I recently came across an interesting article written a few years ago, still, illustrating perfectly the benefits of an agile approach to outsourcing as we practice and advocate so actively at Pantha Corporation:

Everything You Know About Offshore Outsourcing is Wrong

As you can read, one of the largest European bank (ABN Amro) found satisfaction with this model a while ago. This corporation undertook a major strategic change a few years later, fully embracing outsourcing and restructuring accordingly. They also ended up working with multiple suppliers rather than one large one.

Several aspects spoke about in the article syncs amazingly with our experience at Pantha and lessons learned found their way into our framework documentation. Here are some snippets matching the Pantha way:

Agile methodology works best for fast paced application development:

"... the bank [ABN AMRO] 's North American technical architecture group deliberately sought out offshore providers who were not focused on the traditional development processes."

Iteration period needs to be defined on a case by case basis, depending on the context. Success can only be found if the entire project team (client, offshore supplier and Pantha) conforms to our framework:

"We use iterative development in two-week intervals. While one iteration is underway, we start on the next one,"

"It turns out that just because you use short iterations it doesn't mean you have no process."

The client's in-house liaison needs to be dedicated and have authority:

"You must have a local liaison, no question," said Matthias Autrata, senior vice president of IT Architecture. "This person participates in one- or two-day design sessions during which 'stories' are written that describe the user interaction with the system."

"Of course, the local liaison also has to acclimate to our culture," said Autrata. "Often they must learn to be more aggressive, to go and get what they need."

Requirements made of user stories including technical solutions, are to be signed-off on the client side:

"Another [lesson learned] was that the ABN AMRO team had to get its own requirements agreed to before communicating with the liaison; working through conflicting or inconsistent needs real-time was not efficient "

etc.

The article also strikes the importance of understanding the culture (both on the supplier's and on the client's sides) which we have put focus on from the beginning and worked through with our long-term-relationship offshore partner in India.

Here below a slide that summarizes our solution to some common issues in an offshore setup: