Having been included in two separate teams where our outsourced projects don't go as well as expected I cannot help but to take a step back and ask why things are consistently failing with separate teams, and separate organizations.
The commonalities in both projects were fixed-bid (i.e. fixed price, features and time) using a modified waterfall model (to account for geographic locations). I know—you say the waterfall model doesn't work. Be that as it may organizations revert to this model and are thus handicapped; unable to make adjustments to the changing business and unable to make definitive decisions on how to improve their process, but more on that later. Other commonalities included high level and low level designs, unit test cases, test cases, etc.
I have heard that groups similar to mine are having great success with outsourced projects, and I myself have also been involved with projects that were executed to great success, however I assert that for us there are areas of improvement. At a high level, I can sum it up in one word: process.
Where have my two projects failed? IMHO it is in the analysis of the requirements. The requirements had the vendors pegged implementing features on product technologies they were unfamiliar with—some churn in requirements and with new technology. Traditionally engineering teams would perform proof of concepts and experiments to validate design, and clickable prototypes to share with customers to stabilize requirements (business and technical). While some of that was done here, I still see where it could have been improved. In both instances, we started with a solid vendor relationship that quickly begins to fall apart due to lack of trust. IMHO the biggest areas we are lacking are:
IMHO in both projects are considered high risk when examining the vendor skill set, staffing model, and experience with projects of this complexity. In most situations you can apply the Parento principle (AKA 80-20 rule) where 80% of staff is offshore while 20% is onsite for R&D phases, moving to a 90-10 planned iterative model for build and less onsite still for stabilization.
In both projects the offshore team encountered additional issues during implementation that require workarounds for resolution, R&D, or a complete shift in approach. On both projects we tried to mitigate risk by having frequent check-ins with the offshore team and checking progress on a tight basis (one was almost daily, the other bi-weekly). Alas when significant and unexpected delays arose the relationship fell to pieces and in response we put in-house staff on the project to sure it up and get it going in the right direction.
Leveraging Visual Studio Team System
I have found that VSTS handles the needs of geographically dispersed development teams (and their inherent challenges) in a variety of ways:
Each one of these allow the onsite team to ensure compliance with corporate standards and gain trust in confidence in the offshore team's ability to deliver a quality, stable product.