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| Home - Industry Article - Apr 05 Issue |
What Business Value are You Receiving from Your Offshore Strategy?
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3. Your offshore organization wants to increase head count. When faced with low offshore productivity and high attrition, some offshore entities attempt to persuade head quarters to allow them to hire more people. The argument is: “after all, offshore labor is cheaper and hence throwing more bodies at the task is a no brainer”. However, this is not always the right approach. If you scale up an operation that does not have in place necessary management processes in the first place, it will only make matters worse. Once the offshore organization is running efficiently, you may decide to staff up to handle additional workload. An assessment of “Business Value” from offshoring and existing management processes can help address this issue.
4. Initial projects are not set up right. This typically happens where a prior relationship existed between a member of the management team and a vendor in the offshore site or between a board member and a vendor in the offshore site. The project gets off to a fast start because of the relationship, but before too long, schedules are being stretched out, fingers are being pointed between US groups and the offshore group. “They are doing what they want to do not what we need”, says your domestic team. The requirements are not well documented and we can’t get a straight answer from them” says the offshore group. Many companies rely on the prior relationship and things are no longer working smoothly. An audit of projects almost always identifies issues that need correction.
5. Processes become broken. Even when the initial projects work well, problems can enter the picture. Domestic groups are accustomed to dealing with issues by walking to the adjacent cubicles and talking through things. With continents and time zones separating the teams, processes must be razor sharp and maintained religiously or they will break down. The companies that are best at offshore activities will tell you that they must periodically review all processes to assure the goals will be met for the offshore site and that operations are smooth both domestically and offshore. Typically, symptoms of broken processes include time and cost problems, politics between domestic and offshore groups, and teamwork breakdown. Periodic audits are needed to identify and correct problems.
6. Out of sight, out of mind. Management has plenty to focus on these days. Nothing goes smoothly all the time. The problem du jour can consume a management team and offshore activities are increasingly left to operate in a vacuum. Depending on the nature and severity of the problems that distract management, the situation offshore can get very severe before it hits the radar screen. By then many things are broken. “I didn’t hear anything about it and assumed that everything was OK.” How did it get broken so fast? A regular program to review offshore projects from a process and procedure viewpoint can avoid this situation.
These problems can be solved and goals from offshore activities can be achieved. Like any other operating issue, it requires attention and a focused program to have a successful offshore effort.
Business Value assessment to get a handle on how well the offshore initiative meets your objectives, coupled with a regimen of periodic review, based on experience in scores of offshore projects, can be done in a cost effective manner and can avoid big problems. The key is building the mechanism in your operations so that the reviews are expected and anticipated by all members of your team.
To determine if you need to take steps to assure your offshore operations are achieving the goals that you have set, please take a moment to complete the following score card on your offshore operation. Assign a score of 1 to 10, with 10 being the highest for each factor and total them up to see where you stand. For example take factor no 1; do you have a clear written statement specifying the company goals for going offshore? Do you have at least a 3 year plan for offshoring with expected financials? Does everyone associated with offshoring clearly understand the long term goals of offshoring? You assign a 10 if you answer yes to each of these questions. When you add up the scores for each of the following questions, if you score less than 80%, you need to consider undertaking assessment of your offshore initiative.
Assessment Score Card
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Factor |
Your score |
| 1 |
Do you have clearly established goals for your offshore initiative? |
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| 2 |
Is your offshore organization meeting original expectations? |
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| 3 |
Is there consistent expectation between head quarters and offshore organization at all levels? |
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| 4 |
Do you have a clear understanding of productivity of your offshore organization compared with its U.S. counterpart? |
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| 5 |
Do you have a clear understanding of total cost of offshoring – not just salaries? |
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| 6 |
Do you have a clear understanding of the real contribution of your offshore organization? |
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| 7 |
Besides engineering processes, have you integrated management processes, culture and goals? |
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| 8 |
Is it meeting current and future needs of the company? |
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| 9 |
Do you have regular program reviews? How useful are they to manage your initiative? |
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| 10 |
Have you established clear guidelines for project selection? |
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Don Fowler is advisor to Global Development Consulting, Inc. He is a 40+ year veteran in the computer industry and currently serves on the boards of several companies (public and private) and advises CEOs. Prior to his current role, Don has been CEO of several Silicon Valley startups and a senior executive at HP (Tandem) and IBM managing multi-billion dollar enterprises.
Sath is President of Global Development Consulting, Inc. and the author of the book, “Offshore Development and Technical Support - Proven Strategies and Tactics for Success”, a practical guide for executives trying to successfully launch and manage offshore initiatives. His experience in the industry spans 25 years. During the last 14 years he has focused on offshoring -- initially as a Fortune 500 corporation executive leading offshoring, then as start-up CEO utilizing offshore resources, and now as author and consultant. Sath can be reached for article feed back at: sath@GDCInc.biz
 
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