How replacing testing subcontractors with managed testing services helps

What is managed services is a topic in itself. However, for the purpose of this chapter, let's focus on how managed services resolve the aforementioned challenges about using subcontractors.

Knowledge retention

With managed services, customers benefit from an outsourcing provider with a broad talent pool of multiple skills, possessing the ability to adapt to customer-specific technology needs while providing a seamless and flexible service.

Handover

Outsource service providers have well-established notice periods with staff in the case of separations. If a staff member quits, there is a handover of responsibilities to other identified staff members to ensure project continuity.

Cost of resourcing

When there are resource changes in the team, the provider ensures both knowledge retention and handover to the new member, relieving the customer of the burden to redo the knowledge transfer.

Economies of scale

Outsource service providers offer services across multiple customers, which offer economies of scale with a large mix of skills and services. Economies of scale result in the opportunity to standardize processes, reduce duplication, and cut down the overall project spend.

As outsourcing service provider offer services across multiple customers; they also offer economies of scale across a large mix of skills and services. This continuity allows for a more standardized protocol, decreased duplication [of services], and fewer project costs.

Illustration of benefits

One of our leading banking clients with a complex and challenging project had the following challenges:

• A large contractor base led to a cost overrun as contractors were expensive
• A lack of cost-effective, skilled resources with cultural orientation

In our Managed Testing Services (MTS) solution, one of the transformation levers applied was people transfer and transition. We replaced an existing subcontractor from their workforce-testing project and deployed our career testers with cultural alignment to run the testing delivery. Our model ensured the work was carried out with a 26% productivity improvement over a 3-year period, effectively reducing the employees required to carry out the project. Using career testers, ensuring knowledge retention, accelerating automation, and leveraging our testing assets and IP were some of the techniques employed for success.

A few key highlights include:

• The client gained increased price and cost certainty, where 90% of the projects (50% BAU) were executed within the fixed price mode and bracket
• The client broke even within the first year, without any negative delivery impact
• The client received cumulative savings of 35% over three years
• Statistics showed a 26% productivity increase after three years using our MTS service

A saving calculator

The following saving calculator depicts the financial savings incurred when subcontractors working for a firm's IT delivery organization are replaced by professionals from an outsourcing services organization:

It is evident from the preceding illustration that savings of 23,738 pounds is accrued every day, resulting in a 19.7% savings/decrease on base and annual saving at 5.17 million euros. The savings are accrued through the differential cost of professionals from the outsourcing services provider relative to the direct subcontractors. The savings improve with the use of offshore locations such as India.