Many Western countries, where the standards of living are higher, jump at the opportunity to "save money" by offshoring many things including manufacturing, food production, clothing and web application programming / technical services.
In the area of custom business application programming and technical services we've seen an enormous rise in offshoring. But here are some realities that people don't always want to talk about:
- Not all offshoring countries are created equally. There are cultural, technical and productivity issues that can often be incompatible with the originating contract country's needs or expectations. Potential for cost increases.
- Many offshore firms "work hard" but not necessarily "smart". Potential for more cost increases.
- Throwing large numbers of contractors on a project is not the solution. In reality, this is usually the beginning of the end! I've seen this in many offshore teams, they have large teams which don't seem to communicate well with each other. It's been well studied that smaller, agile teams are much more productive than massive ones. I know one company that had 50 programmers and a 2 year backlog. They pared down to 5 programmers and within 6 months got rid of their backlog and were ahead of schedule. Large = definite increase in costs.
- Hand them specs and they will code. Actually, quite a bit of hand-holding is usually needed in order for the offshore firms to "understand" what needs to be actually done versus nodding their heads that they understand you have a project for them. Definite increase in costs if not communicated clearly from the onset of a project.
- Make sure you don't get the bait and switch from "local" companies that are nothing but fronts for foreign firms. These companies usually have smart people who can sell, consult and even manage projects...BUT, the work is quietly being offshored. Major increase in costs more often than not.
- Don't train them on your dime. Offshored resources should already be trained in the products they're working on. Unless you're willing to accept training costs for a workforce that could be unstable, transient and unreleable, make sure the company has skill sets in what you need. Those training costs will often wind up benefiting other clients, not yoi. Definite cost increases.
- Time differences do matter. When your offshored firm is a day ahead or 8-17 hours ahead or behind you, there will be major logistics issues in getting communications to work adequately and when you need them. Much of this can be handled with good planning, but on tight deadline projects this is suicidal. Most people want an answer or query responded to in real-time. This is rarely the case with offshoring. If you offshore, make sure your projects are longer, not time-critical and and well padded.
- Rates are cheap up front but they usually double, triple or quadruple as projects continue. One problem with many offshore firms is that they rarely meet deadlines. This is often a cultural issue in which time is very relative and they don't have the drive to meet schedules or to bring up issues with projects to
Rick Zanotti is the president of RELATE, an IT and Training consulting firm in business since 1984. He upper level IT management experience, has implemented numerous ERP systems and also is adept at multimedia and broadcasting. He has over 35 years excperience in Systems, Training and Business. Rick is also a video podcaster, public speaker and Management consultant. Rick loves dogs and teaching martial arts.