Thought leadership

Balancing onshore and offshore for maximum value

Outsourcing services and corporate functions is a way of  life in nearly every industry in the world today. If  managed properly, outsourcing brings benefits including project control, best practices, lower costs, skilled labor, and risk offsets, among others. But realizing some or all of  these benefits is not a given: planning and a carefully laid out strategy are essential, especially if  outsourced resources are offshore. In our experience, those companies that have reaped the benefits from offshoring projects are those which actively managed the projects onshore as well as offshore.

The list of botched offshoring projects is a long one; to name a few:

• A telecom company outsourced the implementation of a new GIS application, and hired a firm that the CIO had worked with before – with a non-competitive bid. Six months into the project, the project manager finds out that a friend, also a project manager, is paying 50% less for the same type of work from the same vendor
  
• A regional transportation company needed help converting data into their GIS application, and hired a vendor after a lengthy and competitive selection process. The company did not spend any time providing rules or standards for the data conversion, as they trusted the vendor to complete the job with little or no guidance. When the data was delivered at the end of the project, vast quantities of data were missing or incorrectly coded, resulting in a delay in delivery and a frustrated end-user base
  
• A shipping company wanted to upgrade their GIS application and hired a vendor they had worked with many years ago (before the vendor had an offshore presence), located twelve time zones ahead of the company. There was very little in the way of project kick-off or onboarding for the vendor. The company found that there were cultural differences that they had not anticipated; this and the time zone difference resulted in miscommunication, missed deadlines and an overall increase in cost for the project.

Despite the long list of failed projects, why do situations like these continue to happen? Offshoring projects are not seen as the complex undertaking that they are, and insuficient care is taken to manage the unique elements of these projects. With careful planning, offshore projects can be a core component of your sourcing strategy.

To be effective, organizations should consider the following questions, in this order:

• Should you offshore and if so, what should be offshored?
• How can onshore support offshore?
• How do you select an offshoring partner?
• How do you make it work?