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Page 1 of 3 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. |
