2.3.4: Planning for Outsourcing – Student Workbook

Plan of Attack: Making the Case for Smart Outsourcing

Setting the Stage

In a recent conversation with the Chief Operating Officer (COO) of a midsize tech company, I learned about a project that had veered off course—not because the product lacked value, but because the strategy behind its outsourcing decision was incomplete. The leadership team had decided to outsource the development of a core product, largely because they needed to demonstrate progress to investors. The logic seemed simple: external development meant lower cost and faster results.

To execute this plan, the company hired four U.S.-based software architects and engaged a development team in India. But there was a critical flaw: no one was assigned to manage the offshore team. The architects wanted to focus on design—not coordination. Communication broke down. Deliverables lagged. The project burned resources without building momentum. The company had “outsourced” development, but not responsibility, not planning, and not leadership.

This is a cautionary tale—one that’s all too common in organizations that see outsourcing as a budget solution rather than a strategic capability.

Why This Exercise Matters

Before you can make recommendations on how to outsource a project, you must be able to answer five essential questions:

1. Why outsource at all?
2. What should be outsourced—and what should remain in-house?
3. How do we select the right supplier?
4. How should we structure the engagement (contract, communication, oversight)?
5. How do we manage the risks of offshoring—especially when it comes to quality, IP, and coordination?

In this milestone, your job is to guide leadership toward better outsourcing decisions—grounded in data, analysis, and professional project management practices.

Objectives for This Task

As a team, you will:

1. Explain the strategic justification for outsourcing portions of the Reckon project
2. Apply the outsourcing lifecycle to structure a sound outsourcing plan
3. Draft a Statement of Work (SOW) to define the outsourced scope and expectations
4. Design a supplier selection process, including criteria and due diligence
5. Identify the risks associated with offshoring and present mitigation strategies

Your final product will be a clear, persuasive Outsourcing Recommendation for the executive team.

 

Step-by-Step Guide

Use the following structure to develop your deliverable:

Step 1: Justify the Decision to Outsource

Your first responsibility is to articulate why outsourcing makes sense for the Reckon project—based on internal constraints, external opportunities, and the project’s strategic importance.

Use a SWOT analysis to frame your argument:

• What strengths or opportunities make outsourcing feasible or advantageous?
• What weaknesses or threats make internal development problematic?
• How does outsourcing align with C-Bay’s broader goals?

 Tip: Use one of the provided SWOT templates to organize your analysis. Anchor your reasoning in real constraints (e.g., staffing capacity, timelines, technology stack limitations).

Step 2: Identify What Should Be Outsourced (and What Shouldn’t)

Review the full project plan for Reckon. Break down the work into logical components or phases.

Then:

• Determine which components are strong candidates for outsourcing (e.g., front-end development, testing, legacy migration)
• Identify which elements must be kept in-house (e.g., system architecture, data governance, product strategy)
• Justify each decision based on complexity, risk, integration sensitivity, and internal capacity

Also describe what resources and roles are required internally to manage the outsourced components effectively.

 Tip: Look for embedded assumptions in the original project plan. Challenge or validate them using your independent analysis.

Step 3: Recommend a Contract Type

Evaluate the different types of outsourcing contracts available:

• Fixed-price contracts
• Time-and-materials (T&M) contracts
• Cost-plus contracts
• Performance-based contracts

For each, explain:

• Pros and cons in the context of the Reckon project
• Level of flexibility vs. control
• Risk exposure for both parties

Then recommend the best-fit contract type and explain your rationale.

Tip: Consider the maturity of the vendor, clarity of scope, and C-Bay’s risk tolerance when choosing a contract model.

Step 4: Design a Supplier Selection Process

Develop a plan to identify, evaluate, and select the most qualified vendor.

Your plan should include:

• A clear supplier selection criteria list (technical expertise, delivery history, pricing, etc.)
• A step-by-step evaluation process (e.g., RFP → Proposal Review → Interview → Reference Check)
• Guidance on vendor due diligence (financial stability, past performance, ethical sourcing, data security readiness)

 Tip: Reference the article on supplier due diligence to guide your approach.

Step 5: Identify and Manage Risks

Outsourcing and offshoring introduce a unique set of risks. Your recommendation should name at least 3–5 specific risks that could impact delivery, quality, or compliance.

For each risk:

• Describe the nature of the risk (e.g., IP leakage, delivery delays, communication failures)
• Assess the likelihood and impact
• Propose mitigation or management strategies

Tip: Review the ACM Job Migration Task Force report (Chapter 6) to understand the structural risks involved in global outsourcing.

What You Will Submit

Your team will prepare a formal Outsourcing Recommendation Document, which includes:

• SWOT Analysis Summary
• Make-or-Buy Rationale
• Outsourced Scope with Justification
• Contract Type Recommendation
• Supplier Selection Criteria and Evaluation Plan
• Risk Register and Mitigation Plan
• Supporting appendices (e.g., worksheets, visual frameworks, key assumptions)

You’ll also prepare a short presentation of your findings and recommendations for peer and instructor feedback.

Outsourcing is not a shortcut. It’s a strategic move that must be justified, structured, and governed. In this milestone, you’ll learn how to take a vague directive (“let’s outsource it”) and turn it into a professional-grade plan grounded in project management principles and stakeholder value.

Approach it like a consultant. Think like a strategist. Write like a leader.

Milestone 1: Planning for Outsourcing – Student Workbook

Section 1: Getting Started

Purpose:
This workbook will help your team structure and develop a complete outsourcing recommendation for the Reckon project. It guides you through key decisions, analysis tools, and templates required to justify what to outsource, how to structure the engagement, and how to manage risk.

Instructions:
Complete each section as a team. Your responses will feed directly into your final deliverable and presentation. Each prompt is designed to mirror real-world project management decision-making.

Team Roles:
List your team members and assign responsibilities for each major section.

• Team Lead:
• SWOT Analyst:
• Contract Research Lead:
• Risk Manager:
• Supplier Evaluator: