A recent gartner report highlights some of the main reasons why offshoring projects will fail. The offshoring market is growing in leaps and bounds- "Businesses will spend more than $50 billion on offshore and near-shore outsourcing by 2007"Gartner's report identifies five areas where outsourcers should apply more thought before taking the plunge:

Unrealized cost savings: Companies forget to take into account Hidden expenses for things like infrastructure, communications, travel and cultural training take a bite out of the wage differential. Also planning and start-up costs are high, so offshore deals lasting less than a year may not pay off at all, and savings from longer-term deals will emerge slowly.

Loss of productivity: Staff at an offshore service center probably won't be as productive as internal staff back at home, at least not initially.

Poor commitment and communications: Senior executives often drift out of the picture once a deal is signed. But they need to stay engaged to keep morale high and strategy on track. And good communications among all parties is paramount. Projects, goals and expectations have to be defined clearly and in detail. On the home front, managers need to explain clearly why work has been sent overseas and what benefits are expected.

Cultural differences: Communication styles and attitudes toward authority vary from region to region and those differences can cause problems

Lack of offshore expertise and readiness: Some organizations make the leap before they are ready. Offshorers need to get everything in place internally and secure the support of key stakeholders in the company before launching a project.

via ComputerWorld

Tag(s): Offshore.

Prashanth Rai