Off-Shoring and Politics
Off-shoring has always been controversial. Most large companies do it, but few are comfortable discussing it. Former HP CEO Carly Fiorina was skewered for doing it while running for office in California. It’s one of those things that businesses must do to compete, but do everything they can to change the subject when asked about it.
When times are good, off-shoring is less of a political issue, for example before the current economic difficulties. Most people could find work if they looked, so sending some of those jobs overseas was not a concern for voters or politicians. But when times got tough, the tune quickly changed. Legislation has recently been introduced that would eliminate tax breaks for companies that off-shore and the current administration has vowed new ideas to bring jobs back on-shore. The White House is working to offer tax breaks and loans to such companies and IT services firms that set up shop in urban and depressed areas are also getting help from state government.
One can argue about the role politics play in the way our businesses run, but there is no doubt that the current group of politicians is looking to win points with the electorate by addressing the issue of jobs being shipped overseas.
Current Considerations When Looking at Off-Shoring
In spite of these concerns and issues, off-shoring of IT projects and development continues to grow. It is a legitimate solution for many IT departments. But its not for everyone or every project. Some things to consider before off-shoring:
Data transfer of any kind has security risks and off-shoring is no different. Many companies simply look at off-shoring as a way to save on IT costs, putting security risk as a secondary concern or afterthought. This is a critical mistake and one that could not only add significant costs should there be a breach, but it can put an entire company at risk. A good reputation and the trust of your clients if not something easily won back. Security should be the first priority when considering outsourcing.
Cultural differences can be complex and take time to truly understand. And business norms from country to country can vary widely. It is extremely important that you understand the intricacies of a country’s culture before off-shoring a project to them.
Some Projects Work, Others Don’t
Good projects for going offshore are usually those that are repetitive, well-defined, and have little expected change. Projects that need heavy customer involvement or are likely to have many changes will be less successful.
Details, Details, Details
Off-shored projects must be VERY well defined. No detail should be left out no matter how trivial. Everything should be written down and no assumptions should be made no matter how obvious.
Set up a good communication structure from the beginning. Establish a single point of contact on both sides who are responsible for the timeline and completion of the project. Do not be afraid to over communicate, especially during the first few months of the engagement.
Not a Quick Budget Fix
Off-shoring is not a quick budget fix for the IT department. It can takes months to completely transfer IT work offshore. And costs may actually rise during this transition period.
The off-shoring of IT talent and projects is a booming business that continues to grow. It is a legitimate way for companies to save money on certain IT initiatives.
But as popular as it is, there are significant risks (financial, political, public relations, security) that need to be considered before moving forward. If all of these risks are accounted for, it is then imperative that a well-documented plan is put in place and enough time and resources are allocated to ensure the transfer of information. IT off-shoring is not for every company or every situation. In fact, some companies have moved certain functions back on-shore. But if planned for, and managed, properly, it can be a legitimate solution that offers significant savings and access to needed IT resources.
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