Quocirca's Straight Talking: Offshoring - it ain't easy

Some advice on improving your chances of success

Outsourcing IT work to an offshore location is hardly a new phenomenon - yet that doesn't make it any easier to decide whether to do it and, if so, to manage the process effectively. Quocirca's Elaine Axby offers some tried-and-true suggestions.

Offshoring continues to transform the lives of those affected by it - from giving the graduates of India a lifestyle their parents could only dream of, to presenting new cultural and managerial challenges to business managers. And that's not to mention offering consumers a 'guess the location' experience when ringing their bank or removing jobs from hard-pressed UK locations.

But some difficulties have arisen, causing companies such as Dell to pull back and others to make running call centres at home a positive part of their consumer marketing. Even strong advocates of offshoring admit it poses unique problems and challenges.

What, then, should companies think about when considering whether to go offshore, whether it is for software development or business processes such as finance or customer service?

First, have a clear strategy about what you want to do and why you want to do it. True, the attractions of programmers or call centre staff at low rates might be tempting but offshoring projects will incur additional overheads and the cost savings might not be all that you might think. Large parts of China, for example, are far from being low cost places in which to do business.

Risks such as the premises of the outsourcing organisation being flooded during the monsoon season need to be factored into your planning too. Think of additional costs of insurance, back-up accommodation and call centre staff able to take over in an emergency.

Think about the business strategy. To what extent do you want to improve business processes at the same time as offshoring them? Or do you just want to decrease costs by moving established processes overseas?

And what will you do when your market changes or new regulations come into effect - and changes and processes need to be updated? To make sure processes are in shape, you need to have a strong capability in-house or be sure your potential offshore partner or a third-party consultancy has the know-how you require. Simple call centre outsourcing operations or programmers are increasingly commoditised, which is all very well if you have the structure and strategy in place but likely to give poor results if you don't.

Second, take your time developing the deal. If it's a large one, you need to be sure about not only how it fits in with your strategy but also how it fits in to the outsourcing partner's business - they may well need to scale up for your business and that takes time.

Training has to be right no matter where the call centre is located. It doesn't really matter whether the person on the other end of the phone knows the detail of Saturday's English football results. What counts is how well they know your products and services and how quickly they can get things fixed for the customer. The business must be in good shape to begin with, too. If most of your PCs are faulty, that's a fundamental business problem, nothing to do with where the call centre is.

Once you have decided to go ahead with an offshoring project, make sure you have a very strong project management structure in place to ensure successful delivery. The time and cultural differences mean it is going to be even more difficult to manage than a UK-based project - and those are difficult enough.

You need project managers who understand the technology and the business, and a strong project management framework in which to place the offshore resource. During the early stages of project definition, you need structures and senior people in place to make sure that the scope, deliverables and success criteria are fully understood by the offshoring partner. As the project progresses, a strong 'hands-on' style of project management is going to be needed to make sure that progress is being made as you expect.

Offshoring can offer significant benefits but it is by no means an easy option. You need to be careful about how it fits in with your business strategy, take your time finding the right partner and once the project is underway, manage it with even more attention to detail than you would with a traditional onshore project.