So, you have been offshoring for a while.  If your experience is similar to most companies, issues begin to creep into your offshore operation; expectations do not continue to be met consistently; and some in your management team may even question the wisdom of offshoring.  How do you address this situation?

Facing the Inevitable Offshoring Hurdles

Recently I was called in by a Silicon Valley Company faced with a management challenge. They had been offshoring for the past few years.  In the early stages things seemed to go well, but in the recent past they were encountering several issues; many in middle management felt that this whole idea of offshoring was not working. It was simply taking too much management time, was not saving the company any money and in fact it was a bad idea. Senior management could not understand why this was happening.  After all, they had done a lot of due diligence and chosen one of the top tier vendors in India with an impeccable track record and reputation. They had devoted significant internal resources to establish and manage the offshoring initiative.

This Silicon Valley Company is not alone in experiencing such symptoms.  While some companies are quite successful, many are finding that their goals are not being met in a consistent way. Over time, issues creep into the picture; here are some examples:

• When you started working with your vendor to set up the initial project(s) for offshore work, they were attentive.  You felt they considered you to be the most important client in the world.  They took time to educate their people about your company’s needs.  Unfortunately, things have changed. Now your offshore vendor seems distracted and distant.  Their staff doesn’t seem to remember all your needs or seems indifferent to them. 

• Frequent changes occur in vendor personnel at the offshore location.  Members of your US team, who provided training and support to initial offshore activities, have been reassigned to other duties.  While the vendor says that they can retrain replacements without your assistance, you know that they cannot do it alone.  To be effective, they need support from your staff once again.

• Schedules and quality begin to slip.  Your staff starts complaining that low productivity in the offshore operation is eliminating cost benefits that you justified the movement to offshore in the first place. 

• Politics develop between the US and the offshore operation.  There is finger pointing and the US based groups complain about the offshore group doing their own thing and the offshore operation complains about lack of solid requirements and communication problems with the US groups.  Teamwork seems to break down on any subject dealing with the offshore operation.

Offshore Challenges

Offshoring is challenging because of distance, time zones and cultural differences. In addition, rapid vendor growth in countries like India creates additional issues. For example when I began working with Wipro in the early 90s the company had a head count of around 2500. Recently they crossed 70,000, and they are still continuing to grow!!! Other vendors also have had explosive growth during the past few years.

Their management is challenged to handle such rapid growth. Some are more successful than others. In addition, internal movement upwards in the vendor’s organization means that personnel with whom you had established personal rapport may have moved on to other assignments.

Attrition rates are high because of the abundance of opportunities.  So, not only management personnel may change, but individual contributors who you have trained may also have moved on.

In addition, your own processes and personnel may have changed over time causing some of the issues.

Not surprisingly, out of sight and out of mind syndrome can often set in.  After all, management in every company has their hands full these days.

Steps To Keep Your Offshore Operation on Track

Constant vigilance is needed on your part. Conduct audits of your offshore operation at least once a year. Your audit should answer the following key questions:

1. Do you need to update your offshoring goals?

   You need to regularly review and update goals of the offshoring initiative - it’s quite common for offshoring dynamics to change considerably over time. For example, many companies initially went to India to reduce costs but now find that India also offers a rapidly growing market potential. If you have not factored this change in your business scenario, you need to figure out if it makes sense for you to factor this in and revise your offshoring goals.

2. Do you need to re-synch management goals and expectations?

   If you update your goals as discussed in the previous paragraph, you need to communicate the new goals to the offshore organization. This step is usually taken. In addition, with time, key members of staff change at either the head quarters or offshore location or both. You need to assure that goals and expectations are consistent between head quarters and offshore location at all levels of the organization.

3. Do you need to update your management processes?

   Often we find that organizations are good at synchronizing engineering processes; but reconciling and realigning management processes is often overlooked; this needs to be done at the beginning; then at regular intervals, at least during annual audits.

4. How can you enhance offshore productivity?

   With time, offshore productivity can begin to suffer; this is especially true when an offshore operation begins to grow. You need to take stock of various possibilities that impact productivity; some common inhibitors - processes, training, infrastructure, tools, your own management structure and your offshoring model.

I have outlined here common questions that you should be asking yourself during an offshore audit. It is by no means exhaustive. Each situation is unique. You may find that in your case, you need to apply a subset of these questions and/or consider some that I have not listed here. The way in which you address these questions will be different for each situation depending on size, industry, products and offshoring partner.

Assure continued management competency in offshoring:  Typically, managers and executives find themselves with the task of managing an offshore effort or initiative. Often they do not receive training in the nuances of managing offshoring.  Though they will develop this skill over time, you may want to consider providing training to help them get up to speed rapidly to effectively manage offshoring. If you have done this initially when you launched into offshoring, you need to continue to train new managers.

In conclusion, to be successful, offshoring requires constant vigilance. Assuming you have been successful in getting past the initial challenges, you cannot rest. Over time due to rapid growth in offshoring and changes in your own organization, issues begin to creep into your offshore operation. To continue to be successful, you need to put in place annual audits/assessments of your offshore operation and continue to train you managers in the nuances of offshoring.