Yes James, Offshoring is fraught with risks. But...
So is every technology or business endeavour. One need to recognize the risks and learn to mitigate their impact.
It was interesting to see James McGovern’s comment on a recent blog entry of mine, chiding me “Would you be willing to show more integrity by also talking about what are the pitfalls of outsourcing?”
You bet James. Risks and Rewards, as any business and technology leader would agree on, are two sides of the coin.
There are inherent risks in offshoring that few of us can really shy away from. Right from the second chapter --["Planning Offshoring"] of my book on Offshoring, I start addressing aspects of offshoring risk. The way I look at it, organizations need to identify and evaluate offshoring and management risks early to avoid surprises and pitfalls.
In my research, I also quote from analysis by gurus in the industry. Case in point is the analysis by Ralph Kliem, who in his Information Systems Journal paper ["Managing the Risks Of Offshore IT Development Projects"] states
‘Offshore outsourcing of IT development projects does not eliminate risks. Instead, it combines new risks with existing ones often associated with onshore projects. Project managers must recognize that these offshore projects will likely require even greater management of risk due to the unique challenges posed by geographical, cultural, and other differences. Otherwise, the gains attributed to offshore outsourcing of these projects will not be realized, and the chances for failure may be augmented.’
In the “Risks of Offshoring” section of my book, I attempt to address several categories of risks inherent in offshoring. Quote: With offshore development, risk management assumes a renewed focus. Risk in the offshore development model is contributed by three major sources:
- Organizational Risk
- Technical Risk
- External Risks
I invite you to critique the “Risks of Offshoring” section in the section of my book where I address these risks in detail.....and more importantly, I attempt to address some of the mitigation strategies.
Ps: my employer does not shy away from discussing risks of outsourcing and offshoring either. A couple of links published on the Infosys website.
GDM Risk Mitigation
BPO Risks and mitigation
and ….lots more research and case studies available; if interested drop me a note.
Comments
Maybe another dimension to talk about is when outsourcing is beneficial but when companies should avoid India for other countries such as Brazil, Jamaica, Trinidad, etc.
Posted by: James | November 12, 2006 12:02 AM
Interesting query James. I will try and address it soon. In all fairness most Project Managers (and IT executives) only provide inputs on Offshoring country preference; the decision on opting to offshore to a specific country is generally taken by CxOs in accordance with other business goals and drivers (International Business Management 101)
Posted by: Mohan | November 14, 2006 06:47 PM
You may also be interested in the article in Computerworld:
"IT offshoring: It's not just for India anymore India once got 80% of U.S. spending on offshore work; now it gets about 59%"
http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9006002&intsrc=news_ts_head
Posted by: Mohan | December 17, 2006 02:52 PM
I agree with Mohan competeley that Risks and Rewards are the 2 sides of the same coin.
Anything that one does in life has some risk associated with it. What is important to identify these risks and have a well defined risk mitigation strategy. I have authored a white paper on this and you can refer to it on www.sourceparadigm.com/whitepapers.htm
Posted by: Akshay S Upadhye | April 16, 2007 02:15 PM