Pros and Cons of Going Offshore

Why go offshore? Most enterprises cite one or more of the following four benefits as reasons for going offshore to implement software development and custom programming:

• Lower cost: Offshore programming is cheaper than work done in the United States. Total project costs (e.g., using offshore personnel in India) can save an enterprise between 35 percent and 50 percent vs. using in-house resources for basic remediation work, when telecommunications and project management costs are included.

• Better Capabilities: In the United States there is a critical shortage of skilled programmers, especially when it comes to the Year 2000 and European Monetary Union work. In many foreign countries the pool of talented programmers is vast and generally talented programmers are more easily available: the benefits stem from a supply/demand imbalance

• Faster implementation: for large scale projects that require a large number of man years worth of effort to assess, implement, customize, or refurbish code. Project delivery time can be compressed as concurrent development efforts 12 hours apart can easily result in a 24-hour-per-day development cycle. 

• Higher quality: Most in-house operations cannot defer their development, support and maintenance work to focus just on one major IT project. The offshore team is focused 100 percent on a single project, unlike a typical in-house team that must change its focus repeatedly.

Short Description of Offshore Outsourcing

The bulk of the work is completed offshore while an on-site team facilitates management and guidance of the project. The offshore teams perform the actual software design, conversion and testing activities, while the on-site team focuses on customer interaction and participates in integration and acceptance testing.  Data communication links between the customer network and offshore development center ensure seamless integration between on-site and offshore project teams. You will benefit from cost savings related to working with lower-cost programmers, but also savings associated with faster project setup and completion times.

The use of offshore resources may not be the solution for every aspect of the project. The enterprise should consider the following four challenges before deciding to hire offshore resources:

• Development methodology: If the enterprise uses either rapid or joint application development techniques, the physical presence of programmers on-site often fosters an exchange of ideas with users of the software that overseas work cannot duplicate.

• Enterprise interaction: Most offshore vendors have minimal knowledge about an enterprise's practices or industry expertise. Sending maintenance projects offshore sharpens the separation between application maintenance and new development.

• Cultural differences: Language barriers are the most obvious barriers to offshore projects. However, cultural differences, even when both parties speak English, can lead to misunderstandings about specifications, work to be done and project status.

• Infrastructure shortcomings: Some regions that have been viewed as excellent potential candidates for offshore programming work, most notably Eastern Europe and the former Soviet Union, lack the appropriate infrastructure to support this type of work. Telecommunications infrastructure, project management skills and computing resources are precarious.