Offshoring made easy – the 6 rules of success.
The trouble with offshoring….
Just about everyone seems to have an offshoring horror story and the blame for failure nearly always lands squarely at the feet of the outsourcing supplier or the offshore resources. Here are a few of the most common reasons I hear about offshore failure.
- Deficiencies and variable abilities among the individual resources involved
- Resource/skills availability
- High staff turnover leading to lost knowledge and poor productivity
- Lack of relevant domain specific knowledge
- Poor execution of the roles and responsibilities
- Cultural differences (e.g. a yes mentality)
- Communication barriers
- Impact of time zone difference / national holidays
Yes, it is true that offshore failures often have resource/vendor performance issues at their heart. But why? – The uncomfortable truth is that the root cause for failure offshore is almost always as a result of failure onshore. If the wrong resource/vendor has been hired, who is to blame? If you have the right resources but do not enable delivery, again who is to blame?
In reality the above is not a list of reasons for a failed offshoring projects; they are list of symptoms of a failed offshoring strategy and approach.
Offshoring can generate significant cost efficiencies or extend your capability, but not always. The ability to recognise, understanding and manage the unique challenges of the working landscape in which you operate, regardless of location, is a pre-requisite to success.
Six basic rules.
Rule one: Know what and when to offshore – and perhaps more importantly know what and when not to offshore.
Rule two: Don’t offshore a problem – if you can’t make a project work onshore, what makes you think sending it offshore will help?
Rule three: One size does not fit all – don’t allow an approach to be imposed on you, tailor your offshore strategy to meet the needs of your overall business strategy.
Rule four: You need onshore buy-in – empower your onshore team to make offshore work. If the onshore team have concerns about their own job security or the ability of the offshore team then your project is destined for failure. If you treat your offshore colleagues like second class citizens don’t be surprised when they deliver you a second class service.
Rule five: Know the labour market – many offshore hubs have highly competitive and rapidly developing labour markets.
You must understand:
- How to accurately identify, assess and effectively develop resources with the appropriate capabilities and domain skills. If you are using a vendor the same rules apply – are resources with the right skills being allocated to your project?
- How to eliminate high staff turnover. This is simply – hire the right people and give them a reason to stay, and I don’t mean by just paying them more money. If you are using a vendor, make sure you understand their staffing issues.
Rule six: Good programme management is critical, onshore and offshore – make sure you have:
- Strong and clear ownership of outcomes.
- Day-1 (and beyond) focus with governance measures driving and facilitating the right outcomes.
- A pro-active engagement model which nurtures good behaviours and feedback loops to enable corrective action.
- Fully aligned onshore and offshore teams that are working on common schedules in sequenced designs on an integrated solution.
Even with the current state of the pound offshoring can reduce resourcing costs by up to 80% or more. That said, the offshore community offers a lot more than just cheap resources. Their labour markets are complex and hard to navigate but they are also littered with highly skilled and highly motivated resources. If you are able to separate the wheat from the chaff and empower them to delivery real measureable outcomes then benefits can be significant.
If you approach offshoring as purely a cost saving exercise you are missing a trick and are likely to fail. The next time someone tells you that the five hour time difference in causing communication breakdown and slowing delivery on a time critical project consider this – if the right approach and strategy is adopted time difference is never an inhibitor. In fact on right project it can enable a round the clock operation that will accelerate delivery.
If you are frustrated with your current offshore output, if you or are considering offshoring and would like to piggy-back off our learning or would just like to understand a little more then I would be delighted to hear from you.
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