| QUESTION & ANSWER |
An offshore conversation: Real estate CIO says communication is key |
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By Karen Guglielmo, Editor
24 May 2004 | SearchCIO.com |
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With more than 200 agents, 40 staff, and $1 billion plus in real estate sales, McGuire Real Estate is the one of the leading real estate brokers in San Francisco. However, its infrastructure wasn't keeping up with the growing demands of the company. So Vivek Asija, vice president and CIO of McGuire Real Estate, set out to improve the company's systems and save some money in the process. The goal was to conduct a complete revamping of the company's infrastructure and implement an enterprise-wide total broker system called MISSILE (McGuire Information System for Sales, Inventory, Leads and Expenses). The new system would centralize all the back-office operations and automate all the functions on the company's Internet site.
After interviewing a number of U.S. and international vendors, Asija partnered with Mumbai, India-based Tata Consultancy Services to design, develop and implement this new enterprise-wide system. The offshore project kicked off in September 2002 and was completed May 2003. According to Asija, working with an offshore provider saved his company time, money and provided access to world class skills. In this exclusive interview with SearchCIO.com, Asija tells us about the obstacles of working with an offshore provider, how the experience made his organization more competitive and why offshore outsourcing is more than just the latest IT fad.
Gartner has said that CIOs need to embrace offshore outsourcing and set an example within their companies by showing what should and should not be outsourced. Are you leading your company's offshore outsourcing efforts? Do other executives look to you to set the example?
Vivek Asija: Yes, I am. I am leading these [offshore outsourcing] decisions. We do things in a collegiate fashion here. We manage by consensus, but ultimately the business side looks to me as the IT expert.
Did you get any push from management about your decisions to go offshore?
Asija: No. Their take on it was that there's no difference between a programmer sitting in New Delhi or one sitting in San Jose. The reality is that most vendors are not going to sit in a desk right next to your office. So management was very open-minded about this decision.
What were the drivers/main reasons for going offshore?
Asija:
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Our offshore outsourcing agreement is branded as an Indian thing. But it's really not about India; it's about a global company with 43 offices in the U.S.
Vivek Asija
CIO, McGuire Real Estate
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At first, the main driver was cost. We were interviewing custom software vendors to develop a total intranet/extranet, workflow management system. During this process, we realized that cost wasn't the only driver; quality and flexibility were just as important. When you do custom software, things pop up. You need a vendor that can absorb these sudden changes and not nickel and dime you. Many of the American vendors operate under lower margins and higher cost structures and cannot absorb change requests.
The Indian vendors were willing to add things in that were not originally in the scope of work. They knew it would make a better system. We found this partnership way of doing business with us very impressive. In contrast, one of the big U.S. vendors we interviewed made us feel very nickeled and dimed. They kept telling us, "this wasn't addressed in our scope of work."
So ultimately [offshore outsourcing] was an easy sell because it's cheaper. But what's really amazing is the kind of people we were getting. They were so incredibly good. They didn't have the domain expertise, but they knew SQL server inside out and had a great work ethic. And because I was so hands-on during the process and knew the domain, I could direct them and, ultimately, shape the solution to best fit the needs of a real estate company, something they could not always do without the domain.
What countries are you outsourcing to and why?
Asija: India is the only one. We chose India because the quality of work is high -- they are proven leaders in this area -- and the costs are low. In addition, the Indian firms have a very good U.S. presence. We currently have a maintenance agreement with one Indian firm servicing us from a U.S. location, which is very reassuring. My account manager was based in San Francisco and was accessible throughout the project.
Our offshore outsourcing agreement is branded as an Indian thing. But it's really not about India; it's about a global company with 43 offices in the U.S. The bulk of the work was actually done in India. But it's reassuring to have a state-side presence as well. I knew that in the event of a war or natural disaster, they could move the project outside of India.
Did you include a contingency plan to address war or other situations in your contract?
Asija: Yes, we did. It states that if there are any acts of God or war, they will move the work to a suitable location at the same price. We won't pay more even it's a higher cost center. They were fine with that.
What do you find is the biggest obstacle to sending work offshore? Any surprises that IT executives new to the offshoring trend should be aware of?
Asija:
I'd say the biggest obstacle is communication. Sometimes language is a barrier as well. When I say communication, I mean in the sense of e-mail and correspondence. When you're working with an offshore team, a lot of communication is done over e-mail. This form of communication doesn't always do the message justice in terms of tone of voice, intent, and so on. In addition, teleconferences are rough because of the time zone differences. I would often find myself working all day and then doing a teleconference at night. It's like working two shifts.
To address these communications issues, I would recommend asking the project leader (PL) and group leader (GL) -- who are responsible for product delivery from the Indian side -- for status reports in writing. These reports can document any schedule slippage. By making them put it in writing, it forces them to constantly be in line with the original scope of work. The way it works is that you have an account manager in the U.S., then a GL in India who manages several projects and allocates resources. The GL hires a PL from within their firm, and the PL is responsible for managing the programming team. You need to escalate issues to the GL when necessary and take advantage of the GL's oversight on your project. This was the way it worked with us and Tata Consulting Services.
Click here to read part two of the interview.
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