5 reasons to go offshore and 3 reasons to stay home
Going offshore…. It seems like everyone is doing it. As far back as 2003, Gartner stated, “It's big, and there's no turning back. Everybody is either doing it, planning to do it, or should be doing it.”
But is that still true? Ummmm… probably, but make sure you know why (or why not!)
So there are at least 5 big reasons to go offshore
1 - More for less
This is the traditional accountant’s view of the world…. If people are half the price elsewhere, then surely it is a no brainer to use them instead.
This is a completely valid argument…. Salaries in India are less than 25% compared to UK or US, and E Europe are probably less than 50%. You do need to factor in some hidden costs – travel, extra collaboration effort etc need to be taken into account, but for sure you can still save significant money going offshore.
2 - Instant Organisation
OK, perhaps not quite instant, but finding people with scarce skills in enough volume can be tough. To my mind, getting hold of sufficient numbers of skilled people is often overtaking cost as the primary reason to go offshore.
3 - Focus, Focus, Focus
You don’t have to do everything yourself & it may be better to focus on what you are the best at, and let someone else do the mundane stuff that is just overhead for you. Or perhaps your business needs to evolve…. Focus on just the new product or service & let someone or somewhere else look after your legacy overhead.
4 - Choices, choices, choices
Having the flexibility to buy “best in class” is always nice…. Especially when you can make a different choice next year if you feel like it. Getting stuff done by someone else gives you this flexibility. As a bonus it might also make your finance metrics look better – With less full time employees, metrics like “revenue per employee” suddenly look much more attractive.
5 - Pay as you like
Pick an alternative commercial model so that:
You could pay for results… or effort.
You could own all the risk… or get shared risk.
You could pay via CAPEX… or OPEX
And equally there are reasons why you shouldn’t go offshore:
1 - It’s tough to make it work
Going to multi location, multi-time zone working is non-trivial. It takes effort and knowledge to make it work successfully. At the same time it is not rocket science – I often describe this as “Management 101 without a safety net” - You don’t really have to do much else than standard management practices…. But failure to do these is often fatal, rather than just a minor pain. You need to be committed to the concept to make it work, and it may be tough in the short term, but pays off long term
2 - Giving away the family jewels
This probably applies more to outsourcing rather than pure offshoring, but given that these often go hand in hand… It’s easy to give too much away, and if someone else learns how to do what you do, then it’s easy for them to sell that skill to your competition. You can sidestep this by creating your own in-house offshore team, or by ensuring you only give away the mundane or non-core work.
3 - Big brother won’t let me
Depending on the regulatory constraints for your industry, you may be forced to keep particular work or data inside your home country. There are often workarounds to these rules such as operating remotely on data that is kept locally, but sometimes the effort & risk can make it to costly to be worthwhile.
Do it for the right reasons, and if you are going to do it, make sure you do it right.