When a Project Manager should not recommend offshoring?
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"
Comments
Having spent 9+ years in the offshore industry, I have developed my own model to identify projects that are worth offshoring and the ones that shouldn't be offshored. This model is like portfolio analysis that most of the IT services organisation offer to their client. But this model of mine is driven by business benefits and ROI and not by technology.
My personal view is that one can offshore almost all types of project only once the client organisation has matured over the years in managing offshore projects successfully. Every organisation is different and hence what worked for one may not work for you. This is the reason why many organisations are looking at experts to help develop and execute offshore strategies.
Posted by: Akshay S Upadhye | April 16, 2007 02:09 PM
This is very informative. I would like to know more on this topic especially on how to categorize the projects in terms of doable/ not doable on remote basis.
I would also request Akshay to share his experience on this aspect and the model he is talking about.
Posted by: Mubeen Qawi | April 28, 2007 09:10 AM