Q: Some industry analyst firms say that up to 50 percent of all outsourcing jobs fail.
Do you agree with that number?
People who work with established players will see very little or a very low rate of failures. Maybe less than 1 percent. The failures are very low compared to what the press reports. What is happening is there are a lot of small outsourcing initiatives that are being run with smaller companies that are not mature. And U.S. companies don't understand outsourcing needs. They throw something over the wall and expect great looking software to be thrown back to them. If they think, 'I've told them what to do and they should get it done for me', that's not right. That's not how it works.
Q: What should American companies be doing to make their offshoring projects work?
Companies forget that ultimately this is a relationship-oriented model. You are several thousands of miles away. It has to be based on a common understanding of what is expected out of this. People expect that the way they have been working to keep working. They may be used to walking up to the programmer's desk and saying, 'Hey, can you make these changes and give it to me tomorrow?' The programmer lives on Twinkies and Coke, and works all night. If that's what they're used to, they won't have a good experience outsourcing. And I'm not just talking offshoring but outsourcing to any other company.
Q: What advice would you give to companies considering or actively offshoring?
They need to look at it as a process. They need to realize that writing good software means having an understanding of upper life cycle. You're several thousands of miles away. You're not in the same time zone. That means you need to work with a formal documentation... There are many things to think about. Is the offshoring team available when I need them? Do they have the right availability of people in terms of contacting them? You should be able to see what progress has been made on the work you assigned yesterday. What do you expect? Do you expect that the code will come back to you and you will test it? Do you expect that the code will come back to you and you can deploy it? Do they speak my language? Do they know how my business works? Do you have a formal process that can be measured? Know how often you will review and what you will review.
Q: A lot of business people and analysts are saying that China is emerging as the next
big offshoring center. Are you concerned that will affect you?
If China offers a better value in money, I know that companies will go there. We have explored both China and Eastern Europe, and we find that in Eastern Europe the cost advantage just isn't there. As for China, we continue to find that they do not have the English speaking capability required to interact with our customer base. So clearly, for the U.S., I don't think China is there yet. Maybe two to five years down the line, but not yet.
To discuss offshoring with other IT professionals, go to our IT Forum.