Congratulations! You have made it past all of the preliminary matters in your offshore project. The proof of concept went well—in fact, it was much better than expected. You and your chosen offshore provider work great together, and it’s really looking like this project will proceed much more smoothly than expected. You cannot understand why the consultants and your other advisers have been cautioning you at every turn, instructing you to spell out your requirements very clearly, repeat them several times, and then have them repeated back to you. There is no need for that kind of approach, especially when you and your provider practically finish each other’s sentences. All that stands between you and “offshore bliss” is getting the contract written and signed.

As it turns out, your advisers were probably right to caution you, since this is usually the point at which many outsourcing customers realize that one of the more difficult parts of their project will be translating all of the synergy with their provider into binding but understandable contract language. Often, the project will seem to slow to a crawl at this point, but it does not have to be that way. In fact, one of the more overlooked aspects of the outsourcing process (which also happens to be particularly well-suited to offshore projects) is the “expectations setting” stage, also known as the “requirements building” phase. By either name, this simply refers to how, from a customer’s perspective, you and your provider will review your objectives for the project, map out all of the in-scope processes, specify the required interactions to conduct those processes, and place the results in the contract.

There are innumerable issues to be concerned about in an offshore project. It’s no secret that offshoring as standard corporate practice has come a long way in the last several years, but it is still not yet fully mature. Legal issues (such as tax, employment, intellectual property, regulatory compliance, and governing law) dominate the landscape, but there are certainly just as many concerns in technical, cultural, social, political, and economic arenas. These issues will begin to surface from the moment you first consider offshoring, and they will continue unchecked well into the term of the agreement if not properly addressed in the expectations-setting stage. And, while everyone involved in the process understands the need to focus on only those issues that are germane to the project and the customer’s business, the risk of the process being infected by tangential issues remains unacceptably high.

To lower this risk, and keep the offshoring process focused and efficient, the customer should behave like a 5-year-old, at least from the perspective of inquisitiveness. In the expectations-setting stage, a customer simply cannot ask too many questions, or questions that are too trivial. Is the customer’s industry one that is little understood in the provider’s country (for example, insurance in India)? How important is it that the provider’s staff understands the customer’s history and culture? How will the parties exchange information and modify processes efficiently over long distances? How will the provider ensure that its personnel will adhere to the customer’s confidentiality and nondisclosure requirements?

A relatively straightforward method of assisting the parties with asking and answering appropriate questions, as well as following up on areas of uncertainty, is through the use of interaction tables. Interaction tables are very similar to responsibility matrices, but at a level or two deeper in terms of detail. An interaction table strives to put all of the possible types of relationship issues for each in-scope process in front of the parties during the contract negotiation stage. By the time the parties reach the expectations-setting stage, they each should have a very good idea of who will be performing what functions in the offshore environment. From this knowledge, the parties should begin to develop an understanding of where and when the parties will be required to interface, either physically (such as via scheduled or unscheduled contact between the parties) or logically (through the exchange of data or other information). It is at each of these “touch points” that the parties should continue their expectations-setting discussions in a more formal, structured manner, and begin preparing the interaction tables.

In the offshoring context, the touch points between the parties usually fall into distinct categories for each type of project. An applications-development project may have touch points throughout the relationship, with the more significant ones occurring in the application testing phases. A call-center project may have its most significant touch points around the training of provider personnel in the customer’s business and problem-resolution procedures. And a transaction-processing project may have numerous touch points occurring only when errors occur.

Regardless of the type of interaction, there are some basic principles that should be followed in order to make the interaction tables meaningful from a contractual perspective. First, interaction tables should not be viewed as or substituted with responsibility matrices, since such matrices are often boilerplate statements of who does what at a very high level. Nor should interaction tables take on a “procedures manual” level of detail. If nothing else, the parties will likely be hard pressed to see such level of detail before transitioning into the provider’s environment. Ideally, the interaction tables will reflect all interactions between the parties at each touch point, but at a fairly general level of detail. In the applications-development example, the contract itself will contain the acceptance testing procedures. The associated interaction table should reflect how and when the parties communicate, the timing and types of information that need to be exchanged, and what procedural steps will be invoked if unexpected issues arise. Above all, this type of interaction table should clearly apportion responsibilities at each stage of the application-testing process.

Second, make the table graphic. Literally, interaction tables must be visual in order to have the effect intended by their inclusion in the first place. This is particularly true in offshoring, since a visual aid can lessen the chance of semantic-based misunderstandings. The use of “swim-lane” diagrams that can be easily read and manipulated by personnel in various functional roles is recommended. When the parties transfer their expectations-setting discussions to such diagrams, it is often the case that many aspects of the interactions that will occur at the touch points are seen from a different perspective, which provides the parties with a chance to revisit these activities and ask fresh questions. More important, this approach helps to further refine each party’s expectations for such interactions and lessen the potential for disconnects.

Finally, prepare for the unknown and the unexpected. The contract will of course contain several provisions that deal with changes to the services, but this is where issues unique to offshoring must be addressed. How will a change in U.S. visa requirements affect the training of provider personnel that must take place at the customer’s U.S. facilities? How will the parties handle political or economic volatility in the provider’s country that impacts the project? And, perhaps most important, who will absorb the additional costs that result from legal and/or regulatory changes in each country as well as the customer’s industry? If developed properly, the interaction tables should lead to a more collaborative governance structure that will accommodate process and cost changes necessitated by such legal changes.

Interaction tables will be a vital part of the agreement between the parties and should be attached to the contract (for example, as a schedule to the statement of work). The contract itself should clearly state that the interaction tables represent the minimum agreed-upon interactions between the parties, and during the development of the procedures manual, the parties will supplement and enhance the tables as needed. In this manner, the parties can be confident that they have established the foundation for the interactions at each of the touch points, yet have refrained from being proscriptive by allowing for flexibility and change as the relationship develops.

The activities that occur during the expectations-setting stage of the offshoring process will play a significant role in determining the overall success of the project. As with any business endeavor, constant and effective communication is critical. Through the use of interaction tables, offshoring customers can significantly enhance not only the effectiveness of their communications with their offshore provider, but also their understanding of the role each party will play in the performance of the in-scope activities.