Tips for Managing Offshore Suppliers

Offshore suppliers are an increasingly important part of many projects, especially those involving software. Globalization and improvements in communications technology make worldwide virtual teams a cost effective way of delivering projects. If anything, this trend is increasing. How does this impact project managers? Read any of the major project management methods or bodies of knowledge. You will find nothing which cannot be applied to a globally based team, and nothing which indicates virtual teams are a problem to manage. Yet in reality, offshore teams create real challenges for project managers. In this article I explore these challenges and suggest ways to diminish them.

A couple of examples

Two of my projects show the increasing complexity of global project teams. In the first, I was asked to assist a technology start up. I have been involved in several start ups. The need to keep costs low means that office space is a luxury that is not immediately invested in by many start ups. Virtual team working is common. Conference calls, email, instant messenger, Skype and virtual meeting software play a central role. On this project there was a small team based across the UK, Spain, France, Germany, Czech Republic, Singapore and New Zealand. Most of us never met physically. We were brought together quickly with short project timescales and very constrained resources. It was, to say the least, interesting!

In the second project, a UK organisation was involved with offshoring development and outsourcing ongoing support to an Indian systems integrator. There is nothing unusual with this scenario. What was interesting was that the Indian firm subsequently subcontracted part of their work back to another UK company. My client was this UK business. My client, ironically, had a long standing relationship with the original UK customer from other projects. This made the dynamics of relationships very complex.

Ok - but so what? What is the project management challenge?

One way to understand the challenges of an offshore project, is to start by thinking about an ideal project. Ask yourself – what are the characteristics of an ideal project? A brain-storming session with a few colleagues is a good way to do this. Soon you will have a list of factors or characteristics of your perfect project. You might find items listed such as effective sponsorship, limited and well controlled change, sufficient dedicated resources and so forth. Analyse each of these characteristics one by one. You will find that many of the characteristics of the ideal project are modified by offshoring. Offshoring has proven its value, but it is a distinct project environment and poses various challenges for project managers.

There are 4 factors about offshore projects compared to the traditional projects that I think are crucial to understand. If you are a project manager working for the company that engages an offshore supplier, compared to engaging an in-house or local team:

  1. Communications are inhibited;
  2. Relationships are harder to develop;
  3. Your ability to check and confirm progress is limited;
  4. The power of the project manager is restricted.

Dealing with inhibited communications

A virtual team cannot help but have poorer communications than a well functioning physically co-located team. If you are working next to someone, dialogue can be frequent and instantaneous. When a problem arises you are aware of it, and can immediately start working out resolutions. The better you understand the status of a project, and the sooner you are aware of issues, the better placed you are to actively manage the project. If you are delayed in finding out about a problem, you have less time to resolve before it impacts project time lines. Rarely is the interaction with an offshore team as immediate or interactive as with a local team.

The answer is to work as closely as possible with your offshore team to minimise delays in communication and to maximise intimacy. If you have an offshore supplier delivering for you, no doubt you will have periodic conference calls set up. These may be essential, but they should not be the sum total of dialogue. Try to make dialogue regular and continuous. Keep those calls and instant messenger systems going. If costs are an issue, there are solutions like Skype. Encourage dialogue across the project team, and try not to make all communications feed through fixed meetings.

To make this easier to understand, let me give you a project scenario. An offshore supplier has been appointed and a project is started. The weekly conference call will be held for the first time this week. The conference call is really important, needs to be well managed and minuted - but I also want to encourage faster, informal, and, as close as possible to, continuous communications. How do I do this? I start to call key people in the supplier team on a frequent basis - possibly every day. The typical people I will call are the supplier's project manager, their lead designer or architect, and possibly their account manager. To start with there is not much to talk about - but it does not have to be a long call. The purpose of the call is to build a relationship and to develop trust. What I am trying to do is to ensure when things happen that I should know about I get a phone call back. I want this phone call to happen quickly without layers of tweaking of messages by account managers frightened of upsetting their client. For this to happen the offshore supplier's project manager has to feel it as natural to call me up and chat about the project as it is to talk to anyone else.

Building relationships with offshore team members

One of the results of poorer communications is second of my list of issues. Relationships are harder to develop. There are many factors that contribute to your success in building relationships, but communications are central. The relationships you build are largely developed from what and how you communicate. Most of us develop better and deeper relationships with those we are in close proximity to. Relationships are central to project management. Of course, you can manage people with whom you have a limited relationship. But it is a lot easier when you have a relationship. Someone who has a positive relationship with you is far more likely to be honest about progress, issues, risks and concerns, and is likely to update you to problems more quickly. They are also more likely to go that extra mile when it is required.

How can you resolve this? Again, one key aspect is to try to ensure you deepen your communications and make them regular. There is no doubt that relationships are usually better with people who talk both more often and about a broader range of topics. If possible try and bring the team physically together at least once. This is often not economically viable, but for large programmes, the cost of a few flights will be recouped from greater productivity, better understanding, and generally more open relationships.

What to do when you can’t directly inspect progress

If a team is remote, progress tends to become harder to track and verify. If your project requires you to manage someone building a wall next to your office it is very easy to determine how far they have got. If they are thousands of miles away this is difficult. Additionally, as many offshore deliverables are relatively intangible, like bits of software, you will often find that the only measure of progress you have is what your offshore partner tells you. This is not ideal for project managers, and is made worse if you have little or no relationship with that supplier. Finding ways of converting vague supplier statements of progress, into tangible milestones is very helpful. Otherwise, as project manager all you become is a channel for communicating what the supplier has told you. This is hardly value adding.

Unfortunately, I don't have a simple or absolute solution to this problem. But one tip is to review the supplier's project plan at the start of the project. Ensure the supplier inserts regular milestones you can explore and discuss with them. Give the challenge to the supplier to find ways of giving you confidence in progress relative to those milestones. Make it clear you are not just looking for unsubstantiated verbal updates - you are looking for confidence.

Your limited power

Finally, with an offshore supplier the power of the project manager is generally reduced. This might seem a surprising conclusion for some. Surely your power is inherent in the contract and the possibility of contractually based sanctions? Technically, yes, but calling on the contract should always be a last resort. Frequent reference to the contract is an indicator of a troublesome project. If every time you deal with your offshore supplier you have to refer to the contract, conversations become stilted. Many details of a project need debate and consensus, especially with software. Requirements are often ambiguous. You will not get your way if you rely purely on pummelling your offshore supplier with contract terms. You have to influence them. Of course, many very effective project managers are used to having little formal power and rely on influence. Virtual projects extend the need for strong influencing skills.

Overcoming the challenges

There is a lot more to managing offshore projects. I have not touched on topics like cultural differences and language barriers. There are the logistical issues of working across time zones. Contracts, especially those created for different legal jurisdictions, can be a maze. Inconsistent assumptions create problems. Different organisations, different countries, and different cultures lead to diverse assumptions. This is a major source of project risk.

Some of the challenges and pleasures of project management relate to using the full power of the tools, methods and approaches of our discipline. But it is people who deliver projects, and irrespective of your situation, project management is, in the end, a form of people management. With offshore projects many of the biggest issues are related to people management challenges. Managing people you have never met, who have different working practices and diverse motivations is demanding. However, if you are sensitive to these issues they can be resolved. Work hard to ensure communications are continuous, do what you can to build relationships, use your influencing skills effectively and most of the challenge of offshoring can be overcome. It is these people issues that I find the part of project management that many project managers forget in their haste to do the essential project management processes.

I’m really interested to hear your experiences and lessons in this field. Offshoring is hardly new, but there’s still lots to learn. I’m not aware of any consolidated body of knowledge on project managing offshore suppliers - if you are let me know. Are are there any regular challenges you have experienced - and how have you overcome them?

Related content:

5 Reasons Why Project Managers Should Use Facebook
How to Manage Management Consultants
Learning from New Product Development Projects


I like this statement:
"Some of the challenges and pleasures of project management relate to using the full power of the tools, methods and approaches of our discipline."

I can say that its true, in offshoring you need to have an offshore best practices, this is key to make your business succeed.

Hi Jessica

Thanks for your comment, it's always good to get some feedback!

Are there any specific aspects of offshore best practice you think are really important? Richard

Add new comment

- nice2 - sales1