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While attending the annual conference for the Fairfield (CT) and Westchester (NY) chapter of the Society for Information Management in Stamford, CT yesterday, I had a chance to talk to a group of about a half-dozen CIOs and IT directors about their experiences with application development projects that were handled at least partially by offshore contractors. Based on what I was able to gauge, their encounters have yielded mixed results.
And while this is just a snapshot of results from offshore outsourcing projects, their responses map completely with what many other U.S. IT leaders have shared with me over the past ten years.
For starters, offshoring doesn’t always generate the type of cost savings that decision-makers hoped to obtain. As one IT director pointed out, there are add-on costs that crop up just as they might with internally-run application development efforts.
Then there are the challenges associated with trying to manage a project team several time zones away. A point person for a project in New York often has to organize conference calls with the Bangalore project team before the Indian group has finished their work for the day. That could mean holding a conference call at 6 a.m. EST and then reaching out to the team again later that night to go over any changes in project requirements or deliverables with the project team as they start a new day.
As several project managers have pointed out, it’s a quick path to burnout. It’s part of the reason you’re seeing more U.S. companies exploring relationships with nearshore contractors in places like Brazil and Chile.
While there are lots of emerging markets for application development, including Eastern Europe and parts of South America, India remains a popular destination, in part because of its reputation of being an engineering factory. But according to some of the IT leaders I spoke with yesterday and others that I’ve spoken with in the past couple of years, it’s becoming a lot more challenging to land the cream of the crop among Indian engineers. The best developers are in high demand and there’s drop-off in terms of talent and quality of work received when you get to the second tier of developers.
One IT director for a Fortune 2000 company was telling us that only the biggest companies with the most leverage have the clout to request specific project team members from offshore contractors. Plus, those organizations that have worked with the same set of offshore contractors for months or even years have recognized the need to strike a balance between wanting to place trusted developers on their project teams while recognizing that they also don’t want to step in the way of the contractor’s own career mobility.
Obviously there are a lot of factors to consider with offshore outsourcing engagements. Some U.S. IT executives have gravitated towards a hybrid offshoring model where they have either a U.S.-based liaison or a project team that’s located stateside along with an overseas component to help make the engagement more manageable. One thing that’s clear is that managing the offshore outsourcing relationship is still very much a work in progress for American IT leaders.
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