The media is full of reports of tech companies going offshore for their
software development and support capabilities. While this is a real
phenomenon that is happening, and the dollar cost savings can be
compelling, there are several downsides that don't seem to be brought
up very often. These can have a tremendously detrimental impact on a
company's products and brands, and without careful consideration can
lead to shortsighted decisions that ultimately take down a company.
Here are a few of the considerations:
1.) You may stifle and inhibit your product efforts
Truly great products are created by innovative engineering teams
that work very closely with Product Managers and other groups in a
company. As a Product Management professional I've worked with some
great teams that have delivered some incredible products. Products like
these aren't something you can simply write a spec for, deliver it to
engineers overseas, and get something exceptional back. Sure, for
simple and VERY straightforward coding work you can farm it out. But if
you want to create truly breakthrough products you need a team that has
great ideas AND that works closely with your Product Management folks
to ensure customer needs are being met. The best situation is where you
get a team that looks at the MRD (Market Requirements Document) and
figures out a way to deliver far more than what it calls for in a way
that Product Management could never have thought up.
2.) Your brand and customer relationships may suffer
The cost of losing a customer and ruining your brand as a result of
offshoring can be very high. Consider this example. My wife Sarah (VP
of Sales for the 280 Group) recently had a software problem and
contacted technical support for a well-known brand name product. She
ended up exchanging email five or six times with them. After the second
message it became painfully obvious that the person on the other end
didn't speak English very well, and that they had little chance of even
understanding the problem let alone solving it.
Now if this was an isolated incident it would be one thing, but
this company gave me the exact same lack of service when I had a
different problem. Sure, they saved a lot by having the support handled
by someone in India. But now that they've lost us as customers, the
question is, how much are they going to have to spend to attempt to win
us back?
Smart companies are realizing this - that's why Dell pulled their India
tech support efforts recently. The long-term value of a customer is FAR
higher than any short-term savings they can realize by having someone
less-expensive answering support questions.
3.) Managing offshore development can take a huge toll.
A friend of mine recently returned from a trip India where he is
managing an engineering team and was investigating finding new
facilities. He goes there about once a quarter. During this trip he got
violently ill, and suffered the usual jet lag and loss of personal time
when travelling. Upon returning he informed his boss of the progress,
and was told that he needed to return again in 2 weeks to finalize the
deal on the office space and make sure the team was on track.
The cost of this? Well, I can tell you that if he gets the chance to
work for a different company where he doesn't have to travel he'll be
the first to jump ship.
Incidentally, he mentioned that they are having problems with attrition
of staff in their India office, and that office space is no longer as
cheap and widely available as before. While it had been easy and cheap
to offshore two years ago, it had become more complicated and
time-consuming recently.
4.) Lack of accountability
I'm working with a team that is remote right now for a client.
Every day we have a team meeting conference call and people call in
from multiple sites. Though good in theory, we end up having to repeat
many things that are said because the phone lines are questionable.
Additionally many people skip the meeting, or delay us because they
don't have the project files to look at when we put them up on the
projector. I also suspect that a good part of the team is doing work
(or other things) on their computer while on the phone, since when they
are asked a question it is clear they haven't been listening.
There is something to be said for making your team show up in
person, look you in the eye when you are having a difficult discussion
about schedules and features, and not be able to hide their facial
expressions behind a phone line. True accountability makes for great
product teams.
THE BOTTOM LINE
One has to wonder, when the laws of supply and demand begin to
catch up with the situation, and the hidden costs of offshoring begin
to become more apparent, will companies come to regret their
cost-conscious post-bubble offshoring choices?
About The Author
Brian Lawley is the President of the 280
Group, the Product Marketing & Product Management Experts™.
The 280 Group provides consulting, contractors, training and templates
to help companies define, launch and market breakthrough new products.
For more information about the 280 Group's services and toolkits
(Product Roadmap, Product Launch, Beta Program, Developer Program &
others) visit
http://www.280group.com.
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