 As our clients sought ways to lower the price of their IT projects this year, we began to work in conjunction with companies in Romania and Mexico on client projects. The experience we gained working as project managers of these globally outsourced projects has added a new flavor of consulting to our services.
Since the 1970s, global outsourcing has become increasingly widespread among American companies. Early in its growth outsourcing did not usually mean global outsourcing; however, the technology growth of the last four decades, particularly the internet and high speed connections, has made the world a smaller place.
One key area of outsourced work, technology itself, is expanding to low-wage countries, such as Romania, Mexico, China, India, and Russia.
Technology developments have made global outsourcing one of the primary tools used to cut labor costs. However, all business decisions involve risks, and outsourcing is not an exception. When considering a global outsourcing project, companies need to consider the risks. Once the risks have been identified, they should be analyzed, and processes should be created to minimize those risks.
Some main global outsourcing problems or risks have long been identified.
Unrealized cost: Most businesses push work overseas in the hope of cutting labor costs, but businesses must look deeper than salaries. Other expenses such as travel, communications, and cultural training cost additional money, and planning and start-up costs can off-set labor savings on contracts lasting less than a year.
Slower productivity: Staff at an offshore service provider won't, in many cases, be as productive as internal staff. Global markets, such as in India, often have high staff turnover, so you may be getting new and inexperienced workers.
Geographical problems: The geographical location of many global outsourcing contenders often present language/communication problems, political instability, different laws and regulations (particularly concerning intellectual property), labor laws, and cultural issues.
Infrastructure and operational problems: Infrastructural and operational problems, such as undeveloped disaster recovery capacity and power generation capacity, can spell disaster for an outsourced project.
In order to avoid the basic outsourcing problems a company should take preventive actions before hand, a vital step in any successful outsourcing arrangement, be it global or domestic, is the contract. Unfortunately, many global vendors will not perform any tasks not specifically identified in the contract. Any outsourcing contract should include:
- detailed specifications for the project,
- deadlines for project milestones and penalties for failing to meet them,
- quality guarantees that define the standards that need to be met,
- precise payment terms,
- locked in key personnel or personnel standards,
- the method of conflict resolution, and
- the contract's term.
One of the most important steps a company can take when planning first time outsourcing projects is to hire a consultant to help plan outsourcing strategy. For example, the basic goals and processes for the project should be well thought-out and understood before the company begins talks with global providers. Planning should include methods of measuring the performance and a plan for resolving any complications arising during the project.
 ABOUT THE AUTHOR
Robbie Adair, CEO of Media A-Team, Inc., has worked in the IT industry since 1993 as a trainer, developer, director, and consultant. Her company, Media A-Team, offers services to include development for print or web, digital video, technical writing, and custom training and consulting.
Media A-Team can be contacted via their site, http://www.mediaateam.com, or telephone at 713-681-8302. |
