Sometime shortly after the Y2K non-event and the .com crash of 2001 many Big 5 consulting firms at the time – Ernst & Young, Deloitte & Touche, Arthur Andersen, KPMG, PricewaterhouseCoopers – began to experience heightened price competition from Indian consulting services firms penetrating the American market.
These Indian firms like Tata Consultancy Services (TCS), Infosys, and Wipro were the spearhead of the fundamental shift that would establish how, where, and at what cost information technology services (IT Services) would be conducted for the approaching two decades.
When a company makes the determination to outsource – there are a couple of essential perspectives to consider:
- Cost savings to the company and its clients.
- Cultural differences.
- Language barriers.
- The skillset of the resources and training needs.
- Ability to manage resources across various time zones
- Ability to service the client in a timely fashion without timezone delays
Once a strategic vision is defined and the necessity to outsource decided; the next decision is to evaluate outsourcing location.
There are three imperative tenants for locating offshore services:
- On-Shore: Locally based employees, that are typically in the same locale.
- Near-Shore: Non-local but similar geography and close timezones. Think Canada, Latin America and the Caribbean.
- Off-Shore: Several times zones away (Asia Pacific: China, India, Australia)
Pros & Cons of OffShoring
During my career, I have been involved in multiple technology implementations and managed services engagements where offshoring was leveraged. I have seen various problems arise because of communication challenges, the absence of cultural awareness, and time zone diversity. According to the Harvard Business Review:
“According to several studies, half the organizations that shift processes offshore fail to generate the expected financial benefits.” Source: Harvard Business Review: Getting Offshore Right. Published December 2005; sourced August 10, 2018: https://hbr.org/2005/12/getting-offshoring-right
To improve my chances of success while managing offshore teams for a global Consumer Packaged Goods (CPG) company based in the USA I have relied on the following:
Alternating the inconvenience of conferences to accommodate the time zone differences particularly for associates in Asia and the Pacific. I would typically have two development meetings a week, one late at night for the US team, but early for the offshore team and the other early morning for the US team but late for the offshore team. Using this approach, both sides were sharing the burden of working late hours.
In the early days of offshoring, many managers were leveraging their offshore staff to accomplish work that their onshore teams deemed “unfulfilling”. To build a cohesive working unit, it’s essential to engage the overseas groups, in the same manner, you would onshore or nearshore teams. You need to get to know each individual personally and professionally and challenge them to accomplish their best work.
Language and extraordinarily different accents for pronunciations of English words can become a barrier to secure communication. To minimise the difficulty posed by different accents, it’s important to listen attentively and leverage video conferencing as much as possible. I found seeing the speaker helped to improve my understanding of the team’s communication style.
For my Global CPG client, my team was on-shore and offshore, and the client team was near-shore and offshore; this arrangement yielded the following benefits and challenges
- 24 hours support of the client in their local timezone.
- Lower hourly cost for the project due to leveraging resources in Asia-Pacific.
- Empowering the offshore team to be able to win work with the client’s Asia-Pacific business unit.
- Communication of request and requirements extended longer than anticipated
- Time zone differences made scheduling additional meetings challenging.