Offshore Development has seen tremendous growth in recent years,
primarily among Indian software development companies. The benefits
of offshore development in India are numerous; be it offloading
application maintenance, product development, help desk operations
or numerous other projects, clients are assured of the
best among Indian software developers, forming vital partnerships
and mission-critical Extended Development Centers, at phenomenally
lower costs. So dynamic and well adapted is offshore
development in India that management gurus are now heralding its
longevity and the effect it will have.
The typical Offshore Development engagement
in India, will last for a number of years, and be governed
by a contract setting the terms and conditions
between the client and Indian software developers for the duration
of their relationship. To measure whether that relationship is
working and how well, Service Level Agreements are
established, which define the boundaries of all offshore projects
or offsite projects in terms of functions and services that the
service provider will provide its client, the volume of work that
will be accepted and delivered, and acceptance criteria for responsiveness
and the quality of deliverables.
Offshore development
– The opportunities
- Offshore development provides enormous cost benefits
- An offshore development center works according to Internet
time
- Offshore development provides an extended resource pool
- Offshore development allows focus on core competencies
Offshore development
– Risk factors
- Ensuring quality is difficult in an offshore development project
- Communication is a problem in an offshore development project
- Cultural differences form hindrances in an offshore development
relationship
- Infrastructure challenges hinder work in an offshore development
project
- Offshore development relationships may also be fraught with
political and natural disasters
IT columnists and strategists echo the success
of offshore development, citing cost efficiencies and
time advantages. But the extent of its potential
is yet to be realized. Many believe that the offshore development
model is still facing teething problems of its infancy. As increasingly
complex, business-critical projects are developed offshore, the
offshore development industry will mature and contribute
substantially to a global economy.
In the interim, the offshore development industry
is fraught with challenges such as inferior quality; inflexibility;
slow-adapting infrastructure, political and natural disasters.
Possibly the biggest challenges that will hinder
the natural progression of the offshore development industry are
- communication and cultural differences. Trying to communicate
the intricacies of a project across continents, through a constrained
medium, can lead to confusion and misunderstanding. The success
of offshore development is also hindered by culture as it differs
vastly from region to region, saying nothing of country to country.
As a result, companies continue to burn their fingers experimenting
with offshore development and offshore development centers.
Discussed above are the operational hazards of
the offshore development model. How can you traverse beyond
that and move from mere cost saving to strategic value?
Select the right supplier – the single factor that successfully
smoothens rough edges and ensures that any offshore development
venture is a multicrop harvest – compatibility. When selecting
your offshore development supplier, the question that needs to
be asked, and answered, is – “Pepsi or Coke”.
Preferences, goals, objectives, drivers are all
important inherent traits that define the rhythm of an organization,
an important criterion when you need to tango to the frenzied
pace of the Internet economy and when you plan to leverage on
offshore development.
This has led to a paradigm shift in the traditional,
widely accepted concept of ‘supplier = partner’. According
to the management consultants, Everest Group, offshore
development suppliers need to be allies, rather than partners,
as “Partners share joint liabilities and ownership. Allies
act together for each other’s benefit where and when their
interests are aligned.” There is a common goal and both
parties leverage their strengths to achieve it. Everest goes on
to recommend this shift in perception as the most important best
practice for outsourcing decision makers.
With so much at stake in an offshore development
relationship, the act of selecting the right ally needs careful
consideration. According to the Offshore Development Group, “One
of the biggest challenges facing potential buyers of IT services
from offshore development organizations is identifying appropriate
vendors and performing due diligence.”
Location - Location plays an
important role when outsourcing to an offshore development supplier.
The choice of location determines the caliber of resources available,
language and cultural compatibility, time zone differences, innate
quality consciousness, availability of infrastructure, political
stability and, most importantly, cost. It is extremely beneficial
if the offshore development provider also has a local presence
in your country or has extensive experience working with other
clients from your country.
 All
roads lead to India - India is the undisputed leader
in offshore development and offshore development centers. The
country enjoys first-mover advantage and is the most mature market
in the current scenario. It has a large population of culturally
sensitized, technically advanced, English speaking professionals
(most of the higher education in India is in English), who are
available at low costs. Outsourcers with operations in India or
offshore development centers in India are reporting 45 to 60 percent
annual growth. Gartner Group predicts that within two years, 40
percent of its clients will spend up to two-fifths of their legacy
budgets on offshore outsourcing to India.
India is an attractive location for the
following reasons
- Cost Saving - Fully loaded costs for offshore
work and offshore development centers in India are 30-50 percent
lower than those in the U.S. and Europe.
- Faster time to market - Time reductions result
from 24/7 development cycles. Offshore development allows for
rapid ramp-up through access to a large pool of resources and
faster learning curves in some areas stemming from past experience.
- High quality - According to research findings
by CIO.com, “India has the highest number of CMM-certified
companies in the world—37 companies meet CMM minimum standards
while 5,554 have ISO 9000 certifications. 260 of the Fortune
1000, including 3M, Amazon, Nortel Networks - outsource to India.”
- Greater value – many companies are
leveraging the technical expertise of Indian resources for activities
such as R&D.
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