Offshoring - Beyond Cost and Resource Availability

Offshoring - Beyond Cost and Resource Availability

1. Introduction

Offshoring has long been driven primarily by either cost advantage or by resource availability.

On comparing the cost of an employee in a developing economy like India against that of a developed economy like the USA, the cost advantage is very clearly understood. Further, such developed countries bring in various schemes (Increasing the cap for H1B visas by USA or green card scheme for IT professionals by Germany) to ensure increased availability of talent pool in their countries. Yet Offshoring is seen as a risky or difficult proposition by many organizations. This note examines how, in the software industry, Offshoring goes beyond cost and resource availability..

2. Offshoring Challenges

There are several perceived challenges (or risks) in Offshoring of a software project. We will deal with each risk and also look at the positive and long lasting benefits that accrue from managing these risks successfully. We can summarize these benefits
as below:

ƒ Improved Manageability
ƒ Enhancing Clarity
ƒ Bringing in the right business model of work-sharing
ƒ Increasing Maturity of the Offshore model

3. Offshoring Advantages

Let us look at each of above benefits from the perspective of pain points (or points that are put forth by opponents of Offshoring), by discussing each of them.

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