1. WHITE PAPER
Rightsourcing –
The Art of Outsourcing
Testing resources are usually expensive, often behind
schedule, and generally scrambling to understand the current
and next technologies and business domains. The effective
use of outsourcing will result in the establishment of a test
team that can handle these challenges.
Software testing is becoming an increasingly critical component of the development life cycle
and, as such, demands focus and experience. As important as testing is, companies should be
focused on testing in the most efficient, cost effective way. A blended choice of offshore,
onshore, and onsite testing resources can help to minimize risks, while maintaining high levels
of effectiveness, efficiency, and cost savings.

2. WHITE PAPER: RIGHTSOURCING - THE ART OF OUTSOURCING
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Software Development Technologies
(SDT) provides software test services
Outsource Selection
to product development and IT Overview
partners. SDT creates new test groups
or extends the software testing Outsourcing is hardly new. It has been used for
capability of our clients. SDT can decades for manufacturing, engineering,
design, implement and execute software development and test, and other
Function, System, and Performance services for many industries. Its popularity has
tests to augment a partner's test grown in the last decade, but there continue to be
capability. Alternatively, SDT can build failures with outsourcing. The purpose of this
or transform a software testing paper is to discuss software test outsourcing, and
organization, by introducing an specifically to focus on software test outsourcing
automation framework, a wide range issues, strategies, and recommendations.
of software test tools, and a complete
set of test processes. Software testing is becoming an increasingly
critical component of the development life cycle
and, as such, demands focus and experience.
Paul DiGrazia, the SDT engagement
Because of its importance, companies should
executive sponsor at WMS,
execute software testing in the most efficient,
summarized SDT's performance as cost effective way.
follows:
Without an integrated approach providing a
"As a Product Development Executive, proven, defined test process, test tools, and
my Testing Partner decision is critical – training, outsourcing lacks the foundation for
for the last three years, I have trusted success. Software Development Technologies
SDT to deliver the right consultants has worked with hundreds of firms to improve
and test project teams. With Software their software quality. SDT’s software quality
experts have worked with companies to assess
Development Technologies’ proven,
and transform current software test processes,
experienced consultants, we rapidly
practices, technologies including test automation,
developed a solution that is efficient organizational structure, and environments used
and repeatable. The SDT Outsourcing to develop and test a software application. A test
approach is to provide a skilled and transformation implements a consistent
flexible resource offering, developed discipline across development, quality assurance,
and properly staffed to meet our and operations.
needs, and dedicated to our goals and
objectives. The resulting high quality When SDT works with a company to implement
and strong teamwork provide the right outsourcing, outsourcing is not just added, it is
integrated into the development, quality
return on investment with our critical
assurance, and operations organizations and their
projects being tested the right way”.
use of processes, technologies, and
environments. Effective outsourcing enables
sustainable and efficient software testing under
dynamic conditions, project after project.
Testing is enabled by domain specific
knowledge, by tools for test design, execution,
and management, and by test methodologies and
processes that verify and validate a range of
work products of software application project
teams. The testing processes are included within
a Software Development Life Cycle (SDLC) and
are constrained by costs, schedule, technology,
and people resources. Testing resources are

3. WHITE PAPER: RIGHTSOURCING - THE ART OF OUTSOURCING
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Learn More expensive, often late, and often scrambling to
understand the current and next technologies
and business domains. Within this context,
Software Testing in the Real World is which is often complex and chaotic, outsourcing
an informational guide that is can be at best a partial solution to the challenges
essentially a toolkit for continuous, of software testing.
sustainable improvement of the
software testing process. Written by
Edward Kit, CEO of Software Considerations for
Development Technologies, Software
Testing in the Real World addresses
Outsourcing
the most frequently asked questions
about methodologies, tools, Reasons to outsource
technology, and organizational issues SDT has helped many companies outsource
being posed in the testing community software testing as part of a program to
today. transform their testing. Some of the benefits of
outsourcing that SDT’s clients have seen are:
To request a discussion with SDT and • To provide additional resources to the
gain insights into how your company test effort
can effectively outsource complete • To potentially shorten schedules
software testing, test departments, or • To improve the quality and value of
test projects, please call James Wright, testing
SDT’s General Manager, Test Service • To reduce costs for testing by relocating
Operations, at 405-232-6000 x11. To selected testing activities to less
find out more about Software expensive facilities
Development Technologies, visit • To improve efficiency and effectiveness
www.sdtcorp.com. • To provide around-the-clock test
operations
• To avoid employee
overstaffing/understaffing or
hiring/releasing cycles
• To make use of technology and
business domain expertise from third
parties when resources are not available
locally
• To gain access to world-class
capabilities
• To make better use of in-house subject
matter expertise
Problems to avoid
Increasingly outsourcing has been done at
offshore facilities where costs are lower.
Discussions with SDT clients and published
articles indicate that there are serious issues with
an outsourcing model based strictly on offshore
testing when there is not sufficient support on-
site.

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Offshore models at first appear to provide a low • Outsourced resources must have
cost advantage, but the problems can outweigh communication and collaboration skills
the benefits: that match the on-site project team
• Cultural, language, and time zone culture.
differences
• Excessive travel costs In addition, practices must be set up to achieve
• Higher project management costs the following:
• Lack of domain knowledge and • Outsourced resources must gain project
expertise in the outsourcing firm application domain knowledge and
• Lack of in-depth software test expertise experience.
in many outsourcing firms • Outsourced resources must quickly
• Ineffective test design and automation learn the project functional
• Difficulty in knowledge transfer requirements, quickly absorb changes,
• Difficulty setting up lab environments and quickly expose risks during each of
• Vendor delivery failures (business the SDLC phases.
interruptions, local outages, • Outsourced resources must deliver each
communication technical issues) of their work products in support of the
• Vendor employee turnover project schedule and compliant to all
• Poor quality control requirements of the SDLC.
• The need for data privacy must be
• Intellectual Property risks
maintained if testing is based on actual
• Data privacy risks – such as when using
data. Data may have to be scrambled.
actual data as test data
• The company must continue to spend
• Serious issues managing offshore
management effort to meet the needs of
outsourced resources by the company
the outsourced resources and to assure
• Lack of expertise or experience with
their success. Companies may need
test project management in the company
help initiating outsourcing and
• Hidden costs / risks to the company sustaining effective management of
(such as a reduction in morale on-site) outsourcing.
Outsourcing as a pure cost reduction effort for With proper contingency planning it is possible
poorly functioning test processes only degrades to bring the function back in-house if
value. outsourcing does not work.
Best practices in After reviewing and experimenting with different
outsourcing models, SDT recommends a “Blended Model”
that uses a combination of offshore and onshore
Outsourcing of test resources, like any test centers as well as on-site representatives.
engineering project, requires that the company This mix of resources and locations in the
and the outsourcing vendors engage in planning, Blended Model is designed to improve
have clear requirements, plan detailed integration communication, knowledge transfer, and project
of people, technologies, and processes, build management while minimizing travel and
comprehensive metrics to show status and training costs, and the effects of cultural and time
trends, and manage all aspects of the effort. zone differences.
Skills in these critical areas must be built to
enable outsourcing success:
• Outsourced resources must have the
technical skills, and specifically the test
skills, that complement the development
and project management skills of the
project team.

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Based on research published in the SDT study on
Implementation problems
outsourcing, SDT recommends the following to avoid
outsource locations in a Blended Model for Some problems to avoid when implementing
companies located in the US: outsourcing are:
• Communication problems
Offshore: o To help minimize communication
India problems, formalize processes for
specifying and updating software
Onshore: requirements. Anything ambiguous
Oklahoma City, Oklahoma may be misinterpreted. Changes
Kansas City, Missouri after work begins will increase
Memphis, Tennessee costs and lengthen the project.
Albuquerque, New Mexico o Also plan frequent meetings
between the company team lead
and the outsourcing team lead.
This white paper is abstracted from a detailed Choose a meeting time that is
SDT research study. For more information, relatively convenient for both team
please contact SDT for “Optimized members.
Outsourcing Practices for Software Testing – o Note that cultural
Rightsourcing.” misunderstandings can lead to
communication problems.
Implementing outsourcing • Problems when outsourcing tasks that
require close communication with
Some steps to execute when outsourcing are:
cross-functional groups
• Understand your strategic vision and
• Starting with immature internal
plan and how it relates to an
processes
outsourcing relationship
• Lack of an internal process for
• Understand your company goals and
specifying work
objectives
• Lack of internal project management
• Have senior executive support and
skills
involvement
• Trying to use outsourcing as a means to
• Select the right vendor
attempt to fix broken processes
• Charter an Outsource Test Management
• Losing control of the resource
Group to oversee the relationship,
workflow, and metrics. • Losing critical internal expertise
• Plan for the test lab infrastructure. • Not involving the right people –
executive sponsors, users, and impacted
• Ensure nondisclosure of confidential
employees
customer data including test databases.
Ensure that data privacy is maintained.
• Reengineer existing processes to fit the Types of testing projects
outsourcing relationship best suited to outsourcing
• Properly structure the contract and
associated Service Level Agreements The following types of testing are suitable for
(SLA’s), but provide flexibility outsourcing:
• Measure and monitor work regularly • Function testing
• Tie key metrics to Service Level • Compatibility testing
Agreements • Internationalization and localization
• Have open communication with testing
affected individuals and groups • Performance testing, if the load can be
• Pay careful attention to personnel issues generated at the company site but
• Justify using additional funding in the controlled remotely
near term

6. WHITE PAPER: RIGHTSOURCING - THE ART OF OUTSOURCING
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• Security testing, if the outsourcing more crime, a less educated population, lower
company is a specialist in this area quality talent, fewer desirable places to live, and
• Usability testing, if the outsourcing few or no high quality service providers in
company is a specialist in this area economically depressed areas.
Projects and products that do not require deep Based on study factors, an onshore model in a
knowledge of complex, undefined or changing popular “lifestyle” city that is also a low-cost
business rules are better suited for outsourcing. area appears best suited to fulfill the criteria for
an onshore center. “Lifestyle” cities are areas
Types of testing projects where people want to live, due to such factors as
nearby educational institutions. One city
not well-suited to fulfilling requirements is Oklahoma City,
outsourcing Oklahoma, with Kansas City, Missouri,
Memphis, Tennessee, and Albuquerque, New
The following types of testing are less Mexico also being potential locations.
appropriate for outsourcing:
• User acceptance testing University-Based Model
• Testing normally done by the
Definition: Outsourcing using a labor pool of
development team, unless the
university students in conjunction with an
developers are also outsourced: unit
organization to manage the physical and project
testing and initial integration testing
logistics.
• System end-to-end testing, where some
specialized domain knowledge may not
A development organization should not depend
be available to the outsourced team
upon the University model as a major part of
• Testing of products undergoing
their outsource model at this time. Because the
significant or late stage changes main focus of the student is on other priorities
(getting an education) there could be issues with
Outsourcing Models the quality and consistency of the work products.
Near-shore Model
For the purposes of this paper, SDT investigated
and compared the following types of working Definition: Outsourcing offsite in a country
relationships: geographically close to the organization’s
• On-site country. For US companies, consider Canada,
• Onshore Mexico, etc.
• University-based
• Near-shore Offshore Model
• Offshore Definition: Outsourcing at a country remote to
• Blended the organization’s country. Countries to
consider for US companies are India, China, Viet
On-site Model Nam, etc.
Definition: Outsourcing the work to workers on-
site at the company’s location where Although becoming more expensive, India
development takes place, sharing facilities with currently holds the best promise for offshoring
employees. activities from the US because of the relative
experience, strong skills, and low costs of the
Onshore Model workers. Knowledge of English is a strong
benefit when outsourcing from US companies.
Definition: Outsourcing offsite in the same
country as the organization.
An onshore model using depressed economic
areas does not look promising because there is

7. WHITE PAPER: RIGHTSOURCING - THE ART OF OUTSOURCING
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Blended Models
SDT Outsource Selection
Recommendations
Definition: Outsourcing that combines more
than one model into an overall outsourcing
strategy.
This whitepaper describes one element of a
A Blended Model gives the best combination of larger program to improve the quality and
impact and control. The mix of resources and effectiveness of testing at a development
locations in the Blended Model is designed to organization. Previous SDT presentations have
improve communication, knowledge transfer, defined a need for an Enterprise Software Test
and project management while minimizing travel Center of Excellence (EST CoE) and
and training costs, and reducing the effect of recommended the formation of such an entity. A
time zone differences. development organization should use their
employees for key Center of Excellence
Depending on the location of the on-site and positions to maintain continuity and retain their
offshore offices, in an On-site/Onshore/Offshore knowledge base.
Blended Model it may be possible to find a time
zone for the onshore team that supports The EST CoE is to provide guidance and
communication with the offshore resources at coordination to foster world-class testing
one time of the day and with the on-site team at throughout the organization. The mission of the
another time. EST CoE is to provide services and assistance in
identifying, documenting, and planning software
Sub-models testing. The EST CoE leverages proven, state-
of-the-practice technologies, procedures,
The following business relationships can be methods, and tools such that the key mechanisms
considered for the outsourcing company: of existing systems are better understood, that
• Contracting Company Partner: A current business structures and operations are
third-party vendor who provides testing improved, and that the business enterprise is able
services. to foster innovation as a competitive strategy.
• Wholly Owned Subsidiary: Rather
than outsourcing to another Every outsourcing opportunity is different, and
organization, a development SDT recommends a blended strategy that can
organization might opt to start their own flex and solve the major problems of the
subsidiary company. previously tried outsource models. An On-
site/Onshore/Offshore Blended Model allows a
• Build/Operate/Transfer Model: In development organization to shift resources from
this approach, the partner provides offshore to onshore if any risk factor warrants a
clients with a complete solution for change. This approach more easily deals with
building a presence in a particular city ramping up testing capability. The approach
or country. The partner provides a combines benefits and minimizes risks,
comprehensive set of operational improving the overall chance for success.
management services, from HR and
staffing, to accounting, payroll, legal, SDT recommends that, when outsourcing with a
facility management, and security. The Blended Model, a development organization
partner should not be able to lock in the utilizes an outsourcing partner who starts with an
client company. Instead, the client equal number of resources coming from the
company should have the option to offshore team and resources coming from the
bring the operation in-house at any onshore team to staff testing, and then adjusts the
time. Typically, the outsourcing ratios based on project requirements.
contract includes a clause that states the
client company has the option to buy
the entire operation after a fixed period.

8. WHITE PAPER: RIGHTSOURCING - THE ART OF OUTSOURCING
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cost savings and effectiveness and mitigates
Recommendation 1: outsourcing risks.
Establish Relationships Where Outsourced Resources
with a Small Set of Testing
are Located (initially)
On-
Partners
At Offshore At Onshore site
Where
Outsourced
Development organizations should establish Resources
solid relationships with a small set of qualified Come From
vendor partners that will provide the testing From Offshore 50% 45% 0% 5%
resources. Ideally an organization would have From Onshore 50% 0% 25% 25%
one or two partners, each with capability to
provide both onshore and offshore resources. Total 100% 45% 25% 30%
Using a few partners reduces the risks associated
with sole-source sub-contracting without over Note that a percentage of resources that come
extending the project and vendor management. from the offshore team and resources that come
from the onshore team are located on-site to act
Recommendation 2: as communication conduits and liaisons. The
recommendation is to minimize from the start
Establish an Outsource Test the percentage of resources that come from the
Management Group offshore team that need to be located on-site. In
addition, the recommendation is to begin with
SDT also recommends that the company the percentage of outsourced resources that come
establish an Outsource Test Management Group from the onshore team that are located on-site as
to dedicate internal resources to qualify vendors, shown (25% may be optimal) and reduce this
to qualify projects, and to coordinate and oversee number over time. This is an area where
the outsourcing process. This approach outsourcing efforts in many companies fail. If
concentrates the outsourcing experience and the number of outsource resources that are
expertise for the company and allows for better located on-site is too small from the beginning,
coordination of the various test activities. transition efforts can be overlooked, and domain
knowledge transfer can be at risk. Once domain
Recommendation 3: Use knowledge has been gained by the outsource
the Blended Outsourcing resources, and the process understood and
implemented, the resources from the onshore
Model team who are located on-site can successfully be
The Blended Model that SDT proposes combines redeployed to their onshore location.
on-site, offshore, and onshore resources. SDT’s
software testing experts can determine the right Analysis supporting the
mix of onsite, offshore, and onshore resources.
One approach that is often optimal is for the
Blended Model
development company to initially plan for about Recommendation
50% of the outsourced resources to come from
the pool of onshore resources and 50% to come Primary factors
from the pool of offshore resources as shown in
the table below. Some percentage of the SDT considered five primary factors to compare
resources coming from offshore would actually outsourcing alternatives. The details of each
be located on-site. Similarly, some percentage of follow this list.
the resources coming from the onshore team of • Location Risk
the outsourcing company would also be located • Direct Cost Savings
on-site. The actual percentage distribution will • Flex Capacity
vary depending on project and work • Efficiency and Effectiveness
requirements and will evolve over time.
• Nationalism
Dividing resources in this manner maximizes

9. WHITE PAPER: RIGHTSOURCING - THE ART OF OUTSOURCING
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• Costs for technical support (lab hardware
Location Risk and software administration, network
management, telephone charges, etc.)
This is the risk of a failure due to factors other • Costs for training the outsource resources in
than vendor technical performance. These would the company’s applications and processes
include security risks, language and cultural • Increased project management costs – the
differences, communication over time zones, cost of additional project oversight that is
political interference, the risk of terrorism, and required within the company’s development
other non-technological issues based upon or test organization to manage the outsource
geographic location. Factors to consider are: testing
• Language and cultural differences
• Security risks (risks associated with building Flex Capacity
access, improper protection of Intellectual
Property, unauthorized application access, Flex Capacity measures how quickly the number
unauthorized access to corporate data, of resources can be changed. Factors to consider
unauthorized access to information backups, are:
etc.) • Flexibility of staffing levels
• Geopolitical risks • Capacity – size of the labor pool available
• Natural geographical risks (due to • Ability to timely ramp resources up or down
earthquakes or weather) • Start-up and shut-down logistics
• Risks doing business in the region Effectiveness and Efficiency
• Risks due to laws of the region
• Time zone differences This reflects the quality and consistency of the
• Distance from the company site work products and the effort required. Factors to
• Visa requirements for travel or on-site work consider are:
• Quality of life issues in the outsource • Efficiency of offsite resources compared to
location on-site resources
• Lack of transportation availability and • Efficiency of outsourced resources
choices compared to regular employees
• Currency volatility • Quality of work
• Ability to meet schedules
Direct Cost Savings • Accuracy of resource estimates
• Repeatability
These are the financial elements that contribute • Reliability and bandwidth of network
to higher or lower overall direct costs. This connections
includes labor costs, travel costs, and project • Inefficiencies due to communication
management costs. technical issues. Consider telephone
• Labor cost (averaged direct labor rates due reliability, availability of teleconferencing
to the mix of resources based on the work facilities, desktop sharing and web
location and experience) conferencing capabilities, etc.
• Travel costs • Complexity of contracts and Service Level
• Costs to ramp-up resources (cost to hire and Agreements
prepare resources for performing testing
tasks) Nationalism
• Maintenance costs (minimum overhead
costs to enable resource availability) This measures the favorable or unfavorable
• Costs to reduce staff, if any, when fewer impact of using nationals from a different
resources are needed country.
• Technical infrastructure costs (costs for • The desire to use the nation’s labor pool
equipment, floor space, network • Employee, customer, and community
connectivity, etc.) backlash over a perceived loss of jobs by
shifting work out of the country

10. WHITE PAPER: RIGHTSOURCING - THE ART OF OUTSOURCING
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Each of the five factors was evaluated and Figure 1 provides a summary of computed values on the
assigned a value of 0 to 10 for each alternative. row labeled “One Hundred Scale”, using a scale of 0 to
Based on feedback from SDT clients, a 100 to compare the options. Zero would represent the
subjective weighting factor on level of worst possible case and 100 the best situation. The
importance was also applied. Extended and computed values fall between 53 and 80, with the
normalized scores were then computed and Blended Model ranking highest.
examined.
Figure 1: Summary of Findings
Near-shore
University
Offshore/
Onshore/
Offshore
Onshore
Blended
On-site
On-site
On-site
Weight
Risk Factors (described
above)
Location Risk 5 10 8 8 8 7 6 4 7
Direct Cost Savings 10 0 8 4 6 7 8 9 8
Flex Capacity 10 2 5 7 7 7 9 9 9
Efficiency and
Effectiveness 10 9 5 8 7 7 6 5 8
Nationalism 5 10 10 10 10 6 3 0 7
Total 400 210 270 280 290 275 275 250 320
One Hundred Scale 53 68 70 73 69 69 63 80
Notes:
- On-site refers to company employees at the development location
- Blended refers to the On-site/Onshore/Offshore Blended Model

11. WHITE PAPER: RIGHTSOURCING - THE ART OF OUTSOURCING
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Review - Outsourcing for voice calls. Alternatively, or in addition,
reliable telecommunications infrastructure can be
Model Critical Success used for voice calls.
8. Personnel issues must be managed. Disgruntled,
Factors discouraged, in-the-dark employees can undermine
relationships, withhold critical information, and
The effectiveness of any outsourcing model’s cause the relationship to fail.
capability relies on the following success factors: 9. Performance incentives and penalties based on
1. A well-defined and well-documented objective criteria (measurable, quantifiable, and
Software Development Life Cycle is comparable against pre-established criteria) should
mandatory, including standard be used. The relationship managers need to be
documentation formats. Training to provide trained on the criteria, incentives, and penalties.
the necessary common terminology and 10. Clearly communicated goals and metrics enable
understanding enables efficiency and teams to manage to success.
effective delivery of work products. 11. “Best Practice” companies prefer global sourcing
2. Project documents, such as requirements over the Offshore Model. Companies with
and specifications, must be updated significant outsourcing experience have moved or
throughout the development process. are moving toward a strategy of multiple locations,
Change happens, and when it does, its multiple vendors, and a judicious blend of both
impact must timely propagate through the onsite and outsourced models to minimize risks
sequence of development documents. and maximize flexibility.2
3. Participation at technical reviews from
software test personnel, especially during
the analysis and design phases of the
Software Development Life Cycle, is
required in order to understand the
functionality and scope of the application to
be tested.
4. Program Management (for managing the
relationships) and Change Management (for
managing the work products) are keys to
success. Most of the companies that
responded to a survey (85%) believe that the
establishment of a Program Management
Office (PMO) provides the foundation for
outsourcing/offshoring success, with two-
thirds (67%) stressing the importance of
proactive communications programs.1
5. Regular teleconferences and site visits with
the outsource test team are critical to good
communication and collaboration.
6. An on-site manager who functions as the
contact point for the outsource test team and
who works closely with the outsource
vendor manages timely delivery of work
products and resolution of issues.
7. Sufficient, reliable network bandwidth is
required to allow data communication
between the offsite and on-site groups.
Skype or a similar technology can be used
1
Outsourcing Institute, “Top Ten Outsourcing
2
Survey” Ibid.