How do I know if I am ready for offshoring or nearshoring?

About Hugo Messer

Hugo Messer is a Dutch entrepreneur, distributed agile team specialist, and author. He is the founder and owner of Bridge Global, a software services provider, and, an agile coaching agency. He has been building and managing teams around the world for the past several years. His passion is to enable people that are spread across cultures, geography and time zones to cooperate. Whether it’s offshoring or nearshoring, he knows what it takes to make global cooperation work.

17 thoughts on “How do I know if I am ready for offshoring or nearshoring?
  1. I spent a year in India to create an offshore SW Dev organization for Siemens, and then another year remotely managing it from the US. Note that I have _not_ read your link, I’m just speaking from one (long) experience.

    The factors which caused our offshore development to (almost) fail had more to do with cultural disconnects and human failings than the work itself, although the choice of work can cause failure as well. There are many pitfalls.

    Key success factors from my experience:

    – Pick a country whose culture is as similar as possible to yours, and ideally speaks the same language and/or English.

    – Find a representative or go-between who understands both your culture and the remote culture. Often the offshoring organization will provide a point-person (someone who works for them but is “west-aware”), but you may want to find/hire a dedicated and experienced offshoring manager who has been successful with this country before.

    – Choosing the right project to offshore. Successful projects are self-contained (all resources, training, know-how, detailed requirements, equipment, materials, etc, can be found, purchased, and acquired by the remote organization in the remote country, without your daily support). Poor projects include ones requiring specialized know-how or training by you, prototypes from your country, highly detailed requirements written in your country, etc. Basically, if the remote organization cannot be autonomous — if it requires frequent (more than weekly) interaction with you, or has to do things exactly “your way” — you will fail. If the remote organization is frequently held up by problems that only you can solve, or equipment that only you can provide, you will fail. A good project is one you can cleanly define, package-up and give away. Of course, these kinds of projects are not common (another reason offshoring is not for everyone).

    – Use your go-between to track progress, don’t try to do it directly unless you have spent a lot of time visiting the remote organization and establishing relationships. Even the most basic concepts, like Time are treated differently in every country; Truth is treated differently in every country; the trade-off between the Relationship and Task is different in every country. Trying to use your value-system (assumption base) to interpret the answer to even something as simple as “will it be ready Friday” will leave you thinking you heard “yes” and then confused when, on Friday, it is not. It is not a language issue it is a culture issue. Only your go-between (someone culturally savvy) will be able to interpret correctly.

    – Visit the remote organization frequently, and establish strong relationships. Good relationships are the capital that will solve most problems. Failure to visit often and invest in relationships will gradually defeat you. If, like many westerners, you really prefer to focus on the tasks/projects alone, you will (probably) fail.

    – Recognize that you will have to hold conference-calls during the remote organization’s workday, which may mean making calls at 9pm your time or 6am your time. And if other employees from your home organization need to be on the calls (which is common), beware that interruption of an employee’s home-time is often a formula for resentment.

    Offshoring is very tricky and incredibly complex. There are a thousand ways for it to fail. If it is your first time, work through someone who has done it successfully before, and listen to their advice. Alternatively, do it yourself from scratch but be prepared to invest a lot of time and effort in laying the ground work.

    Hope this helps.

  2. When you have decided it won’t work for you. That means you have identified the problems with your set up, and are actually closer to success than you believe. The only thing you now need to do is address the main problems with available resources and start.

  3. You are ready when you start thinking about it. In most cases this mean your business is growing outside your country/needs a quality support at lower costs etc., i.e. ready for offshore solutions.

  4. Ignore the hype and focus on the longer term outcomes from companies like Boeing who’ve ended up “insourcing” their previously outsourced workers.

    Outsourcing (sometimes) works for very low level roles, especially when you already have a global presence but in higher level roles, the savings to be made are very limited and you’ll almost certainly end up taking a massive hit in terms of reputation and prestige in your sector.

  5. I have been doing outsourcing/offshoring from the US to India for about 10 years now and I must say that I completely agree with Dave Mock’s answer. It is a business tool that is incredibly complex and requires an experienced Manager who is well versed with the intricacies of language and culture in both countries for it to succeed. Technical expertise or domain expertise alone is not enough. There are a 1000 reasons why it can fail and you do not want to have to repeat mistakes or try to reinvent the wheel. Get someone who has been there and done it before and the chances of success are much higher. It is well worth the investment as the probability of success will dramatically improve thereby raising your expected return on investment from the outsourced project. There are many ways you can implement a tool like outsourcing but many of them may lead to disaster. There is often only one right way to implement it and you do not want to find it by trial and error.

  6. Having long years outsourcing works experience, the main problem is task specification. If you really can describe what you want to have then you can try outsource your works and you need not to be near developer.
    If you will spend your long long time on phone for describe your work then sure you will not have any work. I think his problem also on value on case of onsite development. Better to have communications by email. This case you and developers will have a documents for history and for better and easy understand the task and what to do.
    My advice is don’t do any prepayment before you will not have results. This case you will be protected.
    And last advice is Cam to Armenia if you want to outsource you software development :)

  7. I totally agree with Dave, particularly with the comment that you must pick a country whose culture is as similar as possible to yours, and ideally speaks the same language and/or English. I think language and cultural differences are the major cause of misunderstandings and mis-communication. If English (or your language) is not the first language of the contractor there will inevitably be poor spelling and grammar as well. Time zones that are very far apart also cause major difficuties. These things, all put together, are the biggest reasons outsourcing attempts fail.

  8. Don’t do it…once you send it over there it never comes back the same.
    You will decrease your competitiveness by limiting your domestic teams’ abilities to access and migrate through changes, processes and dare I say the ‘I’ word…Innovation.

    Outsourcing is a trend and displacement of power that is required here.
    If you haven’t noticed, outsourcing has been in effect for nearly 15 years and the trends have shown we are less competitive, incredibly poorer and for some reason people in this country just can’t find work…hi ho, hi ho, its off to out source we go…

  9. Several really good insights in the responses here, especially Dave’s.

    The key to the question here is the “if”. In my view, that has little to do with the “how” – fixed price, T&M, etc.

    The “if” can be answered as follows –

    1. What is the business case? Is sourcing a function, process, outcome externally (onshore, offshore, nearshore) really valuable to the business? This needs a better answer than “we will save money next quarter or next year”. The answer will delve into sustainability, scalability & long term viability.
    2. What is the best source of the said result? That needs an analysis of the supply side of the equation. Notwithstanding some of the comments, it is hard to beat the efficiency of an offshore (read India) player when it comes to large scale software development. There are other examples as well – some of them will come up with answer “onshore” or “onsite”.
    3. What is your preparedness as the buyer to invest in the success of the enterprise? Dave’s response expresses that very clearly.

    Having said that, it is necessary to think about how the enterprise will be commercialized. That’s where the T&M, fixed price, etc. come into play. Each has its place, and each has its challenges & risks. It’s tempting to put together a “one-size-fits-all” answer, but that is fraught with pitfalls. Each situation demands & deserves independent analysis.

  10. Thanks for all the replies. I believe there is a lot of knowledge and wisdom in all of them. The one point that I found hard to accept as ‘truth’ is the fourth point Dave makes: that only self-contained projects are leading to succes. My experience is somewhat different and maybe the difference relates to the method of offshoring. In most people’s minds, the question in my article implies ‘offshore outsourcing’. Outsourcing means that you have two companies, two different sets of people who operate (to some more or lesser degree) autonomous. The outsourcer puts a project or process into a ‘black box’ on the vendor side. He puts it in and expects to get it back according to the expectations he has of the outcome. For that to succeed, indeed the project or process should be well described and performable independent of the outsourcers’ organization.

    But offshoring can also be organized on the people-level, either by setting up your own company or by working with a supplier that provides you with ‘people’ and leaves operations to you. In that model, you are able to organize according to your own needs/desires/rules/processes. The offshore people are engaged into your organization, they follow (and co-develop) your processes, they add their knowledge to your products and become part of your company. Because there is much more human interaction here (frequent conference calls and physical meetings are more ‘logical’), people seem to overcome language and culture barrier more easily. People invest in eachother, get to know eachother, respect eachother, form high performing teams and the results are more positive that the black box approach.

  11. Een externe partij stelt eisen en dat kan lastig zijn.
    Net als met veel zaken, moet je ook bij outsourcing goed nadenken over wat je wilt outsourcen. Ben je vervolgens in staat om een andere partij duidelijk te maken wat je wilt. Zo kun je testwerk zonder documentatie best uitbesteden, alleen dan wordt er door de externe partij getest op basis van common sense (wat zou die applicatie moeten doen). Dus dan moet je iets gaan doen van kennisoverdracht.
    Uitdagingen soms, maar door er goed over na te denken, best wel oplosbaar.
    Waar een wil is, is een weg. Alleen je moet de weg wel vinden. Neem je de verkeerde weg, dan is verdwalen het resultaat en mislukt het avontuur.

  12. Beste Maurice, dank voor je reactie. Heb je ook specifieke ervaring met offshoring?

  13. Op mijn laatste klus had ik de testers in India zitten. Ik had daar eerst een zeer slecht gevoel bij – het leek wel alsof is een stel apen had, die alleen maar een bepaald kunstje konden uitvoeren. Maar als je er wat langer mee te maken hebt, dan leer je de kracht kennen van hun (dus ook de minder sterke punten) en dan is het zeker waardevol.
    Ik denk wel dat je uren verliest, maar de uren zijn wel veel goedkoper. Met de druk op de Nederlandse tarieven zou je ook kunnen outsourcen binnen Nederland.
    Capgemini hanteert de kreet Rightshore. Op de juiste shore je werk verrichten. Ook wij vertalen dat graag naar offshore, maar dat is niet per definitie de beste oplossing.

  14. Mijn ervaring is dat voor India hetzelfde geldt als voor Nederland. Als je de juiste mensen vindt, dan zijn ze enorm waardevol. Ook India kent hele goede architecten, test managers, etc. Tevens zijn de Indiërs die al onshore ervaring hebben communicatief veel vaardiger en pro-actiever dan degenen die alleen nog maar in India gewerkt hebben.

    Dus, als je blindelings uitbesteed aan een offshore leverancier, dan is het een kwestie van geluk hebben met wat je krijgt. Als je zelf een actieve rol neemt in het selecteren van de mensen, gaat het vaak al stukken beter. Tevens helpt het voor langere trajecten om ofwel mensen (of in ieder geval de offshore projectmanager/testmanager) aan het begin een maand naar Nederland te halen om een persoonlijke relatie op te bouwen. Dat is enorm waardevol op de langere termijn.

    En dan hebben we het nog niet eens gehad over alle cultuuraspecten waar je rekening mee dient te houden. Naar mijn mening is offshoring naar India goed te doen. De mensen zijn net zo goed (of slecht) als in Nederland, de cultuuraspecten zijn even wennen en zoals Maurice zegt, duidelijke documentatie helpt bij het testen over een grote afstand. Tevens helpen alle “nieuwe werken” tools als IM en alle aanverwanten bij het overbruggen van de afstand.

    Offshoring is volgens mij niet iets waar je klaar voor bent, het is een nieuwe manier van werken, waar iedereen (en vooral wij) aan moeten wennen

  15. Goed om een positieve ervaringen te lezen. Mee eens dat offshore niet altijd de juiste oplossing is (het achterhalen van de situatie waarin het wel een oplossing is, was de crux van mijn vraag/artikel).
    Mark, fijn ook om te lezen dat jouw inzicht is dat het om de juiste mensen draait. Mijn ervaring is wel dat je een bepaalde omvang + structuur (specifiek: heldere proces-inrichting en voldoende management tijd) nodig hebt om offshoring soepel te laten verlopen. Is dit niet goed ingericht, dan kan het een weg met veel hobbels zijn. Vandaar dat het nuttig kan zijn jezelf de vraag of je er klaar voor bent (of wellicht nog het een en ander moet inrichten) te stellen voordat je een offshoring avontuur ingaat.

  16. Helemaal mee eens. Naast de juiste mensen en de “softe” aspecten, zijn de procedures net zo belangrijk. Het werken met een team op afstand is een stuk lastiger dan een team in hetzelfde gebouw waar je regelmatig langs kunt lopen. De juiste structuur en management aandacht helpt enorm in het snel opstarten van nieuwe trajecten/projecten

  17. Hi, I do thinnk this is an excellent web site.
    I stumbledupon itt ;) I will retuyrn once again sincee i have book marked it.
    Money and freedom is the best way to change, mmay you
    be rifh and continue tto help other people.

Leave a Reply

Your email address will not be published. Required fields are marked *