January 25, 2007
Sin & Offshoring
Agreed that most organizations that outsource operations to offshore environments consistently save money by taking advantage of lower labor costs. However, what they don't realize is that most offshore initiatives could do much better at improving cost efficiency. Evidence suggests that poor planning, shoddy implementation and ineffective management are endemic to both captive and outsourced offshore projects.
These problems could result in lower profits or even losses. Usually, the failure is not due to lack of capabilities, experience or resources. The main reasons are simple human failings like laziness, greed, arrogance, etc. I know it seems a bit difficult to believe but to put it simply, good old-fashioned sin is to blame. Cio.com reports:
Don't be lazy. Don't "lift and shift" and settle for a short-term cost reduction without considering the long-term implications. Baseline performance before offshoring, and address performance issues before moving. At a minimum, develop a performance improvement plan for the offshored operation. Better still, re-engineer the operation before offshoring. Invest in building solid processes and an onshore management framework, and offshore, invest in training and orientation to make offshore staff part of the global organization and to create a sense of belonging.
Read more: A Sinner's Guide to Offshoring
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