By
Bob Thilmont
April 2006
At the February, 2006
Northern Colorado Consultants Forum meeting we evaluated a project where an
Indian offshore engineering firm successfully won a local contract against
several Northern Colorado engineering firms.
The interesting thing about this project was that the customer was a small local startup firm and not a
multinational corporation. The Indian
company also had a sales office in Colorado.
Situation:
A Northern Colorado startup had
employed a Boulder based Web design
company to develop a website. After
about one year of operation, the site started to be plagued by some very
specific performance issues. The client
approached the Boulder Company to
fix their problems. After several
attempts the Boulder Company was not able to fix the problem even though the Boulder Company billed all the additional
evaluation & analysis work to the client at an hourly rate.
The client then began a search for a new vendor. They came up with the following vendor
selection criteria:
- All
work must be fixed price (not hourly)
- They
looked for high quality (well tested solution)
- They
wanted a firm with a great track record (i.e., good references)
- They
wanted a firm that wanted to make “Their (the client’s) business
successful”
- They
wanted great customer service (they wanted to feel important)
- They
looked at overall costs (though not the most important criteria)
- Finally,
they were interested in anyone who could fix the original problems (though
this was optional and not a required part of the criteria selection)
Selection Process
The client short listed four companies. Three of them were locally based Fort Collins
(CO) companies. The fourth was an
India-based company with a sales office in Thornton,
Colorado.
The Indian company was selected over the local companies. The Indian company met all of the client’s
vendor selection criteria and in addition agreed to work with the client to
resolve the performance issues of the original design.
Though the Indian customer was the lowest cost it was their
attitude and desire to make the startup firm successful that won the
contract. We should mention the cost of
the contract was less than $1,000.00.
Thus, most companies might not have looked at the Indian company based
on the low cost of the project. However,
both the client and the Indian company realized this was just the initial
project to be worked on and that there was the potential of many more projects
should this initial project prove to be successful. Also the client was in a position to
recommend the new vendor to other people as well.
The following summarizes the analysis used by the client:
|
|
Indian Company
|
Fort Collins
Companies
|
Comments
|
|
Pricing
|
Fixed Project Price
|
All three wanted hourly
pricing
|
The local companies didn’t
acknowledge the client’s desire for a fixed price!
|
|
High Quality
|
Offered minimally tested
solution
|
Wanted to charge
additionally for all testing
|
|
|
References
|
Great
|
All had good references
|
|
|
Desire to make the client’s business successful
|
Listened to what the client
needed. Probed to learn what else
needed to be included
|
All three were only focused
on the technical aspect.
|
Local companies did not
employ Customer relationship building in their business model
|
|
Customer Service
|
Client focused
|
Task focused
|
|
|
Overall Cost
|
Lowest
|
Competitive but not the
lowest
|
Had any of the Fort Collins companies exceeded the Indian company on all criteria,
then the client would have chosen the local company!
|
|
Ability to fix the original problem
|
Offered to fix problems for
a fixed price
|
Offered to fix problems for
an hourly price
|
|
Performance:
The Indian company met or exceeded the client’s expectations
and has formed a strong working relationship with the client for future projects. In addition, the client is now in a position
to give the Indian company referrals.
Lessons to be
learned:
There are several lessons to be learned from this
analysis. First of all, offshoring is in
our backyard. No longer is it a focus of
large multinational companies. Small
companies can take advantages of the same opportunities. Secondly, price is not necessarily the
driving decision for all offshoring programs.
In this example, overall cost was the fifth criteria. Had any of the local companies focused on
customer relations they may have been the chosen company. Finally, by placing an office in Colorado,
the Indian company demonstrated a desire to be customer focused. When I interviewed the Vice President of
Sales of the Indian Company, he emphasized customer service and satisfaction
over everything else.
We hope you have found this paper of value to you. Please feel free to share your offshoring
experiences with us.
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