5 Reasons Offshore Outsourcing Doesn't Work


    ComputerWorld is running this article on “five reasons why offshore deals go bust” — at least, according to analysts of Gartner. Several of the reasons you’d expect — unrealized cost savings, poor commitment and communications, cultural differences and a lack of expertise in doing this. But here’s one that’s worth noting:

    Loss of productivity:

    Staff at an offshore service center probably won't be as productive as internal staff back at home, at least not initially. Gartner offers several reasons: Staff turnover can be high in competitive offshoring markets such as Bangalore, India, which also means programmers there may be new and inexperienced. And service centers overseas struggle with ambiguities in the work they are assigned and shifting directives. Sending jobs overseas can also lower morale at home, creating a drag on output.

    I’ve heard some advisors recommend that you’ll need two people offshore to accomplish what one internal person gets done. I think that’s extreme and varies based on the particular individuals involved and the management applied. But even if the loss is less than that, you should apply some percentage and add that into your calculations when you’re figuring out the budget.