Offshore Mania
By Peter Bart Perkins
Offshore outsourcing is here to stay, since U.S. companies need to remain competitive in the world market. Responsible business people have to consider moving work to locations that offer the best combination of cost and service. Unfortunately, the U.S. is in the midst of an offshore mania. The hype in the business and trade press (as well as that great executive opinion-shaper, the airline magazine) simultaneously causes and confirms this. As a result, a large number of companies are convinced that they must send something offshore to remain competitive and are further convinced that they must do so immediately.
In addition, many companies are feeling so pressured that they truly believe they don't have time to examine the questions necessary for success offshore. But companies that focus solely on the potential cost savings from going offshore, without careful evaluation of corporate motivations, business issues and trade-offs, will be unhappy with their offshore efforts down the road.
No Shortcuts
Many companies are currently searching for the "right" offshore partner. But they aren't really in a position to determine which of the myriad offshore options best meets their needs unless they've established their sourcing requirements. This is most effectively accomplished through a process that examines the critical sourcing issues, which then leads to a deliberate sourcing strategy.
I've recently been approached by a number of companies that are interested in going offshore but that want to jump straight to partner selection and contract negotiation, without doing any homework. For example, a systems integration firm asked me to introduce it to an offshore company that could supply programmers and project managers. In order to determine which companies might be most appropriate, I asked the systems integration people several qualifying questions, including these:
Which cost/service trade-offs are you willing to make?
How much risk can your company tolerate?
How will you make decisions and resolve disagreements with your offshore partner?
How important is Software Engineering Institute certification? Does your company require CMM Level 5 processes?
Do you have several low-risk projects that would make good pilots?
When faced with these questions, the systems integration people became impatient. They insisted they didn't have time to explore such questions, but needed to select a partner and sign an agreement immediately. (It's interesting to note that this well-established company would never dream of starting one of its own consulting assignments without a clear, well-written set of requirements.)
A Quickie Wedding?
This company reminds me of someone who desperately wishes to be married. With only that goal in mind, he rushes to a justice of the peace with someone he met a week ago at a dinner party, despite the advice of close friends. What do you suppose the odds on that marriage lasting will be? Such a brief engagement can result in a successful marriage, but the chances are extremely poor. Do you want to bet your company's future on the equivalent of a one-week engagement? And, by the way, just like divorce, leaving your offshore partner will be costly and painful.
I've had similar experiences with enough firms to convince me that the U.S. is in the middle of a full-blown offshore mania. Looking at the history of manias, from the construction of the railroads during the 1800s to the initial boom in automobile manufacturers to the Internet bubble, it's clear that they always end (sometimes spectacularly!).
The mania phase of offshore efforts will eventually end, too. At that point, companies will send work offshore only as the result of business decisions that have been well thought out. If you're currently feeling pressured to outsource or to send something offshore immediately, invest the time that this important business decision deserves and requires. Only then can you successfully leverage your sourcing decisions to select the right offshore option and design a partnership that will result in long-term success.
COMPUTERWORLD
Offshore outsourcing is here to stay, since U.S. companies need to remain competitive in the world market. Responsible business people have to consider moving work to locations that offer the best combination of cost and service. Unfortunately, the U.S. is in the midst of an offshore mania. The hype in the business and trade press (as well as that great executive opinion-shaper, the airline magazine) simultaneously causes and confirms this. As a result, a large number of companies are convinced that they must send something offshore to remain competitive and are further convinced that they must do so immediately.
In addition, many companies are feeling so pressured that they truly believe they don't have time to examine the questions necessary for success offshore. But companies that focus solely on the potential cost savings from going offshore, without careful evaluation of corporate motivations, business issues and trade-offs, will be unhappy with their offshore efforts down the road.
No Shortcuts
Many companies are currently searching for the "right" offshore partner. But they aren't really in a position to determine which of the myriad offshore options best meets their needs unless they've established their sourcing requirements. This is most effectively accomplished through a process that examines the critical sourcing issues, which then leads to a deliberate sourcing strategy.
I've recently been approached by a number of companies that are interested in going offshore but that want to jump straight to partner selection and contract negotiation, without doing any homework. For example, a systems integration firm asked me to introduce it to an offshore company that could supply programmers and project managers. In order to determine which companies might be most appropriate, I asked the systems integration people several qualifying questions, including these:
Which cost/service trade-offs are you willing to make?
How much risk can your company tolerate?
How will you make decisions and resolve disagreements with your offshore partner?
How important is Software Engineering Institute certification? Does your company require CMM Level 5 processes?
Do you have several low-risk projects that would make good pilots?
When faced with these questions, the systems integration people became impatient. They insisted they didn't have time to explore such questions, but needed to select a partner and sign an agreement immediately. (It's interesting to note that this well-established company would never dream of starting one of its own consulting assignments without a clear, well-written set of requirements.)
A Quickie Wedding?
This company reminds me of someone who desperately wishes to be married. With only that goal in mind, he rushes to a justice of the peace with someone he met a week ago at a dinner party, despite the advice of close friends. What do you suppose the odds on that marriage lasting will be? Such a brief engagement can result in a successful marriage, but the chances are extremely poor. Do you want to bet your company's future on the equivalent of a one-week engagement? And, by the way, just like divorce, leaving your offshore partner will be costly and painful.
I've had similar experiences with enough firms to convince me that the U.S. is in the middle of a full-blown offshore mania. Looking at the history of manias, from the construction of the railroads during the 1800s to the initial boom in automobile manufacturers to the Internet bubble, it's clear that they always end (sometimes spectacularly!).
The mania phase of offshore efforts will eventually end, too. At that point, companies will send work offshore only as the result of business decisions that have been well thought out. If you're currently feeling pressured to outsource or to send something offshore immediately, invest the time that this important business decision deserves and requires. Only then can you successfully leverage your sourcing decisions to select the right offshore option and design a partnership that will result in long-term success.
COMPUTERWORLD
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