinese handled all the Unix server and embedded assignments.
“USA Technologies let us determine where to send the work,” says Deary. In addition to China and India, Sierra Atlantic has development enters in Europe and North America. “They listened to our suggestions and provided plenty of feedback.” He says both teams “are smart and have a strong work ethic. But they don’t think the same way. That’s important,” he adds.
“We told them here’s what we expect. Here’s the return we want,” says Shirey. Deary adds, “They told us they want to get the product out faster with more features before their competition does.”
USA Technologies appreciates the speed; it cut its time to market in half. But it also enjoys the development cost savings, which are about 40 percent.
The partners have finished their first 11 months. There are a few more years to completion as new projects and requirements keep growing.
In addition to getting what it expected, Shirey says USA Technologies enjoyed some unexpected benefits from work outsourcing. It forced his department to refresh the documentation for each process. Then Sierra Atlantic’s engineers “took a deep dive from an outside perspective.” The end result was enhanced documentation that was “bullet proof,” says the executive.
He also likes the cross-cultural integration. “We get to share ideas with people with different backgrounds. Different points of view are powerful,” which he finds valuable.
Why this relationship is successful
Shirey says this offshoring project is successful because the partners were careful “to mitigate the us and the them. From the beginning, it was just us.” Whenever they ran into a “hiccup, we dealt with it one on one.” Adds Deary, “It’s the responsibility of both sides to take the relationship seriously.”
GK Murthy, senior vice president, Enterprise Solutions, for Sierra Atlantic, says 50 percent of offshoring’s success comes from the “soft part” of the relationship. That includes:
- People
- Process
- Communication and collaboration
- Measurement
- Reporting
He says both sides “have to talk to each other in a way that builds trust.” In addition, Sierra Atlantic will bring engineers to USA Technology’s Pennsylvania headquarters “to sit in their offices.” In addition, the supplier has sent some Indians to work with the Chinese and the Chinese to work with the Indians.
The offshore development process
The parties used Sierra Atlantic’s Web-based process for managing tasks and communicating between groups. “You can get the same view from a computer in your office, at home, or at Starbucks,” Murthy explains. USA Technologies had to upgrade its software to take advantage of Sierra Atlantic’s capabilities.
The two then integrated their development processes and assigned responsibilities. For example, they made a clear path to report bugs. Murthy says it took one quarter for the teams “to get into a groove” once the work began.
“This is a journey,” Murthy continues. “Together we are building products and then understanding how they behave in the marketplace.” Laundromat users are especially grateful.
Lessons from the Outsourcing Journal:
- An effective work outsourcing strategy in application development is to send some work to suppliers in two countries (India and China, for example), based on each country’s specific level of expertise. Cross-pollination is useful because each team looks at the work from a different perspective.
- When a company can’t hire specialized engineers to meet its immediate application development needs, outsourcing is the ideal solution for meeting customer demands and staying ahead of the competition in the marketplace in the time frame required.
- Outsourcing success, especially when there is an offshore component, also depends on the “soft part” of the relationship, which includes people, communication and collaboration, measurement, and reporting.