A master work agreement should not only detail specifications for the work to be delivered, a timetable, and costs, it should
also cover issues such as intellectual property. Rules covering code reuse should be spelled out as well, Latty says.
The engineering guidelines Latty uses are more specific than the SEI's programming assessment model, he says. "It's a document
with basic guidelines for writing quality code, involving procedural guidelines and steps for, for example, user interface
standards, how to do file locking correctly."
Follow the Money
Users agree that cost remains a driving factor in looking offshore for application development help.
"If anyone tells you he is making a decision to outsource offshore and that cost is not the first criteria, then he's kidding
you and himself," says Craig Maccubbin, vice president of technology at LasVegas.com.
LasVegas.com, a travel-services portal, uses several offshore outsourcers including Epam Systems, which not only developed
the site's content management system but takes on one-time custom code projects and new system development as well.
Epam is based in Princeton, N.J., but has most of its programmers in Belarus and Russia. Maccubbin estimates he pays offshore
programmers about a third of what he would have to pay for internal programmers.
Giga's Moore says that a 25 percent to 45 percent savings is typical, but it also depends on how efficiently the user's IT
processes are in the first place.
A Resources Pool
Cost savings, however, should not be the only result of using offshore resources, according to Anant Ahluwalia, IT director
at Maine-based food retailer Hannaford Brothers.
"We've used offshore staff numbering … four times the number of our internal staff, and that's where the competitive advantage
is. To have the ability to tap into such a vast resource pool in a flexible way levels the playing field against the giant
retailers," Ahluwalia says. "When necessary, we can use this resource pool to ramp up new systems quickly."
Indian developers from Infosys Technologies upgraded CICS (Customer Information Control System) Cobol systems to IBM's DB/2
when Hannaford needed to double the transaction capabilities of supply-chain systems after the company's acquisition of the
Kash n' Karry supermarket chain.
The decision to use offshore outsource partners was a strategic one made by company leadership, Ahluwalia says. Hannaford
first started using Infosys to update legacy systems for the Web, when many U.S.-based Cobol programmers were scurrying to
finish Y2K projects, and the relationship grew from there. Now Infosys typically does work involving legacy system upgrades,
ports of applications, and expansion of current capabilities. Hannaford itself, however, works with its customers to determine,
for example, how supply-chain systems can be tweaked to best meet future demands.
"We need to stay a step ahead of our customers, and that is something that our own people, who have the experience and knowledge
of our customer's business, can do best," Ahluwalia says.
Staff Buy-In
IT executives agree that strategic decisions about what can be outsourced need to be made at the senior management level,
but they also agree that the IS rank-and-file need to be on board.
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