When offshoring can work

I can’t believe I’m writing about this, but here goes…

Offshoring is part of a continuing trend of economic displacement. In its current form, it’s been going since about the mid ’70s, when cheap bulk transportation (ocean-going cargo ships) combined with an increase in industrialisation in undeveloped countries (specifically: Japan and Taiwan at the time) started to result in manufacturing jobs heading to cheaper countries. This trend continued, and now the vast bulk of manufacturing work occurs along the Asian Pacific Rim (though I’d expect Africa to pick up if the political situation there ever stabilises).

Cheap, reliable communications are now doing the same for knowledge and (some) service based jobs. Call centres going to India and Vietnam, tech jobs heading overseas, and recently even journalist jobs going to Asia. This is part of an inevitable trend: if it is cheaper to do somewhere else for comparable quality, that’s where the work will go.

Like I said, this is nothing new. However, IT outsourcing (particularly software development, which is what I do) can have big problems. I’m not going to go into those in detail here, but suffice to say it revolves under the ability of the business group to communicate with the IT supplier. Of course, that ability is usually abysmal when the IT shop is in the same building, so going overseas doesn’t make too much of a difference.

Anyway, I wanted to talk about when it can work, not when it can’t. To put it simply, it can work when what you want done is very easily explained, without ambiguities. Here’s some examples I was given by a representative from a big Indian IT company that I agreed with 100%:

• Migration/upgrade of a software product from one platform to another (e.g. Windows -> Unix, Java -> .NET, SQL Server -> Oracle)
• Performance tuning: take this application and make it run faster with the same features.
• Localisation. (Actually, localisation is a good one to outsource to the region you are localising for, full-stop)
• Administration; in fact, an Indian company makes a good secondary admin shop for a US-based site due to time-zone differences.

Spot a common trend? Anything that can be packaged up and specified exactly, easily, is an excellent candidate for outsourcing anywhere, and obviously, the cheapest place is likely to be the best.

So, what can you do to avoid being outsourced? The simple answer is to play to your own competitive advantages; you can’t be cheaper than an Indian or Chinese company, but you can be right there to work with your business rep. This means you can get the job done right first time, for less effort, which will result in lower cost (not necessarily as low as the off-shore option) with faster return on investment.

If, however, you play a fairly passive role, and wait for specs to be tossed your way, and build them exactly, and then toss the resulting pile over to someone else, then expect your job to be done from Bangalore real soon now.

Author: Robert Watkins

My name is Robert Watkins. I am a software developer and have been for over 20 years now. I currently work for people, but my opinions here are in no way endorsed by them (which is cool; their opinions aren’t endorsed by me either). My main professional interests are in Java development, using Agile methods, with a historical focus on building web based applications. I’m also a Mac-fan and love my iPhone, which I’m currently learning how to code for. I live and work in Brisbane, Australia, but I grew up in the Northern Territory, and still find Brisbane too cold (after 22 years here). I’m married, with two children and one cat. My politics are socialist in tendency, my religious affiliation is atheist (aka “none of the above”), my attitude is condescending and my moral standing is lying down. View all posts by Robert Watkins