Just tuned into an interesting panel presentation titled, “Look Before You Leap Into Offshore Outsourcing.” It was hosted live as part of a Ziff- Davis Virtual Tradeshow. Audience participants could answer polls and ask questions of the panelists.
You can tune into it here in recorded format (scroll down to the seminar listed for Thursday at 3 p.m.):
(You may have to register.)
Participants included Elliot Markowitz, Editorial Director of eSeminars; Lance Travis, VP of Research for AMR; Bruce Hahn, Director of Public Affairs for CompTIA; and Ray Mota, Chief Research Office for Synergy Research. This was a useful set of perspectives. Mr. Travis addresses the executive or manager curious about offshoring. Mr. Hahn addressed the worker issues and legislative initiatives underway to curtail offshoring; and Mr. Mota talked a bit from the perspective of the service provider as well as the client side.
Here’s a quickie tip offered by Mr. Travis:
If you’re doing offshoring to cut expenses, don’t expect the kind of cost savings you read about during the first 18 months. That first phase in offshoring efforts should be dedicated to experimentation, learning about the processes and choosing IT partners.
It takes time to learn how to do this effectively. Do small pilots with several service providers…. you want to try out two or three… When you find the ones you work best with, then you start to consolidate down.
Another comment from Mr. Travis regarding “rural outsourcing,” the use of firms in places like Arkansas, where wages tend to be lower.
If you look at India, the cost savings are never as great as the differential in salaries would imply… A lot of that is overhead of managing the relationship. You can reduce a lot of that overhead and achieve similar cost-savings by going to a nearshore Canada or going to Arkansas, because you’ll eliminate the time differences and the cultural differences… What will you give up? The critical mass of process and project expertise that you get with Indian companies. If you need five or six people doing Java programming, go to Arkansas. If you need 50 people to enhance the supply chain for the automotive industry, [look to India]. It can’t always just be [about] the cost [savings].
If you listen until the very end, you'll hear a question I asked about the skills that current IT folks should develop to weather the transition undergoing the industry right now. A couple of the panelists supply their answers.