When headcount and revenues shrink during a recession, executives often try to keep operations stable by controlling IT costs. Although they may have shunned the practice in the past, many midsize companies and government agencies are for the first time considering outsourcing out of necessity. For CIOs at these organizations, the prospect of outsourcing IT can be daunting because their performance will be evaluated by an entirely new set of criteria.

A wealth of data, case studies, consultant advice, and peer-to-peer war stories exist to help organizations make outsourcing decisions. But once the decision is made and it's time to transfer responsibility for corporate IT to the vendor, the CIO is in the hot seat. That seat can grow even more uncomfortable once the CIO realizes that, to a large degree, the success of the outsourcing initiative depends upon the skills, knowledge and creativity of the project managers on the front lines of the engagement.

Project management plays a critical role in outsourcing. Many organizations now track outsourced labor and expenses in enterprise-wide project management systems. Unless the IT project managers understand the challenges and success factors associated with outsourcing—and how they differ from those associated with in-house development and operations—the CIO's key performance indicators may unnecessarily turn the wrong color.

The checklist on the following pages can help CIOs and project managers ensure that their first outsourcing projects are managed wisely from start to finish. The 100 frequently asked questions (FAQs) listed on pages two through five address the organizational, technical, and team leadership issues that every project manager should anticipate and proactively tackle. The questions are organized by project lifecycle phase to facilitate alignment with project tracking systems. They are also categorized by the three principal roles a project manager plays: the Entrepreneur, who focuses on senior management's business priorities; the Technology Partner, who collaborates with other professionals to optimize the solution; and the Team Captain, who supervises the workers. There are also a few questions in a Guru category. In addition to helping guide project managers, the questions can also help CIOs identify the right project manager within their organizations to lead the outsourcing initiative.

The answers to the FAQs will vary depending upon the type of business, system, team structure, and risks involved. No matter what your software functionality or engineering methodology might be, these are the critical questions the CIO and project manager should ask—and ask early—otherwise these questions will definitely be asked later during the forensic analysis of the dysfunctional engagement.

Phase 1: Initiating

Entrepreneur

1. Why are we doing this? Why now?

2. Whose decision was it?

3. What are the success criteria?

4. How much influence will I have over the terms and conditions of the contract?

5. Is there a deadline for outsourcing the project?

6. What criteria should I use to select a supplier?

7. What should I tell my business sponsor or client about the outsourcing initiative?

8. How will outsourcing affect my project delivery schedule?

Technology Partner

9. Is there a master services agreement with the supplier?

10. Is there a Statement of Work or Task Order template for the supplier or engagement type?

11. Are there Service Level Agreements for the supplier or engagement type?

12. What type of contract will it be?

13. Can I do a pilot project?

14. Can I visit the suppliers' sites?

15. Can I ask for competitive bids from suppliers?

16. How much experience does my organization's IT operations function have in setting up and managing outsourced engagements?

Team Captain

17. Who in my organization is managing the relationship with the supplier?

18. Who in the supplier is managing the relationship with my organization?

19. Does my organization maintain a central resource pool with the supplier?

20. Will the engagement be based upon staff augmentation or managed services?

21. What criteria should I use to select a project for outsourcing?

22. Is there a headcount quota in my department for moving project resources?

23. Will there be layoffs among my staff?

24. Will there be rewards for my staff?

Guru

25. Where can I obtain more information about outsourcing in general?

Phase 2: Planning

Entrepreneur

26. What is the business continuity plan for the supplier?

27. Who will monitor the accuracy of my invoices from the supplier?

28. Who will arrange travel and expenses for the supplier's staff?

29. Who will monitor that the supplier's invoices for my project are being paid?

30. What is the best ratio of on-site to supplier site resources?

31. On which point will negotiations with the supplier about outsourcing be most difficult: budget, schedule, or scope and quality?

32. What should I do when my project team wants to develop a detailed, specific plan for the engagement, and the supplier wants to agree on a few points initially but leave many aspects open for mutual discussion in the future?

33. Which IT support functions should be involved in planning my engagement?

Technology Partner

34. What reports and metrics can I establish to monitor the performance of the engagement?

35. What sort of data masking will be necessary for the engagement?

36. Can my development tools be installed remotely?

37. How will the supplier's resources receive technical support?

38. How will the supplier's resources appear in our internal systems (Human Resources, Accounts Payable, budgeting, Help Desk)?

39. How will my organization monitor the uptime of the project infrastructure?

40. How many different suppliers' resources can I include on my project team before the logistics become too chaotic?

41. What are the most critical IT and data security issues I should expect to address?

Team Captain

42. How should I reorganize and reallocate my staff to facilitate outsourcing?

43. What provisions should I make for staff turnover at the supplier's site?

44. How are supplier resources trained?

45. What hours will the supplier resources work?

46. Will there be cross-cultural training for my staff and for the supplier's resources?

47. How long will it take new supplier resources to learn their jobs?

48. How should I divide the project work among several suppliers in different locations?

49. Is it worthwhile for the supplier to maintain a bench of idle resources to meet fluctuating project demands?

Guru

50. What resources does my organization provide to train project managers and team leads in outsourcing and supplier relationship management?

Phase 3: Executing

Entrepreneur

51. How often should I visit the supplier's site?

52. How often should I conduct teleconferences with the supplier?

53. What should I tell my business sponsor or client about the status of the outsourcing engagement?

54. How should I respond when management changes affect the personnel, goals, strategy, procedures and/or politics of outsourcing in my own organization?

55. How do I deal with a change of ownership for the supplier?

56. What should I do when I disagree with the supplier about charges for work?

57. When my project team regards the supplier's resources as trustworthy partners, but my organization regards the supplier as a deceitful adversary, how should I behave so that I do not alienate either group?

58. When my supplier is doing an excellent job, how can I ensure that their efforts will be recognized by my organization—and vice versa?

Technology Partner

59. How can I minimize defects and test failures due to configuration problems between the client and the supplier?

60. How can I determine whether the people listed as supplier resources are in fact who the supplier says they are?

61. How can I lengthen, shorten, or modify a Statement of Work, Task Order, or Service Level Agreement in the midst of the engagement?

62. How can I ensure that project team members employed by different suppliers cooperate and collaborate effectively?

63. How should I proceed if my organization and the supplier become engaged in a contract dispute?

64. What actions can I take when the site's networks/PCs/servers are so chronically slow or unreliable that the productivity of my team suffers?

65. How can I improve the technical support my resources obtain from my organization?

66. How should I react when my supplier misses an important milestone or delivers an unsatisfactory product and it suddenly becomes apparent that their status reports have been misleading?

Team Captain

67. What should I do when a resource quits or is terminated unexpectedly by the supplier?

68. What should I do when I decide that a supplier resource must be terminated?

69. What should I do when the supplier's resources want to be hired by my organization?

70. What should I do when other managers in my organization try to persuade my supplier resources to leave my project and join theirs?

71. How can I resolve performance issues with members of the supplier's management or project team?

72. What actions can I take if I have an issue with my own organization's management of the outsourcing relationship?

73. How can I resolve cross-cultural conflicts on the project team?

74. How can I get enough sleep when my project team is on different continents?

Guru

75. What should I say to my family, friends and colleagues who accuse me of undermining our community, our industry, our economy and/or our nation?

Phase 4: Closing

Entrepreneur

76. Whom should I notify that my outsourced project will be ending?

77. Whom should I notify that my relationship with the supplier will be ending?

78. How do I terminate the supplier relationship after the project is finished successfully?

79. How do I terminate the supplier relationship because I am dissatisfied with their performance?

80. How do I terminate the supplier relationship due to a cancelled project?

81. What should I tell my business sponsor or client about the outcome of the outsourced engagement?

82. What information should I provide to IT senior management about the results of the outsourced engagement?

83. What information should I provide to the Vendor Management, Procurement, Operations and/or Sourcing group(s) about the results of the outsourced engagement?

Technology Partner

84. Should I create a new Statement of Work for every iteration of my project?

85. If my Statement of Work still in effect when my project has ended, can I start a new project under the same SoW?

86. What information should the supplier provide at the end of the project?

87. What information will the supplier ask me to provide at the end of the project?

88. How should I document lessons learned for the benefit of future outsourced projects?

89. What actions can I take to encourage the supplier to provide better service on my next project?

90. How can I influence my organization's assessment of the supplier's performance?

91. How much effort should I invest in improving my organization's processes for implementing outsourced engagements?

Team Captain

92. What will happen to my supplier resources at the end of my project?

93. Can I ensure that my best supplier resources will be available to me again, even though there will be a time gap between the end of this project and the beginning of the next one?

94. How can I identify the most valuable players among the supplier resources?

95. What kind of rewards may I give to supplier resources to thank them for their contribution?

96. Should I write performance evaluations for supplier resources?

97. What criteria should I use to evaluate members of my staff who work closely with supplier resources?

98. How can I avoid attrition among supplier resources as the project's end approaches?

99. How can I avoid attrition among my staff as the outsourced project's end approaches?

Guru

100. What new opportunities will I have in my career after I have successfully managed an outsourcing project?

Patricia Ensworth is president of Harborlight Management Services, a project management consultancy that serves corporate, nonprofit and government clients. She has worked as an outsourcing vendor relationship manager, quality assurance manager, and program manager, and she holds a variety of certifications, including Project Management Professional and Certified Software Quality Engineer. Ensworth is also the author of, The Accidental Project Manager: Surviving the Transition from Techie to Manager (Wiley 2001).