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Page 1 of 2 Statistical data about offshoring failures is controversial and it is difficult to say whether the failure percentage of offshored projects is higher, lower, or equal to the failure rate of onshore projects. According to the 2005 Ventoro Report on offshoring, 45 percent of the respondents in their survey considered their offshoring strategy to be successful, while 36% considered it a failure. According to Gartner, "Through 2007, 80 percent of organizations that outsource customer service and support contact centres with the primary goal of reducing cost will fail." So it seems that before declaring a project a failure, it is necessary to have clear criteria how to measure success and failure - by cost savings alone or by taking other factors (i.e. quality and customer satisfaction) into account. What is undisputable is that going offshore is a trend on the rise and the good news is that there are successful long-term offshore projects, so there must also be a recipe for how to deal with the ensuing challenges. Why not study the reasons for failure and try to avoid replicating them? To start, offshore and domestic projects may succeed or fail for similar reasons; the fact that a project is being done offshore is not in and of itself a reason for failure. Furthermore, as corporations take an increasingly global outlook and stance, it is inevitable that they will absorb previously foreign behavior patterns. As a result, the chasm between in-house and offshore will continue to shrink. Geographical distance and cultural differences Two factors that are rarely present in domestic projects, but cannot be avoided when going offshore, are geographical distance and cultural differences. Cultural differences are one of the five areas, together with unrealized cost savings, loss of productivity, poor commitment and comunications, and lack of offshore expertise and readiness that according to Gartner need careful thought before going offshore. Geographical distance might be a factor in terms of unfavorable time zone differences and the difficulty for scheduling onsite visits. But even with extended time differences between you and your offshore partners, with some compromises on both sides, you can still have at least 5 to 6 hours per day in common -- more than you typically spend in communication with members of a domestic project team. Problems do arise when it is difficult to communicate in real-time with one's offshore partners, a factor often referred to as communication overhead. The solution is to become better organized, keep meetings in person to a minimum and schedule them for hours when it is possible for both parties to attend. Sure, this requires better planning but is not unachievable. Cultural clash or personality issues? While distance is a quantifiable factor, the impact of cultural differences is more difficult to measure. What is more, depending on the location you are offshoring to, cultural differences can vary from minor (if you nearshore, for instance in Canada, Australia, Ireland, Europe, etc.) to a real cultural clash (India, China, Pakistan). Yes, cultural differences among team members of different nationalities do exist and sometimes there are situations where nationality will become a factor, either in the decision-making process or in the actions of team members but more often than not, when there are differences in thinking and behavior, they are more the result of personality than nationality. While part of a multicultural software development team, I had the chance to attend training that dealt with cultural issues in mixed teams. The seminar proved to be useful in showing that you need to identify differences in order to counteract them, although in that particular case, the seminar actually created more problems within the team than it solved. While we had not been aware of the sea of (supposed) differences between us, there seemed to be less communication jitter. For instance, after we learnt that East Europeans tend to hint rather than state directly what they mean and rely more on subtext rather than on straightforward meaning of words and phrases, while West Europeans behave just the opposite, communication became a game of encryption and decryption and went on something like that: East Europeans started to be more direct and West Europeans started using more subtext to convey their messages believing that this way it will be easier for the other party to understand. As a result, when East Europeans were more direct, West Europeans were still looking for the subtext (because they were dealing with East Europeans) and when West Europeans started hinting, the message East Europeans decoded (because they noticed that the West Europeans now use subtext, so there must be something that needs decoding) was pretty different in meaning from what was originally intended by West Europeans. Needless to say that the level of understanding between the two nationality groups fell drastically, at least while the seminar was still remembered of. After the seminar was forgotten, for bad or for worse, multinational communication went on as if the seminar had never taken place. Although the seminar stressed national differences, it also clearly pointed out that personal characteristics and circumstances also play an important role in one's behavior and way of thinking. With the same multicultural software development team, I recall many examples that illustrate this. For instance, when choosing whether to take a riskier but a more innovative approach to solving a particular programming task, the opinion was divided into two with both nationalities having more or less the same number of supporters and opponents to the riskier approach.
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