Avoid Common Offshoring Pitfalls

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“What did he say?” This was the thought bouncing around my brain as I tried desperately to follow the conversation of the offshore project manager who was on the other side of the world from me. He was speaking English; however the combination of the long-distance connection echo and his heavy accent were throwing me for a loop. This was my first offshore project and it was becoming a frustrating experience.

I had the unrealistic expectation that we would just offshore our product development and “poof,” we would realize great savings in time and money. Contrary to my rosy expectations, the only “poof” was the sound of our investment going up in smoke. I have since found there are many strategies to mitigate the stress caused by a lack of preparation and understanding.

We all know why companies are offshoring software development. I mean, how can you not save money when offshore developers can make an annual salary equal to the cost of a widescreen plasma HDTV? But just like everything else in life, it is very easy not to save money if you do not plan and prepare. Sure there are other benefits, like gaining productivity with a potential round-the-clock work day, but when it comes down to it companies are choosing to offshore because of the lure of cutting costs.

I’m not here to argue with the Lou Dobbses of the world who believe offshoring is detrimental to the U.S. economy. The fact is we live in a global economy and companies will continue to offshore as a competitive response. Therefore plenty of U.S. managers will have to cope with these offshore projects.

Don’t Downplay Cultural Differences

To gain additional perspective, I spoke with Tiffany Mura, president of bizprox, LLC, a management consultancy based in Boston. Mura has managed multiple offshore projects, and I found she had similar initial experiences.

“We ventured into offshoring for the same cost-saving reasons that are fueling this trend. However, we had a more difficult time than anticipated in realizing the benefits,” says Mura. “We ran into cultural differences and communication issues, along with the unexpected difficulties in dealing with the time difference in India.”

In Mura’s case, they did not discover the severity of these issues until the first code delivery. “When we were evaluating the offshore firm, they did a good job of convincing us of their stable, repeatable processes. However, when we looked at the initial project, there was no consistency in the standards and documentation,” says Mura. “The worst part was that when we went to install in our customer’s environment, the software didn’t work, because the target environment configuration was not documented. So the offshore firm did not build or test for the right environment.”

Another unexpected issue was in dealing with the time difference. Although there can be a time-to-market advantage if you have resources working around the clock, these benefits may not inspire your state-side personnel to enjoy attending status meetings at 6 a.m. or 11 p.m.

According to Mura, many of her project managers, who had never dealt with offshore projects before, balked at this unorthodox schedule.

“Our team did not care for the extended work day, because it was something that they believed was forced upon them. Additionally, they didn’t like the pressure of having to get our state-side work completed before the end of the day. This was because if we didn’t provide our offshore team with what they needed before we went to sleep, then we could lose an entire day of work on their end.”

Mura says the worst part was during crunch time, when key state-side resources had to be on call throughout the night to answer critical, time-sensitive questions.

Ease Into Any Outsourcing Relationship

What to do about these pitfalls? There are several proactive steps you can take.

Start small with a project that isn’t mission critical. This will lower your risk as your team learns the ropes. It also will make it easier for you to feel out the offshore firm’s standard processes. Even if they are ISO- or CMM-certified, daily execution is what really matters.

Provide your team with an “introduction to offshoring” training where you can directly address their concerns and how to eliminate common problems. Companies like Intel have had success providing managers with “cultural sensitivity” training that addressed issues upfront.

One cultural issue I encountered was a tendency for the project manager in India to agree with a statement made, but upon delivery you find out that he misunderstood your meaning, yet hesitated to ask because of — for lack of a better term — politeness. Granted, this could happen in any culture, but a recent CIO Magazine survey found 51% of CIOs felt that cultural differences were the greatest challenge they faced in offshoring. Must be something to it.

To avoid communication gaps like this, Mura recommends being extremely disciplined about documentation. “You must reinforce your intentions with documentation so intrinsic meaning is not lost,” says Mura.

I agree that documenting every conversation with a follow-up email, while tedious, will help prevent misunderstandings. The fact that English is usually not the native tongue only exacerbates the situation, so be sure to encourage everyone on the team (yourself included) to speak up when confused, emphasizing that two-way confirmed communication is essential to the project’s success.

Pay for Productivity, Not Training

One of the other problems encountered by Mura was high turnover on the team in India.

“With the strong IT job market in India we found that our team had major turnover, which impacted the cost and quality of the project,” says Mura. “If I had to do it again, I would make sure we wouldn’t have to pay for the learning curve of a new resource. It also doesn’t hurt to ask them how they retain employees and what their turnover rate is.”

If you do plan on committing to a long-term partnership, then trips to the offshore location would be wise. Just be sure to build sufficient travel costs into your budget. These trips will provide opportunities to review their facilities, see first-hand how their team operates and establish more personal relationships.

Mura thinks it is critical to make the extra effort to strengthen the interpersonal relationships of the team.

“Key management team members went to India and treated the team to a great dinner and gave them small gifts. We also started each weekly conference call with a chance for all team members to share personal life events, like engagements, births, etc.,” says Mura. “Finally, we encouraged each U.S.-based project manager to get to know their Indian counterpart on a personal level. This really helped solidify a cross-cultural team with some common bonds.”

If you really don’t want to deal with these issues, but still want to realize offshoring benefits, then consider using a state-side firm that has extensive experience with offshoring. They can help you select an offshore partner and then manage the project from start to finish, basically providing a buffer for the cultural and other challenges for your team. This approach may eat into your initial cost savings, but it will improve your chances for long term success.

If you follow these simple guidelines, the sound you hear won’t be “poof,” but more like the pop of a champagne cork to celebrate a successful, cost-effective project.