Lessons in how to succeed at offshoring

05.12.2005

Because the Globant team is working efficiently, Brase estimates that the project should be finished within 14 months, or one month later than expected.

Now, Cable Scope is looking to hire someone to oversee all of its key projects and essentially act as the IT liaison to companies like Globant.

Lesson learned: Never underestimate the time or resources needed to manage an offshore contract.

In addition to communication problems, lower-than-expected cost savings can also disappoint novice offshore outsourcing customers. Part of the problem is that many new customers buy into the hype that they're in for huge savings, when offshore vendors tout development rates of US$15 per hour while $90 is common in the U.S.

But those per-hour charges are only the tip of the iceberg, says Lee Jones, CIO at Stratex Networks Inc. in San Jose. That's because many clients of offshore contractors fail to account for time zone differences and project delays that lead to extra travel for the customer, says Jones. As a result, actual costs can end up being closer to $45 an hour, he says.