Do Your Homework: Know Your Offshore OptionsDo Your Homework: Know Your Offshore Options

One of the biggest challenges for small and midsize businesses that want to place IT work offshore is finding a reputable provider. While large companies typically have entire departments dedicated to identifying and vetting contractors, most smaller companies don't have such in-house expertise. Vendor selection "can be a discipline in and of itself," EquaTerra analyst Stan Lepeak says. And simply doing a Google search doesn't help much. The search engine yields more than 700,000 results for "offshore programming."

But managers at small and midsize businesses looking to find IT help in, say, India or China, do have some resources at their disposal. Participating in user groups at small-business associations and listening to word of mouth are among the best ways to zero in on potential contractors, Gartner analyst Frances Karamouzis says. "Informal networking is going to be one of the biggest drivers of offshoring in the small-business community," Karamouzis says. Companies that have enjoyed success with the process can tell you who they've dealt with and who's reputable, she says. Many Russian-owned small businesses in the States are hooking up with programmers from the former Soviet Union through community forums, she says.

Trade associations also can be good sources of information. The National Association of Software and Services Companies represents Indian outsourcing vendors and provides information on its members. It conducts events to educate technology managers about outsourcing, such as panel discussions for CIOs from smaller businesses interested in offshore outsourcing.

There are more and more "brokerage" Web sites emerging to link sellers of offshore services with prospective buyers. In addition to Elance, which allows buyers to share feedback, another increasingly popular site is TopCoder .com. Would-be sellers of offshore programming services must first pass numerous quality-control tests before they can earn a listing on the site, TopCoder says.

EquaTerra's Lepeak says any of the above methods are preferable to responding to unsolicited E-mails that offer Java programming for $5 an hour--an increasingly frequent scourge in the IT manager's in-box. "That's about the worst way to pick a vendor," he says. "You have no idea who you are dealing with."

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Small-Scale Offshoring