Outsourcing the Quality function

In many enterprises, software quality leaders are facing a serious quandary; addressing the complex and ever-changing needs of the business, while maintaining high quality service levels with fewer and fewer resources. Much like kayakers paddling upstream against a fast moving river, software quality leaders are searching for answers to help them stay on top of the water and avoid the obstacles scattered along the way. More and more organizations are looking toward outsourcing as one way of equipping themselves for the growing complexity of today's environment. Outsourcing the software quality function can achieve the following objectives:

  • Designing, delivering and coordinating the software quality function on a worldwide basis to support global expansion.
  • Developing more effective quality services to address a range of issues, including the challenges of an aging workforce, regulatory compliance, as well as increasingly more complex bundles of products, services and solutions.
  • Reducing costs as the enterprise faces continued pressures that limit quality budgets and headcount, forcing quality leaders to continually "do more with less."
  • Reaping the benefits of enhanced technologies (such as automated testing and performance tools) without the need for significant capital upgrades and additional technological skills.

The evolution of quality outsourcing mirrors much of what we have seen in the HR outsourcing landscape. Many of the original HR outsourcing arrangements focused on individual processes, with a strong emphasis on administrative areas such as benefits and pension administration. However, over the last several years, there has been a trend toward integrated, multi-process outsourcing that incorporates more strategic capabilities, such as recruiting and compensation planning. The quality function appears to be progressing through a similar transformation, incorporating the entire software quality function, including test design, development and delivery of all functional, performance and system functions. As the outsourcing market grows and matures, one expects to see continued out-tasking, more end-to-end outsourcing and an increasing number of deals where the entire quality function is externalized. The following highlights some handy lessons gleaned in outsourcing SQA in one of the top 10 software companies in the world.

Four drivers of success

Four pivotal actions are required of software enterprises as they consider outsourcing:

  1. Identify the appropriate leadership capabilities required to oversee the overall outsourcing effort.
  2. Create an overall transition management plan that identifies all the activities required to transfer responsibility to the vendor.
  3. Develop an ongoing governance and relationship management structure to address conflicts and build an effective working relationship between the client and the vendor.
  4. Build a measurement and reporting framework that communicates how well the outsourcing arrangement is operating.


Let's analyze the first driver; Identify the appropriate leadership capabilities required to oversee the overall outsourcing effort.

Given the strategic importance of, and complexity associated with, outsourcing the quality function, organizations need to identify an individual, or individuals, early in the outsourcing process who have the right skills and capabilities to lead the effort. For many companies, this initial challenge becomes a significant issue, as the individuals who are most likely to be effective at taking charge in this new environment are often attached to other efforts and may be difficult to discharge from their original duties. The skills and competencies that are needed to lead an outsourcing effort are very different from the skills garnered from leading a functional department. In an article published in the Sloan Management Review in 2000, Michael Useem from the Wharton School of Business and Joseph Harder from the Darden School at the University of Virginia identified six key leadership capabilities that are valuable in outsourcing arrangements.3 Though the context in which they were writing focused primarily on IT outsourcing, the six capabilities provide a relevant framework for the types of leadership skills needed by quality professionals as they take on outsourcing responsibilities.

Strategic quality vision; To be able to determine what capabilities need to be handled internally versus outsourced to an outside vendor, the leader of an outsourcing effort needs to have a solid understanding of the firm's existing and future business needs and its current quality capabilities. Further, the individual must be able to articulate how outsourcing can be a cost-effective alternative to internal resources and how an outsourcing vendor will fit into a larger portfolio of software projects.

Analytical approach to problem solving; In a quality outsourcing environment, the focus moves from managing a set of internal activities to evaluating a set of outcomes and results. Therefore, the leader must be able to analyze and draw conclusions from key metrics, such as service level agreements, to validate that the vendor is delivering on its promised commitments. Also, he or she must be able to evaluate the quality outcomes and determine how those are contributing to the organization's goals.

Deal making; Leaders of an outsourcing effort need to understand both the current and projected capabilities of outsourcing vendors and be able to make decisions regarding their viability as potential partners. Once the potential vendors are determined, the quality outsourcing leader needs to be able to work effectively with other organizational stakeholders, such as the legal and procurement functions, to put together a working arrangement that is agreed to by all parties.

Partnership governance; Given the complexity and interdependence required for a successful outsourcing arrangement, the organization and vendor must frequently interact with one another. Therefore, the ability of a leader to maintain an effective relationship with peers on the vendor side is paramount. This includes being able to address small problems before they become larger issues, while at the same time protect the company's longer-term interests.

Change management; Given the magnitude of change associated with end-to-end outsourcing of a function the size and magnitude of the quality function, an outsourcing leader must be able to manage the information and involvement needs of a number of stakeholder groups. This includes individuals at all levels, from internal customers to staff whose jobs are being displaced, relocated to a vendor organization, or significantly altered to meet the needs of the new environment.

Program management; With numerous operational and transformational initiatives occurring simultaneously in a quality outsourcing environment, the leader must be a skilled program manager. Among the key skills necessary is the ability to understand the links and interdependencies between projects, allocate and juggle resources, identify potential roadblocks and communicate status to a variety of interested parties. Because one individual may not possess the full complement of skills required, companies should be open to supplementing with capabilities from inside, or even outside, the quality function when managing a large-scale outsourcing effort. For example, deal making and partnership development skills may be more readily found in a business development or alliance management function. And program and project management capabilities might be more common in an IT department or central project office function. In my experience, two individuals were selected to lead the outsourcing effort. One brought with him a strong sense of the business issues facing the organization and experience in pursuing deals with a number of learning partners. The second person had a background in managing a the quality outsourcing effort, and provided a wealth of operational knowledge on developing metrics and running a large and complex outsourcing program. By combining the skills of both individuals, the organization provided the groundwork for setting up an effective outsourcing relationship.

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