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Lessons in how to succeed at offshoring

05.12.2005
First-time offshoring customers often encounter a rash of unexpected difficulties, such as lower-than- anticipated cost savings and the need to send IT managers overseas for extended periods to resolve project problems. So serious are these issues that more than half of customers end outsourcing contracts prematurely, according to a recent survey.

Nevertheless, some offshoring customers that have encountered problems with overseas engagements have stuck with their providers, learned from their mistakes and applied the lessons to strengthen those relationships.

Offshore surprises

Organizations that send some of their IT work overseas have to contend with all sorts of challenges, including time zone, cultural and language differences.

As a result, dissatisfaction with offshore outsourcing is on the rise, according to two independent surveys of IT managers and businesses conducted earlier this year.

Last spring, Chicago-based DiamondCluster International Inc. surveyed 210 senior IT executives at Global 1,000 companies and 242 executives at outsourcing service providers and found that over the previous year, the percentage of users satisfied with offshoring providers fell from 79 percent to 62 percent. Even more telling was the number of customers who prematurely ended domestic or offshore outsourcing contracts within a year: That figure jumped from 21 percent in 2004 to 51 percent this year.