A question many executives are asking is "we have been offshoring for a while; how can we tell whether our offshoring efforts are delivering true value to our company?"
While you pay offshore vendors much less than what you would be paying a U.S. vendor, some members of your staff complain that offshore productivity is really low, that 2 or 3 offshore personnel are doing the same work that used to be done by one experienced person in the United States. And that’s not all: offshore outsourcing entails additional costs for travel, communications, and duplication of equipment and/or software tools, to name just a few expenses. At least some of your staff may be implying—or even loudly proclaiming—that offshore outsourcing is not saving money after all and that it was a bad idea. Even if offshore outsourcing may have saved you money in the beginning, it may not be doing so any longer. After all, offshore labor costs also tend to escalate over time.
The cost of offshoring isn’t only about money; it’s also about perception. If, for example, your management team must work into the night and arrive at work in the early morning to manage offshore projects, their perception about who is benefiting and who is hurting becomes personal. While added stress on your domestic staff should not be ignored, the way to address this issue is to develop an objective view of all facets of costs:
You should, in addition, assess the offshore productivity and factor that in; even if offshore personnel are as competent as the local staff (which is your best case scenario and unlikely to be the case when you are getting started), there will a productivity loss because of systemic issues. If you are just launching the offshore initiative, add the costs of finding a suitable offshore vendor and launching the offshore operation for the first time.
Compare this against the benefits you are receiving from offshoring – both tangible and intangible such as reduced costs, easier round the clock coverage and so on. This will give you a balanced view of the situation.
Posted on 31-Jan-2018 Click here to download