Managing Offshore IT

I was recently consulting with a client of ours in Toronto and got chatting with the client’s admin manager who handled paperwork, logistics, and management etc for the CIO. We were talking about my end-date and termination of my access to their systems, firewall etc and she remarked that I was about the 38th person from Infosys to be working onsite at their office in 3 years. I remarked that the only common thread was the resident onsite Project Manager -- Let's call him Sam -- who handled all administrative, logistical and management issues from our end.

Sam’s responsibilities were varied, starting from identifying the request for needs, to onsite travel for Infosys techies, to arranging visa invitation letters to coordinating with the client’s managers on logistics when the new person arrived ...or someone departed. Ensuring that the offshore teams produced the required deliverables for him to get a client signoff was among his responsibilities, which included invoicing and ensuring billing for the work done.

One day I was an observer at an internal meeting chaired by Sam that got quite animated. The issue on hand was the client had postpone the User Acceptance Test (UAT) by a few months due to some internal scheduling conflicts and wanted to release our onsite folks allocated for the tasks since they wanted to reduce costs (understandable!)  Sam, the onsite manager was having to explain to the expatriate test specialists that their onsite engagement was abruptly ending in two days intend of the scheduled two months.

Though the testers understood the “business significance” of the move, they were unnerved nevertheless. Their personal schedules, plans and logistics were in a disarray and it wasn’t just a monitory issue since the policies in place would compensate them for any loss due to short-term travel, lease breakage of accommodation etc. An online request and follow-up call would ensure that their return tickets and paperwork would be arranged by the travel-desk.

While trying hard to keep the discussion veered around their professional concerns, they wanted to express their personal disappointment over the abrupt change too. Well, what about their desire to enjoy the ‘white christmas’ in Toronto…or the New Year’s eve here? The techies were not in a position to express such personal desires or plans and though the manager understood where they were coming from. The techies also realized that Sam was just the messenger, conveying the dictates of business and stakeholders.

Though traveling at short notice, living out of a suitcase (literally) and being flexible to the demands of the business, and clients’ needs are a part of a global software professional’s life, the yin-yang of personal desires and business drivers that needs to constantly be balanced. I have seen and experienced several such incidents over the years -- and also mentioned some case-studies in my book – but sometimes reflect if everything we do is about the business needs? What is the right answer?....I guess “it depends” 

Footnote: To his credit, Sam, in this instance was able to sound his peers in the Toronto development center of our company looking for software testing professionals and was able to refer them to a new assignment without having to immediately travel back to India.

Yet another Merry Christmas and a happy New Year.....!

Posted by Mohan Babu K. at 05:39 PM | Permalink | Comments (2) | TrackBacks (0)

He described how different it was to work in a “truly multicultural” team in Canada, which surprised me, given that in his former job, he had worked for several clients in the US and Europe. He said this current experience of being an immigrant colleague was ‘different’ from being an expat from his (former) company. I guess, in his case, the dynamics of being a “consultant” versus being a full-time employee of an IT department also was weighing in though that is not the aspect of software culture he was talking about. This made me reflect: there must be something to be said about experiencing working in a multicultural team; as opposed to just reading about it.

A perennial topic in offshoring and outsourcing aspects of managing across cultures and working with people from different backgrounds is also a topic I had dwelt in extensively in a chapter of my book.

Though almost a year old, Paul Tija’s article in “Global Services” makes for an interesting read, though it does not mean that I entirely agree with the viewpoints.  For instances Tija states that “Indians tend to be too optimistic about time and schedules. If an Indian is asked how much travel time is needed to reach a certain destination, the answer will probably be inaccurate and will not include the possibility of encountering traffic jams.” I wonder if he is just taking journalistic liberty in stretching the much lamented traffic woes of Indian cities with schedules and meeting deadlines. Surely he too must credit Indian software engineers with enough smarts to be able to predict their schedules in a traffic condition known to them? I am not the only one wondering about the viewpoint in the article.; Sanjay Kalra, a Bay Area technologist blogs “While many of these are cliched issues, and have been overcome to some extent, I still think that for Western managers it is a good idea to be aware of cultural idiosyncrasies and actively work to overcome them.”  In all fairness, Tija does not spare Europeans either, when he states “Some Dutch even say that it is easier to work with Indians than with Belgians.” (again, on this, I will reserve my judgement)

Aspects of Cultural Sensitivity in offshoring continue to be studied by both practitioners and academics. Though the viewpoints will continue to emerge, there is hardly a short-cut to experiencing it first hand?

Posted by Mohan Babu K. at 04:45 PM | Permalink | Comments (0) | TrackBacks (0)

For years, B-school students were taught about the significance of environmental and geographic location on success of business enterprises (read “Location, Location, Location”) a theorem that was essentially turned upside down by globalization and flattening world; apologies Tom Friedman.

It is interesting that the debate over “location” continues to come back in different contexts, be it “India vs. China vs. Other Country” or “Bangalore vs. Anytown” or other similar arguments. I am occasionally asked by client managers and executives on my views on Bangalore or India as “the” (read preferred) location for IT outsourcing. Case in point: James McGovern’s comment on my earlier blog is a query of this kind. “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.”

I generally try and skirt the question for a couple of obvious reasons. I spent most of my formative years in Bangalore (name likely to be changed officially to Bengalūru soon), I went to college there, and the nearby town of Mysore, and started my career in Bangalore so I would admit to a personal affinity to the city [The fact that Infosys, my employer, is also headquartered there may be a smaller factor to weigh in]. This said, like many fellow Infosys executives, I have also spent years living and working in different western cities, so I think I can be a bit less sanguine about just Bangalore or India.

Perhaps the same may not be true of the opinionated folks in the cyberspace. If one were to judge the success of a viewpoint by the number of vocal comments it generates on popular blogs, the recent Businessweek article “Outsourcing: Beyond Bangalore” would rank high. And why not? The responses on Slashdot for this article have been extremely opinionated. The article makes for an interesting read and focuses on four key topics

The Search for Lower Costs
Mix of Outsourcing Locations
Benefiting from Geography
Infrastructure Counts

One aspect of the article made me reflect on the biases of journalists and analysts.  The article quotes Linda Cohen, vice-president of sourcing research at consulting firm Gartner saying “Ninety percent of all outsourcing deals in the market today have been structured around cost improvement only," prompting the BW author to add that “By the third year of an outsourcing deal, after all the costs have been squeezed out, companies get antsy to find a new locale with an even lower overhead.”  .....Statistics, as the old adage goes, can be used to prove (or disprove) anything.

One would like to believe that fellow managers and executives who opt to work on larger offshoring and outsourcing initiatives do a better due-diligence, and don’t “get antsy” to “find a new locale with an even lower overhead”  by the third year of an outsourcing deal. And if they do, the driver in exploring offshoring is probably ONLY cost, and not the overall value.

A counter to the BW article comes from Economist magazine in “Outsourcing Growing Beyond India”

Moral of the story: Let journalists and analysts debate the merits of “external factors” impacting offshoring; practitioners like us have to continue to make it work….one project at a time.

Footnote: You may also be interested in my recent column "How project managers can succeed with globalization" in IT Manager's Journal.

Posted by Mohan Babu K. at 04:26 PM | Permalink | Comments (0) | TrackBacks (0)

Prof. Murugesan raises some interesting points in the guest blog entry, leading with the query “What Drives Offshoring: Just Low Cost or Other Factors?”

I agree with Prof. Murugesan’s viewpoint that “In a flat world, the national boundaries become less significant, and the winners are those who capitalize on capabilities available globally.” Extending this, one could also be asking: what are the implications of this flattening on Project Managers?

A lot!

Most managers recognize the need to be aware of the “external operating” environment, especially searching the landscape for trends that could impact their initiatives, programs and projects. An understanding of the market dynamics, competitor strategies and trends can impact their day-to-day functioning too….especially when it comes to pursuing new opportunities, responding to proposals, RFPs, RFIs and the like. This awareness also helps in advising clients and stakeholders on emerging thought leadership, especially when it comes to choices and options that are available to them (the business leaders)

I tried to address this query in the section “Offshore Outsourcing: The Strategic Imperative” where I discuss the key drivers behind offshoring that include Limited Talent pool, Cost Pressures and the Innovate vs. Sustain dilemma. This is a topic I also blogged about while discussing “Offshoring as a business tool”

In a nod to this trend of “moving up the value chain,” a Forbes analyst, in a recent article “Consultants From Chennai” talks about how “Indian firms are moving into high-value strategic advice faster than anyone had expected. Just ask IBM, Accenture and EDS.”  [I would prefer not calling out firm names..but what the heck.. Just quoting the article]

As far as Prof. Murugesan’s query "Is offshoring good or bad, or both?" goes... I am tempted to say “It depends.” well, I am a typical consultant; what do you expect?

Posted by Mohan Babu K. at 03:21 PM | Permalink | Comments (0) | TrackBacks (0)

In advanced economies debate rage about offshoring IT services – such as software and Web development, technical and customer support services, data analysis, customer relationship management and business intelligence (BI) activities – and other business processes and functions to countries such as India, China, Brazil, Philippines and Ireland. For instance, in Australia, recently there were debates and media rumblings about major Australian companies such as the national carrier Qantas and banks Westpac and NAB moving some of their software development to India.

But, despite protests from the employees, dissatisfaction among the general public and potential political and social fallouts, and risks in outsourced projects (see Communications of the ACM, November 2006, pp 75-79)  many enterprises continue to offshore some of their activities. And this trend is not going to stop soon. Why? What drives this trend? Is it just low cost of getting things done overseas, or are there other factors? 

As Graeme Philipson wrote in the article, IT welcomes its Indian summer, published in The Sydney Morning Herald, 5th December  2006:   “It's not just about money. Increasingly, it's about capability. Cost remains a factor - there is a worldwide trend towards outsourcing and a search for lower cost and more efficient business processes.”  “The most common reason companies now go to India for software development is because of the vast talent pool afforded by the sheer size of the place.”

The IT industry in India “employs millions of people. The top five software houses alone are looking to hire 150,000 new programmers over the next 12 months. Across the whole industry, demand is expected to exceed 750,000 new programmers.”

Most Indian software companies are high quality providers and realize they must deliver first rate services and products. They barley mention lower cost any longer as a factor in the industry's success. It is all about things such as capabilities, support, discipline and performance. 

The Indian IT industry is matured, delivers quality products and services at low cost, and meets or even exceeds its clients' expectations. And, it has vast potential and has capabilities to meet the varied and challenging demands of software, IT and other services required by clients all over the world.

Nevertheless, in advanced economies such as the US, UK and Australia, there is strong negative perception about and opposition to outsourcing (offshoring). Their major concern is job loss, though other issues such as privacy and integrity of customers’ information and intellectual property take prominence. As a journalist wrote in an Australian newspaper recently, for enterprises that offshore its service needs, it is the question of their survivability, improving their competitiveness and providing better customer service in cost-effective ways, rather than how and where it gets services accomplished. If they don’t offshore some of their services, some of the enterprises can’t remain competitive and sustain their business contributing to further job loss and strain on economy and the society.

In this context, it is important for everyone to recognize that we are living in a ‘flat world’ (see The World Is Flat: A Brief History of the Twenty-first Century, by Thomas L. Friedman, Updated and Expanded edition, April 2006)  and to adopt to it. In a flat world, the national boundaries become less significant, and the winners are those who capitalize on capabilities available globally.

While offshoring may be bitter for enterprises and the nation that offshore their activities, the alternatives could be more damaging. It is, perhaps, the question of choosing a better evil (swallowing a lighter bitter pill)!

Your thoughts on pros and cons of offshoring, from multiple perspectives – enterprises’ perspective, national perspective, social/society’s perspective and others – are welcome.

Is offshoring good or bad, or both?

San Murugesan 

Posted by Guest Author at 11:23 AM | Permalink | Comments (2) | TrackBacks (0)

Thus far I have been the primary author of this blog. To add new perspectives, I plan to collaborate and invite other authors to also add their inputs and perspectives.

It is a pleasure to have Professor San Murugesan from Southern Cross University, Australia join us in sharing his views on offshoring and globalization in this blog. His research areas include Information retrieval, Wireless Internet Technologies and Applications, Web Engineering, IT adoption, Globalization and Offshoring.

Posted by Mohan Babu K. at 08:13 AM | Permalink | Comments (0) | TrackBacks (0)

At a recent conference where I was presenting, the audience was gung-ho on leveraging offshoring teams and on offshore outsourcing in general. However one person in the audience wanted me to comment on instances when one could (or should) not offshore. I was tempted to say that “all” projects could be offshored successfully… but with varying degrees of returns / success.

I could have deferred the question to viewpoints like “9 Reasons Why Software Offshoring Won't Work (and Why You Shouldn't Believe Them)”

However, I decided to reflect on some practical scenarios when it wouldn’t make sense for a manager – of a service delivery group even with an offshore team -- to recommend offshoring. 

Reason: Project is too small: And the perception is that the overhead of managing offshore-onsite coordination will offset the (cost) benefits of offshoring. In my observation, no project is really too small to be offshored (refer to emerging research on micro-sourcing or offshoring by SME (Small, Midsize Enterprises). [note: An interesting read Scott Burkett’s blog on “Offshoring for Startups”…caveat: I don’t agree with all he says in the blog] .... Back to the point I was making, one could make a case for not offshoring small projects. For this argument, assume that the service delivery company already has adequate staffing at the client site supporting a few other initiatives…And the current onsite support role is at a “low / light” phase of the life-cycle. Here the decision comes down to whether the manager can get the onsite team to “extend” and take on a quick project onsite without the need to extend work offshore.

Reason: The development methodology being adopted is not widely used by offshoring teams. Examples are that of niche life-cycle models Agile Development, eXtreme Programming (XP) and the like. Even in these cases, one can successfully argue that it is not the methodology that constraints offshoring. Ref my blogs on Agile Offshore Development

Reason: Legal constraints: There are projects and programs, especially those in the government, defence and allied sectors that may have (legal) clauses precluding contractors and service delivery firms from sending “work” outside the geographic or national boundary. In some instances, such projects require team members to undergo “security clearance” and be citizen of the country where the project is being executed. Though few and far between, one cannot argue against this constraint. This is perhaps the only convincing reason whey a Project Manager would NOT recommend offshoring.

As obvious, these are just my eclectic viewpoints…open to debate! I also invite you to add to the "reasons"

Posted by Mohan Babu K. at 01:06 PM | Permalink | Comments (2) | TrackBacks (0)