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Why Offshore Outsourcing
Projects Fail
Information Technology (IT)
projects can fail for any number of reasons and in most
cases identifying one reason, or even a small group of
reasons, for failure is impossible. Typically, there are
a number of contributing factors, large and small, that
cumulatively result in a project being abandoned or
failing to meet its intended goals and objectives.
Offshore outsourcing IT projects can fail for many of
the same reasons as any other IT project: poor planning,
inaccurate estimates, ineffective management, loosely
defined requirements or objectives, etc. But offshore
outsourcing projects place an even greater premium on
effective planning and management and are vulnerable to
additional risks as well.
These risks can include: Barriers
to Communication, Complexity of Infrastructure, Division
of Labor, and Cultural Factors.
Cultural Factors
By far, intrinsic cultural
differences are one of the most commonly overlooked and
misunderstood barriers to effective offshore
outsourcing. Aside from the commonplace, and more
immediately understood, challenges of language
differences and work schedules, cultural factors can be
very subtle and insidious. There can be very different
attitudes and approaches to work and work relationships
in different countries and regions around the
world.
For example, in some Latin
cultures, work is not the defining entity in one's life
to the extent that we commonly find in the United
States. This can lead to a more casual approach to
schedules that can exasperate U.S. business people,
causing them to think that these people are not as
industrious or do not care about their business
relationships. Typically this is untrue - these people
are committed, it's just that in their culture they
believe that many things are potentially more important
or urgent than making sure that a meeting starts
promptly at a given time. People of these cultures tend
to find American preoccupation with clock-watching and
strict adherence to schedules to be
obsessive.
In my extensive experience with
personnel from some Asian cultures, I have found that a
fundamental deference to, and respect for, authority
figures can cause some personnel from these cultures to
not question work assignments in the same way that we
have come to expect from U.S. employees. Whereas U.S.
personnel will commonly ask questions and make
recommendations as to better or more effective ways of
achieving results, personnel from certain Asian cultures
will have a tendency to simply go and do the work,
deferring to the judgment of senior personnel. When
working with team members from such cultures, it is very
important to realize that you will probably get exactly
what you ask for, without question, even if what you ask
for isn't the best possible solution. This situation
places a premium on: a) being very certain that your
requirements, specifications, etc. are very well defined
and thoroughly vetted, and b) actively cultivating lines
of communications with these personnel that will entice
and facilitate feedback.
Conclusion
In my experience, the most common
unique causes of failed offshore-outsourced IT projects
(beyond causes that are typical to any IT project) are
related to unique cultural elements that are commonly
ignored or misunderstood combined with the failure or
inability of management to fully consider the broad
range of influencing factors that are peculiar to
offshore outsourcing. Some of these influencing factors
have been described in previous sections of this
document, but there can be many special considerations
unique to each individual project. Without the benefit
of significant experience in identifying, planning for,
and managing these issues, the typical IT Manager faces
an uphill struggle.
(This is part of the article
Written by: Scott Noble, Director, Global Sourcing
Insights LLC, Published in IT Observer.)
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Boom
time for outsourced apps management
According
to a recently published IDC study, approximately $17.9bn
was spent worldwide on application management services
last year.
System-on-chip
poised for growth
As pressure mounts on large
companies at every segment of the consumer electronics
chain, for greater functionality and shorter
times-to-market, exploiting Indian talent could play a
greater role in the coming years
Lucent
Technologies selects Capgemini for IT services
agreement
To amplify service and cost savings
for Lucent, Capgemini will utilize onsite delivery in
Illinois and New Jersey for transformational consulting,
delivery governance, client relationship management and
application knowledge consistency, while the majority of
low-cost, high-quality services for applications
maintenance and support will be delivered from
Capgemini's center in Bangalore
Fringe
Benefits Management Company (FBMC) today announced an
alliance with Mellon to offer Health Savings Account
(HSA)
Under the terms of the contract, Mellon
will provide financial services, such as checking and
debit cards to pay for qualified medical expenses, an
investment account and IRS-required tax reporting to the
nearly two million members of health plans served by
FBMC. In addition, Mellon's responsibility also includes
claims administration, customer service, online tools,
and employee education.
Gartner:
Overall Number of Internal IT Staff to Shrink 15 percent
by 2010
Analysts at Gartner also add that
with IT skills becoming an important component of
business professionalism, in-house IS staff will be
displaced. By 2010, the firm predicts that 60 percent of
the people affiliated with the Information Systems (IS)
group would assume 'business-facing roles around
information, process and relationships.' Gartner also
adds that as a result, the size of the IS organization
will decrease. |
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Xansa
bags Tesco
The deal is aimed at reducing the
money Tesco spends on its core IT functions, by using
Xansa’s offshore facilities in India. It will handle
application management, software development and project
management, and encompass distribution, stock
replenishment, products and pricing. The outsourcer will
support payroll for the UK and Ireland, as well as
general sales information.
Indian
Software cos grow faster in Europe
Over the
last eight quarters, revenue contribution from Europe
has jumped significantly for companies such as Infosys
(17.7 per cent for the year ended March 2003 to 22.3 per
for the March 2005 year), Satyam (12.4 to 16.6 per
cent).
Indian
BPOs turn to Philippines to set up offshore
centres
Philippines is turning into a hot
destination for India-based BPO (business process
outsourcing) companies who find the low-cost location
ideal for establishing facilities outside
India
Sri
Lanka investment board opens Bangalore
office:-
Though the board will woo major
Indian companies across the country to invest in Sri
Lanka with a plethora of incentives and tax holidays, it
decided to locate its office in Bangalore to attract
hi-tech industries, especially IT and business process
outsourcing (BPO) services and biotech
industries
Wipro
forms alliance with Wind River
India's
third-largest software firm Wipro Ltd and US-based Wind
River Systems, which develops technologies to run
software in devices efficiently, said on Monday they had
formed a strategic alliance
HCL
may strike 51:49 JV with NEC for IT
solutions
HCL Technologies is close to
forging a joint venture with Japanese technology major
NEC to provide integrated IT solutions. Sources say it
will be a 51:49 JV, with HCL holding the majority stake.
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