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While you pay offshore vendors much less than what you would be paying a U.S. Vendor, some members of your staff complain that offshore productivity is really low, that 2 or 3 offshore people are doing the same work that used to be done by one experienced person in the United States. And thats not all, offshoring entails additional costs for travel, communications, and duplication of equipment, to name just a few expenses. At least some of your staff may be implying,or even loudly proclaiming,that offshoring is not saving money after all and moving some functionality was a bad idea. Even if offshoring may have saved you money in the beginning, it may not be doing so any longer. After all, offshore labor costs are on the rise.
In order to understand the full cost of offshoring, you should take into consideration the intangible costs also. If, for example, your management team must work into the night and arrive at work in the early morning to manage an offshore resource, their perception about whos benefiting and whos hurting becomes personal. While for a temporary period, your staff may be willing to do this to be good corporate citizens, you cannot ignore the human cost here in the U.S. of offshoring. To get to the real costs of offshoring, you need to develop an objective view of all facets of the costs, including intangibles and any differential in offshore productivity.
Avoid Costly Process Deterioration
When your domestic team has a problem, someone from one cubicle can walk a few steps to discuss it with someone in a nearby cubicle. But when continents and time zones separate the teams, processes must be razor sharp and maintained religiously or they will tend to break down. The companies that use offshore resources most advantageously will tell you that they periodically review all processes to assure that the offshore resources are meeting their goals and that operations are smooth both domestically and offshore. Typically, symptoms of broken processes include time and cost problems, politics between domestic and offshore groups, and breakdowns in teamwork.
Offshoring management should include periodic audits to identify and correct such problems. While this is a good business practice, it is particularly applicable in the current environment where offshore vendors are experiencing very high rates of growth and turnover of staff is now the norm.
It is vital to address problems before their correction becomes too costly in terms of time, money, and interpersonal relationships. When problems are allowed to persist for too long, correction may no longer even be possible and companies and their offshore resources sever their relationship. This would represent mutual failure. Your offshore resource wants to do a good job and is likely to be at least as frustrated as you are when a lack of direction and flawed processes interfere with its ability to perform.
When the problem du jour consumes a U.S. management team, offshore activities can too often be left to operate in a vacuum. This situation is particularly true when the U.S. management and technical personnel have other responsibilities in addition to overseeing or helping the offshore organization.
When the offshore team senses that you are too busy with other issues, generally they will not push hard and aggressively get your attention to get a solution. They will try their best to develop a work around and try to solve it on their own , which they may not be able to do. Depending on the nature and severity of the problems that distract management, the situation offshore can become very severe before it hits your radar screen.
But by then, significant damage may have occurred. I didn’t hear anything about it and assumed that everything was OK, your U.S. team members offer in their defense. But how could they hear about it They were too swamped to listen. Explanations and excuses always exist, but not only don’t they solve problems, they don’t prevent them. You need to have escalation and other management processes in place and create an environment where your offshore team feels comfortable to bring forward issues, regardless of how busy you are. In addition, a regular program to review offshore projects from a process and procedure viewpoint can prevent this situation and assure that U.S. and offshore teams remain aligned and in sych.
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