Quite a time ago I wrote about "good" outsourcing which is focused on business value delivery rather than on potential cost savings. Even when we speak about outsourcing to offshore locations costs should not be the major factor influencing the decision. What is more important is the ability of the vendor to deliver on promise. Deliver business value on schedule and within budget. If you read Outsourcing Handbook by Construx you will see that cost savings are not listed among 10 common reasons to outsource a project. Although the study did not explicitly focus on offshore outsourcing I believe the results would not much different. Outsourcing is there to help you leverage your own potential by developing your core competencies. Budget savings should be seen as vendor's ability to master his software engineering approaches to achieve higher efficiency than with in-house development team.
Everybody against India
It happened so that India was the first country to really realize benefits and impact of globalization of IT. They made their name and money on the wave of outsourcing. For many years now we say "outsourcing" and think "India". Often you can see this and that outsourcing locations compared with India, like this comparing Belarus with India. Everybody wants to be better than India. While many ideas presented mentioned make sense, some do not seem to be well elaborated.
Some items in comparison are not actually about advantages but about risk. And, you know, risks do not always materialize. For instance, time-zone difference allowing large working time overlap with US is an advantage of Belarus. But this does not necessarily mean than working with Belarus you will not have any communication problems or will have them less than with Indian vendor. Time-zone difference is not that important given that your outsourcing partner delivers value. And as I said before although some outsourcing locations are better than others the most important thing still is choice of partner and his ability to be a valuable contributor to your success.
Again, you outsource to certain company not to country. Make sure you partner can realize advantages of his geographical location and can properly manage risks associated with that.
Outsourcing that helps you
Speaking about Niklas experience with outsourcing I wrote before. I could not help commenting his general description of his job. Don't get me wrong, but believe that outsourcing to 4 countries with 12 hours maximum time-zone difference that make you work 24/7 is not The Right Thing™. On the high-level I divide outsourcing into 2 types: outsourcing to save (i.e. Bad Outsourcing) and outsourcing to focus (i.e. Good Outsourcing).
When you outsource to save costs you send wrong signal to your vendor: whatever it is, it should be cheap. And when vendor receives this signal, he starts sacrificing things to save costs. The first thing he sacrifices is quality. Quality of office, quality of equipment, quality of workforce, quality of deliverables. This ends up as a nightmare for your managers and engineers.
On the contrary, I never repair my car myself. I outsource this activity to focus on my core competencies. And do not seek for cheap service providers. I seek for those whom I can trust, for those who save my time. Such outsourcing partners can boost your business by enabling you to deliver more value to your customers.
Some outsourcing locations are better then others
- Workforce Quality/Skill
- Workforce Availability
- Workforce Costs
- Workforce Flexibility
- Government Support
- Tax Considerations
- Communications Costs
- Communications Infrastructure
- Real Estate Costs
- Statutory/Legal Requirements
- External Infrastructure
- Travel Accessibility
- Political/Economic Stability
- Multi-Language Abilities
As usual with list of comparison items like this you need to clearly understand relative importance of different items for your case. Sometimes workforce qualification and availability will be more important than cost. Sometimes travel accessibility will not be an issue. You want to know what matters to you and what does not.
When you will be looking for an offshore partner you should be aware that a company can address some general deficiencies found in peculiar to the country or region. For example, at SoftServe we have communications infrastructure much better than throughout the country which makes nearly any means of communication available to our clients and employees. Also we run a language school to make sure that "language barrier" is not an issue for our people.