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Offshore Outsourcing: Making It Work

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Considering offshore outsourcing? Stroll through this common-sense approach to outsourcing obstacles before you sign any contracts.

Outsourcing, which began as onsite staff augmentation, has recently evolved into a fully decentralized IT business process. In the early 1990s, U.S. companies would "import" programming talent from countries such as India to supplement onsite staff. Today, everything from software development to contact centers and technical support are sourced from outside the U.S.

Now that you've decided to outsource a portion of your IT operation to an offshore provider, here are seven areas you need to think about:

  • Communications and technology
  • Cultural differences
  • Language
  • Time zones
  • Long-distance relationships
  • Costs of support
  • Control

The following sections describe important—and often forgotten—details to be considered in each area.

Communications and Technology

Voice and data communications, software systems, and hardware platforms should all be considered when outsourcing to an offshore provider. If technology conflicts create a negative experience for your customers, any savings realized in labor costs may be offset by the loss of external customers or by unhappy internal customers.

Voice and data communications from offshore providers must be extremely reliable. Your customer must be able to communicate by telephone or online without perceived delay or difficulty. A successful telephone connection can usually be seen immediately; as a caller, you have a sense for how quickly you were connected. With data communications, on the other hand, the experience may not be so cut-and-dried. U.S. customers may be trying to access information on a web server located in the Far East, for example. If connections to the offshore provider are not quick and reliable, customers end up waiting for information to populate their screens—a very frustrating experience. Although labor rates are much lower in some emerging countries, and you can therefore save money on your labor costs, communications are usually a challenge and can be expensive.

If you're outsourcing business process support, the software and systems being used by the offshore provider are also important. Will their systems be incompatible with yours, causing integration problems? Also, how do they format their data? For example, if an accounting function is performed offshore, how does that data fit back into your organization? Of course, it's possible to perform data mapping and data integration, but these processes may slow down the incorporation of that data, detracting from the realized savings of offshore outsourcing.

What can you do to help ensure that your communications and technology setups work smoothly and quickly?

  • Request references from the provider. Ask for references whose requirements for voice and data communications are similar to yours. Then consult those references about their experiences with the provider's communications reliability. Be sure to ask about communications speed during times of peak volume.

  • Find out about any partnerships between the provider and outside communications firms providing voice and data infrastructure. Try to determine the reliability of those infrastructure providers. Do they have a presence along the entire path from you to the offshore provider? Are there different providers in each country? What if the communications provider's service is down? Is a backup provider available to take on the traffic, and how long will it take for service to resume?

  • Determine whether the infrastructure provider is controlled by a government. How much can governmental policies and issues affect the communications pipe?

  • Find out what systems the provider is using for critical functions you're outsourcing. What call center software do they use? What platform are they on? How often do they upgrade their hardware? What brand of hardware do they use? (And are replacements easily procured?)

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