For the many enterprise companies that do outsource, the percentage of outsourcing they do for IT related services is on average 50% and in some cases 80%. These statistics represent dozens of enterprise companies that our network is involved with. These stats may surprise some but they represent several trends, one of which is our topic and a common dilemma.
Outsourcing percentages that are this high translate into the reality that half the personnel on a given IT project team will be made up of a vendor’s staff. It is common to find non-company employees at many different levels in an IT organization serving many different roles. The point being that most large enterprises cannot scale fast enough organically and therefore rely upon vendors to bring the scale and the skills as needed.
All this is good and an accepted business practice, however, how does a company address the need for training when it largely involves training teams that are mostly made up of vendor personnel? As organizations take on change programs or are simply introducing new process or methodology to operate better there is a need for training and learning for everyone on the team if the project objectives will be met.
Company A has recently invested in redefining it’s business strategy. The results have prompted the organization to explore how they will innovate and get new products and services to market faster, at less cost and with the right set of features the first time.
The decision from IT is to explore improved methods for how the organization is run but also how software is made to support the business requirements coming through. Company A outsources approximately 60% of it’s IT functions using a combination of vendors that provide program/project management, offshore application development, ITO services and some higher end process consulting.
Company A takes on the strategic decision to adopt agile practices and blend them into their existing SDLC in order to accelerate development and operate more efficiently. A plan is defined, a key partner is chosen to help with the transition, teams are selected but a glaring challenge is observed.
While there is a commitment to adopt this change it is apparent that the vendors required to support the related projects have little or no agile experience. The other challenge is that the commercial relationship is largely rate-card based and not focused on outcomes or outputs that are tied to specific value objectives.
To try and change vendors is too costly en mass, although maybe a small set of projects can be transitioned. The challenge is that the investment in the existing vendor community is simply too large and entrenched. What happens now? How does Company A tackle the challenge of paying for the vendor’s staff but now also paying to train them so that the projects are supported and executed correctly?
One option is for Company A to not pay for the vendor’s training but that doesn’t solve the problem because the problem isn’t who pays for training. The problem is that the project is at risk if the whole team cannot execute using a consistent approach.
Since the vendors play a critical role and are very much needed there are some possible solutions to consider.
- Develop a training curriculum that addresses all the necessary needs for learning across the whole team
- Put together the business case for this investment
- Revisit the commercial agreement with the vendors in order to:
- Balance the investment needed for training the vendor’s teams with the project outcomes/objectives
- Agree not only on service levels but also on outputs, e.g. number of stories delivered
- Reset MSA terms to ensure the teams stay intact and that there is some recourse if changes are made
- Timebox the project and the contract supporting it
The concern is always that a company is training a vendor’s teams and then those teams will go elsewhere. This is where proper planning, clear commercial structure and good relationships play a critical role. Investment in the whole team is a good thing and typically brings a strong level of unity to the company and the team.