December 02, 2010, 11:02 AM — Imagine that your company has never done any offshore outsourcing of IT-never even signed a major domestic outsourcing deal. Where in the world would you begin? Probably not China.
But that's exactly where Marie Lee, senior vice president and CIO for Interval International, a $405 million timeshare broker, sent her company's new application development work two years ago. Geography, according to Lee, is one of the last things CIOs should consider when settling on a service provider. "Our selection was based on the qualities of the IT services partner and whether they met our specific criteria rather than the location of the delivery center," she says.
Tactically, Lee wanted to replace Interval's core applications and move to a service-oriented architecture (SOA). Strategically, she wanted to create an agile IT organization better able to respond to changes in the business. Outsourcing new application development to an offshore provider with experience in SOA and agile development would enable a quicker-and cheaper-transformation on both fronts.
Influenced by the recommendation of IT leaders at former sister companies of Interval, Lee awarded the work to Freeborders, a San Francisco-based provider of IT services from China. "They had the exact mix of skill sets and industry expertise that were needed for the project," Lee says.
And the price was right. Development costs, even based on a blended rate of on-site and offshore resources, were one-third less than if Interval had done the work in-house.
The Shenzhen-based application development staff had "comparable expertise" to counterparts in India, says Lee. But there were China-specific risks Lee had to mitigate. "One of our requirements was that the team members have adequate English language skills," she explains.
Lee addressed the perception of intellectual property risk in China by involving Interval's CSO and legal department in the vendor evaluation process and worked with them to develop a three-pronged security approach combining, technical security applications, strict HR processes, and governance. All offshore professionals are screened and trained on security procedures, and access Interval's development environments via a virtual desktop. All source code and data are stored in the U.S.