A Distant Shore

Is moving your development project offshore the right move for you?

By SUDHI RANJAN SINHA

As a CEO, CIO, or senior IT manager, you feel the pressures of bulging it budgets and constantly changing technology. To maintain competitiveness, you need to execute projects despite money and skill crunches. Outsourcing has been a popular option for a long time. Improvements in communication technology and rapid solution requirements in the Y2K era opened a level playing field for offshore outsourcing, tapping into the huge technical resource pool available outside the country and producing quality work for much less cost.

The Benefits

Using an offshore partner has some very direct, obvious, and immediate advantages to your bottom line:

• Productivity. An experienced offshore partner, specializing in IT project delivery, should have proven systems and procedures that can increase your overall productivity. Many offshore development centers (ODCs) are certified under the capability maturity model (CMM), acknowledging their commitment to improved development procedures. If the ODC is several time zones away from the parent site, it will contribute round-the-clock productivity. In postimplementation analysis of offshore projects, productivity emerges as one of the top scorers for ODCs.
• Cost. Usually cost is a big motivator for moving projects offshore. During the first three to six months, you may make investments in remotelink, knowledge transfer, and resource sharing. But once the setup is in place, cost reductions can accrue significantly.
• Flexibility. Because your initial investment in specialized equipment and training is relatively low, you can rapidly start and end new projects.
• Expertise. An established offshore partner should be able to provide expertise in areas outside the existing skill set of your company. This expertise may never be available inhouse because it's too expensive, nearly impossible to procure, or only necessary for a shortterm requirement. Ready availability of such expertise is critical in this world of zerotimetomarket demands.
• Staffing reorientation. Using an offshore partner, you can free up your resources to work on strategic projects or other critical work. With a defined labor strategy, this approach can benefit your existing IT personnel giving them a chance to work on new development or other projects viewed as more interesting or rewarding.

The Risks

Although the rewards can be significant, you should evaluate the numerous potential risks of offshore development. You can address many of these through effective advance planning, but others may be persistent:

• Communication. People offshore and onsite are not always on the same page and may not express their views or concerns precisely. >Eliminating ambiguity and ensuring clear communication are major concerns that you need to address up front.
• Legal. Every country has its own intellectual property, patent, copyright and export laws. You must take care that such issues do not interfere with your project's execution and delivery. Companies frequently neglect this potential hazard.
• Political. The political climate of any country can change overnight, and nobody can control it. If the ODC is in a zone of high political instability, it like any other business enterprise may be jeopardized.
• Cultural. You must understand cultural differences and address them through training and information sharing. Failure to understand the unique body language, gestures, and cultural mores of international resources can result in misunderstandings and communication failures. One of the best examples in this category is the difference in how people from different countries or even disagreement. In North India, moving the head sideways (like an American shake for no) does it, while in southern parts of India, people move their heads up and down. Such differences can impair effective communication.
• Infrastructure and processes. Offshore vendors may be unable to ramp up necessary hardware and software resources quickly. Also, if the vendor does not follow good development and verification methodologies, the quality of the project could be in danger. Proper quantification of the work and definitive change management procedures are necessary.