"Infosys is confident it can deliver because of its quality rating, and some of the deliverables I've seen the company produce so far, such as the specifications, have been first class," he says.
Once programming, unit and system testing have taken place in India or at Infosys' other development centres in the UK, US, Canada, a small team from Infosys will return to Brisbane with the deliverable for acceptance testing and handover. There are two such deliverables due, in April and June 2002. Smeaton says Suncorp Metway has other projects on the drawing board encompassing middleware technology and the integration of front and backend systems that may also involve Infosys.
"Applications development is Infosys' core business, financial services is Suncorp Metway's," Smeaton says. "I don't really see this as outsourcing as we're not actually replacing an internal department. We're using Infosys to complement us with skills we're short on and add shareholder value by delivering projects on time and to budget."
Nor does it matter to Smeaton that the actual development is taking place offshore.
"Somebody raised the question [of offshore development] when I was presenting the idea to our internal IT department. But at our request, Infosys has a project manager onsite in Brisbane with whom we can discuss and deal with any issues that may arise at a management level.
"As far as the development team is concerned, I don't care if they're across the road, interstate or overseas because the reality is that I don't deal with those people, the project manager does. It's contractually up to Infosys to deliver, whatever," says Smeaton, who adds that the events of and subsequent to September 11 have not affected his confidence in Infosys given its recent strong financial results.
According to Gartner, enterprises selecting service providers should always undertake a risk analysis, part of which should consider the vendor's business continuity plans. Kogekar adds that, as in all types of outsourcing, organisations should choose a partner in tune with their needs: size-wise and for whom they're an important client.
"I believe that if you try to do smaller things with big suppliers, you get second rate-people, whereas if you do smaller things with medium sized players you get top people," he says.
Nor has it all been clear sailing for Kogekar when it comes to offshore outsourcing. He admits to a small, but unmitigated disaster at Citibank, where there was not enough due diligence in place and work was inappropriately given to a very junior person. In fact, Kogekar believes that very small projects are not worth contracting out offshore and as a rule of thumb cites five person years as the project minimum.
Kogekar says another unmitigated disaster befell Franklins' parent company, Dairy Farmers, when it engaged the services of a Philippines-based company to undertake software maintenance of a key system. According to Kogekar, the provider lacked the high-quality processes practised by Indian companies, it had nobody onsite at one point, there were lots of interpretation gaps and Dairy Farmers was exerting too much control and changing the requirements. Dairy Farmers finally dropped the provider, but Kogekar says it was an unhappy experience all round.
In fact, like Smeaton, Kogekar is a strong believer in engaging the best, then letting them get on with the job and just holding them accountable for the results. His motto is monitor but don't try to control.
"Too many clients want to control the inputs rather than the outputs, and that's why outsourcing fails," Kogekar says. "Focus on what you want, in terms of functionality and when you want it, but don't ask Â'how' so much. By employing good companies and letting them control their own processes and disciplines, you'll get good results."
Offshore outsourcing is no longer an emerging trend - it's a regular practice for some companies. But what makes the difference between sinking and swimming when you send key projects overseas?
The federal government caused a minor furore late last year with the release of a report by the Department of Foreign Affairs and Trade's Economic Analytical Unit that suggested there are "significant opportunities" for Australian companies to cut costs by investing in and outsourcing to the IT-enabled sector in India. The report, New Economy Old Economy, drew swift criticism from the Opposition, unions and even some local recruitment firms, who accused the government of promoting India at the expense of Australian jobs.
Political rhetoric aside, outsourcing key business functions such as applications development offshore may not be the most appealing proposition to some CIOs given the perceived instability of the region in which many providers are based; a perception exacerbated by the US-led response to the events of September 11, 2001. However, according to Rolf Jester, Gartner's Asia Pacific research area director for the IT services market, Indian companies, especially, are very well capitalised and when they see an issue that might be a stumbling block to their business they fix it fast. "The uncertainty and instability in that general part of the world has worried some potential users but [Indian] companies have bent over backwards to prove how stable and secure they are and demonstrate what sort of business continuity plans they have in place. They've had to do it in order to reassure their customers, and it's worked," Jester says.
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.