The mortgage industry and the larger financial services industry have turned to outsourcing of IT functions in a big way since quite some time. While some firms have set up captive offshore operations, others conduct the whole gamut of operations like hiring, training, management and compensation via partners.

Theoretically, offshore application development, system maintenance and specific IT activities, such as testing, create significant benefits thanks to the high levels of IT expertise available offshore and considerable cost efficiencies, says Hassan Rashid, Senior VP, Global Sales & Marketing at Tavant.

However, despite largescale adoption of outsourcing and substantial economic benefits, the satisfaction levels remains poor, with executives citing issues related to communication, productivity and code quality as dampeners. Many feel that they end up hiring more managers to organize offshored processes.

Given these bottlenecks, the mortgage industry still believe that opportunities abound in offshoring and continue to seek ways to unlock higher bottom-line benefits from offshore IT.

“For each IT activity or development approach, offshore IT requires specific and unique adaptations to commonly used onshore processes. Getting these adaptations right, and adding the right global team interactions and delineation of roles & responsibilities is critical for success,” says Hassan Rashid.

"Deep domain understanding is an absolute necessity. Offshore developers and QA engineers must understand mortgage-specific processes to produce quality code. And more importantly Communication must be comprehensive, real-time and electronically replicate face-to- face team interactions. Tailoring processes to specific IT needs,” he adds.

For application development, these principles need to be applied to two basic development approaches: Waterfall Development and Agile Development. In a Waterfall methodology, the movement of key staff between onshore and offshore at the right time is critical. In an Agile methodology, involving highly frequent code deployment, team organization and electronic interaction must be tuned to replicate the frequent face-to-face interactions exemplary of onshore-based agile development.

Application maintenance mandates another focus. Here, rigor in managing priorities and demand-supply capacity control across competing constituencies and absolute release scope freeze are particularly critical. Offshore testing requires the offshore QA team to engage early with onshore requirements and specification development. The process must also place a representative of the offshore team onshore, and foster close virtual collaboration in test-case development; have efficient remote- access into onshore test environments and the highest levels of test automation.

Another critical area is domain expertise, says Rashid while listing out training and certification courses for offshore staff. Use of loan Consultant, underwriter and processor training materials within a structured mortgage certification curriculum creates the domain foundation for optimal translation of requirements into quality code, he says.

In the initial stages of offshore IT, this may require sending onshore operations and sales experts offshore for extended time periods to jumpstart and conduct the certification. Virtual face-to-face interaction through video conferences and the use of virtual-team discussion spaces also improve the clarity of communication while decreasing response time.

These approaches dramatically reduces management overheads and enhances speed and efficiency, thus making for bigger monetary benefits as well as stakeholder satisfaction. Properly engaged, offshore outsourcing enables global IT organizations to work better, whether in a captive or vendor-enabled context, and realize significant bottom-line gains, he says.

In fact a survey by CIO magazine listed out managing communication, cultural differences, lack of internal processes and lack of internal customer management skills as the greatest offshoring challenges. There is definitely a gap between promise and delivery, but companies need not abandon outsourcing because of this, say experts.

Addressing the opportunity presented by offshore IT outsourcing in a piecemeal fashion serves only to parallel playing one of those “whack-a-mole” games. Pound one creature down into its hole and another pops up elsewhere. No matter how quick you are, the game ultimately defeats you, says Rasheed.

Therefore, it requires a comprehensive approach to all of the variables that contribute to the success – or failure – of an IT project. A realistic approach to success involves four specific factors - adapting processes specifically to the type of activity that is being outsourced; delineating responsibilities clearly across teams; domain certification of development and quality engineers and setting up real-time and face-to-face communication between the teams.