Hybrid Outsourcing Model Reduces Offshore Management Headaches for Encyclopaedia Britannica

Encyclopaedia Britannica (EB) has strived since its founding in 1768 to be the worldwide leader in reference, education and learning. In today’s electronic age, some might perceive that as a rather lofty goal. But not EB, who has been working with digital media since 1981 and continues to develop new initiatives for the Web. It’s toward that end and that mission that EB began searching for a possible outsourcing partner two years ago to help test its digital products.

After narrowing down its list of candidates to five, EB decided to partner with Vancouver-based QA Labs and another nearshore firm. After 14 months in that arrangement, however, EB approached QA Labs with some ideas, desires and constraints to consider, including the needs to further reduce costs, more accurately fix costs, add scalability and leverage the differences in time zones.

QA Labs responded with a proposed hybrid outsourcing model that combines nearshore and offshore outsourcing through its North American headquarters to give EB lower pricing from India without the logistical challenges of managing offshore outsourcing contracts. “This proposed solution, along with QA Labs’ track record of high-quality work led us to make them our sole QA partner and entrust them [with] all of our QA needs,” said Terence Boyle, EB’s executive producer.

How the Hybrid Structure Works

All of the project management takes place in Vancouver, while the testing work is done in Bangalore, India. Essentially, outsourcing provider QA Labs outsources the testing work to its Indian partner company, Momentum Technologies. Some testing is also done in Vancouver depending on resources and expertise required.

QA Labs receives test results from India on a daily basis, gets frequent status calls from India, and is in communication with EB to keep it aware of the project’s status. EB maintains a single in-house QA manager who is responsible for the overall coordination, communication and monitoring of the entire process.

“QA Labs manages the process and the best practices, which I have grown confident in,” Boyle noted. “They also handle a number of the more specialized tests and can cover testing in any area if necessary.”

On average, QA Labs has four people working in India and one in Vancouver. Momentum is a much larger company than QA Labs, which makes it possible for QA Labs, in partnership with Momentum, to ramp up resources much faster in India than it can in Vancouver, according to Wolfgang Strigel, president of QA Labs.

This hybrid model gives EB access to lower overseas pricing because the Indian resources are lower priced than Canadian resources, Strigel noted. It also frees EB from many of the logistical challenges of managing offshore outsourcing contracts, including establishing and training in best practices as well as various cultural and work habit challenges. “EB gets the benefit that this is completely transparent to them,” Strigel pointed out. “They just deal with their trusted North American supplier and we take care of dealing with the Indian team.” Boyle says that is what has made this interaction so smooth, that QA Labs is absorbing the interactions with the offshore partner.

Cost Savings Not the Only Driver

EB has realized approximately a 30% cost savings using this hybrid outsourcing model, according to Strigel. “While there is significant savings in dollar to dollar costs, this is by no means the only or even primary driver,” Boyle pointed out. “Flexibility, scalability, high levels of service, time savings, and specialized expertise are key factors that need to be considered when making an outsourcing choice of any kind (no matter where the partner is located).”

Boyle says there are two keys to a successful hybrid model: finding the correct balance and finding the right nearshore partner. “QA Labs has long-term vested interest in being able to do this,” he said, “and they bring the necessary expertise to manage the oversight. Strong and efficient process is important. As the first major venture in this area, this must be an investment in the future for them. There is a lot to learn and do. Part of why this works so well for me is they cover the problems of doing that learning and establishing those relationships.”

EB has learned numerous lessons throughout this process, the most significant being to view (and getting others to view) the whole process as a complex, strategic one rather than a simple cost-cutting one. “It is natural to view and treat an external partner differently than an internal one, and while there are advantages, it also needs to be monitored,” Boyle said. “In our partnership with QA Labs,” he added, “step one was to control and understand costs. Step two (which we are actively pursuing) is to involve them in our efforts to improve end-to-end product development efficiency because that is where everyone begins to win.”

If given the chance to do the project over again, EB would apply many of the lessons it has learned along the way. “For example, I would do a better job of tracking metrics that demonstrate levels of service, overall workloads, quality of work, etc.,” Boyle said.

He encourages other organizations considering moving to this type of model to be sure your internal team understands the purpose and is “along for the ride. Find the right partner,” he advised. “Take a long-term strategic view, not a short-term financial one. (That is only a small part of the impact and value.)”

Useful Links

Encyclopaedia Britannica

QA Labs

Momentum Technologies