Experience of IT offshoring from the coal face

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I recently blogged about reasons why the government might not want to limit the use of Intra Company Transfers (ICTs). As I do a lot of blog posts and receive a lot of reaction about the problems caused to UK IT professionals by offshoring I though it important to provide balance.

So I blogged 5 reasons why the government doesn't really want to reduce the number of offshore IT workers in the UK. These were views from CIOs, lawyers and consultants. As expected I received some good reaction. This is great because that is what a blog is all about.

I received a comment from a reader known as Mark. He gives 11 reasons why offshoring is not so good. He is commenting on the view from the frontline where UK IT workers are dealing with offshore delivery on a day to day basis.

As I strive for balance here are Mark's 11 reasons why offshoring is not as cheap and effective as you may think:

1. Training and knowledge transfer time.

2. Lower quality staff with poorer language and communication skills leading to an inferior functional and technical solution.

3. Drag on the productively of the onshore team. We have a few really good onshore technical developers but they are propping up "coach loads" of poor quality or mediocre offshore staff, substantially impacting their own productivity.

4. Communication overheads. When we have conference calls there is at least 10-15 minutes of waste at the start to get everybody logged on. Also, losing face to face contact and dealing with people who have poor English language skills means that these meetings tend to last for a very long time and achieve very little.

5. A higher rate of defects and rework when compared with work carried out onshore.

6. A higher incidence of total project failure.

7. Overbilling. Can you be sure that the staff you are being charged for were truly working full time for your business if you can't actually see them.

8. Time zone differences, Indian staff on my project work until 2:30pm UK time but they are going to lunch as we arrive to the office and we are going for lunch just before they go home so we can only actually contact each other for 50% of the working day.

9. High turnover of staff in offshore "sweatshops".

10. More resources, more management and more time required to achieve the same results.

11. Impact on morale of the onshore project team and key business users.

6 Comments

Another issue with offshore and imported ICT staff is the relatively narrow/shallow set of skills available. As ArgieBee points out elsewhere on this blog, a large proportion of Indian developers are relatively inexperienced, so they have not yet gained much depth of knowledge/experience in the first place.

They also tend to come with only a narrow range of skills - typically "vanilla" Java/.NET programming and trivial web development - and little or no understanding of important enterprise technologies, such as databases, that are often largely ignored by many high-throughput university degrees in computing.

Depending on the extent of your outsourcing or reliance on offshore/ICT staff, you are likely to have trouble finding the cheap staff you want with the specialist skills/experience you need: these skills are at least as rare in India as in the UK, if not more so, because of the relative immaturity of the Indian IT industry.

One further consequence of this is that many of the big consultancies that rely heavily on offshore resources will tend to push projects down particular routes, selling you the skills they have in-house, rather than the skills your project really needs. At a handsome premium, of course.

In the meantime, of course, by shifting your IT investment to India you are undermining your own local skills base in the UK, increasing your reliance on poor performing and increasingly expensive offshore suppliers, creating software your own organisation will no longer be able to understand, and still not getting real value for your money.

Duh.

Some good points have been made here.

One of the biggest hidden costs of offshoring is the amount of time required in communication on both sides, handholding, double checking work done offshore and ping ponging things back and forth multiple times until it is finally acceptable. This is total waste of time and money for a company because with the time invested to make the offshore model work your onshore resource could instead actually be doing the work themselves. This waste, and the expense of the other inefficiencies, needs to be added on top of the day rate of an offshore resource to gain a more accurate picture of true cost.

Offshoring is also very short-termist. If junior jobs go offshore then we break the tradition of people getting promoted up the ranks and gaining enough experience at each level to become the IT managers of the future. I am already seeing the effects of people working as IT managers who have not gained the required technical expertise to be able to do their job effectively. IT managers without enough proper project experience make poor and costly decisions.

So much has been mentioned by both politicians and the press regarding the problems that the bankers caused with their short term gain strategies. I don’t see CIO’s who choose to offshore work as being any different in this aspect. The government needs to take action to stop all this stupidity.

This is a good article on offshoring. The research is not anti offshoring but does support the fact that efficiency decreases.
http://news.idg.no/cw/art.cfm?id=C29EDD94-1A64-67EA-E4C3F762CD2D287C

A UK based colleague of mine once worked for a company that off-shored part of its development to India and part of it to China. Both teams had English as a second language and indeed that was their common language. Problem was that neither could understand each other's pronunciation and so my friend ended up having to sit in on every conference call to "translate" Chinese-English to Indian-English and vice-versa. Kept him in gainful employment for a while but wasn't really what he had in mind when he originally joined the company as a software developer!

The problem generally is the emphasis on driving down upfront costs, without taking an overall view, not only of the efficiency in getting a project done, but also the effect on the UK as a whole.

In studies it has been found that the difference in productivity between a novice and experienced programmer can be as great as 10 times.

We have a business mentality currently which views IT staff as "commodities", i.e. you hire so many in order to fulfill a task, and the cheaper you get them the more cost effective and efficient you are being.

This is clearly ludicrous thinking, people aren't machines, they don't have a standard range of efficiency, and having 100 new inexperienced programmers is certainly more expensive and inefficient over the course of a project than paying 10 experienced programmers who write good code on the same job.

There is also the effect on the country as a whole to consider, more experienced older staff on benefits, less tax revenue for the country generally, and younger people both graduate and non graduate unable to find work thereby eroding the countries skill base.

There is a definite "Kings new clothes" aspect to all this among senior management, it's the middle managers you see with the worry lines and premature Grey hair.

Not all offshore staff are like that. Not all of them are "mediocre" or have poor knowledge on their field. Here in the Philippines, we make sure everything that is demanded of us is done right and efficiently. We never leave room for error.

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About this Entry

This page contains a single entry by Karl Flinders published on April 8, 2011 11:09 AM.

Could IBM's prediction of reverse IT offshoring be coming true? was the previous entry in this blog.

Banks could soon have to seperate groupwide outsourcing contracts? is the next entry in this blog.

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