Bringing together agile philosophy and software development outsourcing has been one of the hottest topics over the last decade. Lots of blog posts, discussions in social networks -- people try to figure out for themselves if it's at all possible to align agile methodology with the existing reality of outsourced projects.
How can vendors who practice agile gain new customers? How can customers as newly-converted adepts paste their vision of agile thinking on their existing outsourcing partners?
First of all, let's look back into when and why actually did it all start with IT outsourcing. Manufacturing outsourcing existed since long ago, but IT offshoring only started at the end of 80's - beginning of 90's. Companies jumped at the opportunity to save bucks and use cheap labor not only for producing goods, but for producing software. So, the main point is that from the very beginning outsourcing has all been about saving money. No other notable motivation - just saving money and using cheaper labor.
Next, along comes agile manifesto. People start seeing that the waterfall approach they've been using with their outsourcing vendors is not that good after all. Fixed price contracts do not guarantee real value (Scott Ambler writes very well on that in this article). Next, the more labor is outsourced to some country, the higher are the costs, so the main point for outsourcing which is cost savings makes no sense any more.
There're other even deeper-lying consequences. On the one hand, the country which outsources - or businesses in this country not the country itself - they save bucks but lose in the long run as they do not grow their own engineering minds, let alone all the problems that you have working with remote teams - yes, we have all this telecom in place, but nothing ever will replace face-to-face communication. If you often go on business trips to the outsourced destination to talk to your team - again, it's more costs. On the other hand, outsourcing makes a dangerous long-term impact on the recipient economies as well.
But the point is not about how bad or good outsourcing is. Vendors have written an array of blog posts on how to align agile and outsourcing - and that's natural - they want to keep going, so they do everything to back up their point of view proving that agile goes well with outsourcing. This might work true in some cases.
The companies that outsource on the other hand - they have legacy outsourcing teams. They need to get going with them as well, to stand up to all the funds already invested in their outsourcing center/provider.
So with all this outsourcing in our hands - what do we do?
As an agile outsourcing vendor, you should be ready to invest lots of time and effort to educating your new customers on the value of agile and to building a solid relationship. This might be a very difficult task since some people just don't want to get educated and prefer to stick to good old fixed price bids, logging and billing for gazillion of change requests, lack of communication and other "joys" of classical outsourced development.
As a company with established outsourcing facility, you're better off. But perhaps you could be even better off if you started this relationship not with an overseas company, but with a guy next door at least.
Anyway, you are where you are - so you would need to work with your outsourcing partner to practice the agile approach, since at the end of it all work with agile methodology brings real value, as opposed to counting short-term waterfall pennies and losing long-term gain.