Keep the work local and spend the saved money or send it overseas to get the same value at a lower price? For many budget-conscious businessmen, the latter makes sense. But it doesn’t mean that offshoring is the ultimate solution. It can involve risks and potential long-term downfalls when it comes to business agility and innovation.
Before launching an offshore development initiative, senior management needs to thoroughly understand the challenges to successful offshoring. Major risks and issues include differences in language, culture, politics, regulations, and work practices; all of which can disrupt a collaborative customer-supplier relationship. Specifically, some of the key challenges include:
- “Loss of control” over projects and processes
- Increased management attention
- Concerns over retaining intellectual property and other proprietary information
- Concerns over potential legal issues with foreign companies
- Security risks
- Internal IT departments may not welcome offshoring due to concerns about job security
- Dependence on supplier-provided information
- Limited understanding of suppliers’ true reputation and track record
Therefore, the businessmen need to think and act carefully to make offshoring successful. Following are the things that they can do for this purpose.
- Understand the market where you plan to offshore and make sure the skills you need are available in that market.
- Understand any cultural differences in how your offshore service provider or team operates compared to your onshore staff.
- Don’t underestimate the stakeholder engagement and change management, which is required to make the transition from an onshore IT team to an offshore IT team that you don’t have direct relation with.
- Put in place clear processes and controls when managing your offshore service provider or team.
- Put together a five-year plan where you have to be to avail the benefits from offshoring.
So, make your offshoring strategy effective and get benefits from it.