Monday, June 11, 2007

Offshore work can bring off-target results


With the world's information technology outsourcing market topping $27 billion, the practice of exporting work to companies based in other countries appears to be here to stay.

But the highly vaunted benefits of global outsourcing -- lower labor costs and higher revenue -- are proving to be somewhat elusive. The main culprit: Unexpected transaction costs that are being driven by communications difficulties, project delays and compromised development quality.

It might seem self-serving for the owner of a locally based IT consulting company to criticize global outsourcing, but experience is proving that our elders (once again) were right when they counseled: "If something seems too good to be true, it probably is."

A recent article by an associate professor at Bowling Green State University, in the technical journal Communications of the ACM, describes how U.S. companies are waking up to the dark underbelly of global outsourcing. They're finding that many IT projects being done offshore are plagued by:

• Poor team cohesion between IT workers in the United States and their offshore counterparts.

• Nonstandardized and incompatible development processes.

• Incompatible project management and business management styles.

In short, "the benefit of low-cost labor must be weighed against the risk of missed deadlines, dissatisfied users and failure to reduce development costs," the journal article said.

Requirements analysis and quality assurance of user requirements are a prime example of how things can go awry when key IT players are operating in different cultural and geographic time zones.

Regardless of the methods and tools employed, the success of requirements analysis depends on how well users and analysts communicate and collaborate. Offshore requirements analysis, even with the best available communication infrastructure and collaborative work tools, has a high risk of producing infeasible, excessive, unrealistic, missing and/or incorrect requirements.

Offshoring in reverse

Global offshoring, ironically, is happening on our own shores now. A recent article in the New York Times reported that the fast-growing H-1B visa program -- which allows a person to work in the United States for up to six years, traditionally a steppingstone to becoming a permanent resident -- is now viewed as "the outsourcing visa".