2010 Economy: Outsourcing Provides a Competitive Edge

Economists that typically provide opinions on the economy have various outlooks for 2010.  However, most agree that recovery from the 2008-2009 recession has already started. The chart below shows that the US experienced a 3.5% growth in GDP in the 4th quarter of 2009.

Federal Reserve Chairman, Bernanke, told the U.S. Congress in January that the Fed believes there is a reasonable prospect the recession that took hold in December 2007 will end this year and that 2010 will be a year of recovery. ₁

The question is not whether to make a move, the question is when to move.  According to a report by the UCLA Anderson School of Management, analysts predict an average quarterly growth of 2.7% in 2010 and an average of 4.1% in 2011. ₂

The question is - after two years of recession - what does a positive outlook mean in terms of business strategy and more specifically IT strategy?  Again, opinions will vary.  However, 2010 certainly could become a year of healthy upwards growth.  As companies review budgets, IT strategy and business performance, 2010 may prove to be a fantastic year to begin re-investing in products and initiatives that were cancelled or paused due to the financial crisis. 

In many cases, the initial year of recovery can be viewed as a staging period, that may set the pace for the next economic recovery cycle.  What does this mean?  As in a game of chess, businesses that make a timley and intelligent move, could be the new leaders in their industry or sector.  In the upcoming quarter, several factors can influence decision-making during this initial stage of recovery:

1. Are there projects that had real business value, that were forgone due to the 2009 economic crisis?  If so, how can these be reinvigorated, at lower total costs, to recoupe the foregone return of investment?
2. The economy is still weak and the pace of recovery is unpredictable.  Given this condition, how important is it to ramp-up on staff to support projects for 2010?   Or, is it possible we should wait another year?
3. Assuming speed-to-market is an advantage in a weak and unpredictable economy, can savings and a speed advantage still be achieved together?

In all three cases, Excel SoftSources can help businesses reduce costs and achieve a higher degree of business performance.

Re-Invigorating Cancelled or Foregone Projects

When the DJIA dipped below 10,000 for the first time in over a decade, both businesses and consumers panicked.  Experience shows that this is a natural response - to over-reaction to the market.  As a result, many businesses over-reacted and cancelled or stopped projects, with high perceived business values.

Excel SoftSources provides a means to reinvigorate projects, at reduce costs, thereby realizing the originally planned return on investment.  Excel operates using an Agile Organization Model.  What does this mean?  Excel provides highly skilled resources, maintains a deep bench, and plans and executes projects using flexibile pricing models and methdologies.  For example, businesses that are not accustomed to the Agile Software Methodology, can rely upon expertise and experience at Excel, to deploy new functionality in a faster and incremental fashion.  Or, conversely, companies that are not familiar with Big Bang methods such as Waterfall, can utilize Excel to implement a large release of functionality.

For example, startups can take advantage of the Excel Managed Service pricing model, which provides the lowest total cost of ownership to the customer and a fast speed-to-market capability.

Unpredictable Workforce Demand Calls for an Agile Workforce Supply

Excel streses the Agile Workforce Model to provide elasticity in supply and demand curves during periods of unpredictibility.  The traditional means of manging human resources, especially for software projects, is to plan strategy and budget out this year, to be executed in the following year.  This model works well during periods of relatively stable growth or decline, because typically it takes about a fiscal year to ramp-up human resource efforts and execute plans.   However, how well does this model work, when the economy is somewhat volatile or unstable?   The answer is simple enough.  If you hire more staff, than work that is scheduled, you are overstaffed.  And, conversely, if you hire less staff, than you have work, then you are understaffed.  The effect is as such:

1. Overstaffed:  High direct labor costs.  Higher indirect labor costs.
2. Understaffed:  Lost opportunity costs.  Potential loss in marketing position.

The Agile Workforce Model is designed to reduce both conditions and permit a "smoothing" of resource supply and demand.  The model is not perfect.  However, the goal is to never to be high or below th mark such that costs become stifling or the over-arching business strategy is missed.

Speed-To-Market and Costs Savings Can be Achieved Together

One of life's lessons that we all have heard is - you usually get what you pay for.   For instance, if you buy a cheaper product, you tend to sacrafice quality or functionality.  Or, if you buy something more expensive, it can be faster.  The point we make here - is it is possible to achive faster and cost-savings together.  Excel certainly help reduce costs.  This is plainly obvious - our rate cards are 20-50% less expensive than on-shore resources.  However, an Excel produce our deliverable faster? 

Since Excel Stress the Agile Workforce Model, higher speed to market can be achieved.  Because Excel has a lower burn-rate, it can maintain a much deeper bench than onshore resources.   Excel is also agnostic when it comes to methdology and can adapt methodology to the needs of the project, which include any factor including timeline.  At the inception of larger projects, Excel plans with the client executives the correct project management approach and software methodology to deploy functionality faster. 

Finally, Excel hires resources that possess good hard and soft-skills.  Since we operate on a similar time zone, a high-level of collaboration is possible, which increases productivity and reduces re-work.  As much as possible, Excel stresses an agile workforce, which includes cross-pollination of knowledge between on-shore and near-shore teams.

Excel strives to turn speed-to-market from a threat and risk to a strength and opportunity in your organziation.

Excel SoftSources has the capability to bring your business out of a recessed-state with high speed-to-market capabilities provided by an agile workforce model.

 References

^₁ Coghill, Kim (2009). "Bernanke sees U.S. recovery beginning in 2010", Reuters. 

² Clifford, Catherine (2009),  "2009 Recovery Will Be Hard - Recovery in 2010", CNN Money.