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| Author: Menzo de Muinck Keizer |
This isn’t the first
article about offshore IT or BPO mistakes, but recent changes in the offshore
business require an update.
1.
Expectations
Mismatching expectations is
main reason for disappointing offshore operations.
Example: the client expects
to get rid of some operational issues, while the supplier expects to be judged
based on the availability of skilled resources.
Solution: discuss, agree
and write down your high level expectations and evaluate regularly.
2.
Incomplete Business Case
Many offshore business
cases miss important cost elements, like start-up cost, increased overhead
cost, transition cost, rate changes, Leading to optimistic expectations and
disappointing results.
Solution: get your business
case reviewed by an experienced offshore manager, before taking brave
decisions.
3.
Salary Inflation
Cost differences between
locations aren’t ‘static’ but changing. Salary inflation (defined as the annual
increase of a specific skilled person may vary from +25% in certain areas in
Romania and China to <0% in some areas in Spain. Country averages don’t tell
the whole story.
Solution: get informed
about salary inflation and take it into account in your business case.
4.
Wrong Location
Offshore IT and BPO started
more than 25 years ago in India, which went well for some types of operations,
but for others the Indian culture appeared to be less suitable, for instance
customer contact centers.
Nowadays, we recognize
offshore destinations on all continents, all having their specific strengths
and weaknesses.
Solution: get informed
about the cultures suitable for your operation and availability of resources.
5.
Juniorisation
Large suppliers have full
time dedicated ‘juniorisation managers’ replacing senior resources by juniors.
What you see: the
manager/architect/software engineer that you trusted so much, has suddenly
disappeared, because he was urgently needed somewhere else. According to the
supplier this has no impact on the quality. The reality is often very different.
Solution: add seniority
KPI’s to the contract and monitor it.
6.
Governance
The number of engaged
managers at the client’s side is often too high. This may cause confusion,
supplier frustration delays and unnecessary cost.
Solution: a radical change
of the governance structure, although many managers won’t like it.
7.
Empowerment
Business analysts on the
client side and executors on the supplier side is the common distribution of
tasks in offshore operations, not utilizing the valuable experience of the
suppliers’ seniors.
Solution: put the seniors
of the supplier into a powerful position and give him/her full responsibility
for making it success. Don’t forget to assess the capabilities of the
suppliers’ senior and monitor it.
8.
Inexperienced Client
In a football match the
experienced team is likely to defeat the inexperienced team. In offshore
operations the supplier is often the most experienced. The inexperienced client
pays for his loss by an uneconomic contract and disappointing results.
Solution: get some people
in your team who played the game before.
9.
Cultural Differences
‘Underestimating cultural
differences’ is often recognized but hard to solve, because most people are
unaware of their own culture. In their view they are just ‘acting normal’,
while the other side is ‘acting weird’.
Please don’t think cultural
barriers only exist between Europe and Asia. They also exist between Western-,
Eastern, Southern and Northern Europe.
Solution: engage at least
one manager in a key role, who is familiar with both cultures.
10.
Personal Relations
Even the best contract,
detailed requirements and set of KPI’s won’t guarantee a proper cooperation.
To really understand each
other, personal relations are needed. They can’t can be built via email or
Skype: the minimum is a face to face meeting twice a year.
The solution is simple and
should be included in the budget.
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