How to Run a Successful Offshoring Project: Interviews and Anecdotes
You’d have to be unconscious to be unaware of the practice of offshoring in our economy today. Many companies are doing it, and many employees and laid-off workers are protesting it. A global phenomenon, offshoring jobs has been going on for more than 10 years but only now is reaching our consciousness because of a slow job market. In his book The Lexus and the Olive Tree (Anchor Books 2000),Thomas L. Friedman explains that globalization is no longer just companies going global with work and products. We are forming a global economy and, in order to compete, it has become necessary to offshore jobs that can be done with less of a hit to the bottom line.
Managers in the US, already experienced with project management tasks, will find they need the same skills when they manage an offshore project. The difference is that the world of offshoring is many times more complex. Working within the framework of a foreign culture adds a whole new dimension to a project. As a result, additional considerations must be made in planning, communication, and training.
Besides dealing with the complex task of managing an offshore project, a manager can be caught between stricken employees whose jobs may be going away soon and the executives who see the bottom line and stockholder satisfaction as their ultimate goal. So where is the help for a manager who must send a project offshore?
I interviewed four managers who, together, had managed a total of more than 10 offshore projects. Lori Sledge is a Management Consultant at the Modello Group, LLC, in Seattle, Washington. The other managers-Will, from a large software company; Robert, manager for a large computer manufacturer; and Jane, the project lead for a computer company-all chose to remain anonymous. All the managers who spoke to me were generous with their time, suggestions, and supporting anecdotal information.
Laying the Groundwork-Planning
Planning is key to any successful offshore project. Will explained how he would effect a smooth flow of work offshore, listing three components:
- planning, planning, planning
- enough information to do the job
- clearly defined milestones
All of the managers I interviewed said that you must have a plan before you start, and that plan includes being completely organized. They all had this suggestion: Consider the cost of offshoring and do the planning up front.
Part of that planning process involves assessing which projects are best for sending offshore. I asked Will what he would do if one of his executives insisted that he offshore a particular project. He said, “Any time your manager comes to you and tells you to offshore a project, be bold enough to ask why. Do this for your shareholders; challenge them.”
All the managers agreed that the reason for offshoring is to help the bottom line-to improve the earnings-to-expense ratio. Producing a product for less money is the name of the game. Robert summed it up this way: “You move your assemblies where they are the cheapest and bring it back, like Wal-Mart, and sell it.” Will said, “Ultimately it is the bottom line, but offshoring a project doesn’t guarantee it will be successful. What you must do to guarantee success is the work of planning.”
In “Outsourcing: What Goes Around Comes Around” (Computerworld October 2003), Adam Kolawa of Parasoft Corporation claims that “…I’ve used offshore outsourcing, and my firsthand experience has convinced me that unless it’s done with a long-term investment in time and money under specific circumstances, its drawbacks far outweigh any reduced costs you may enjoy in the short term.” When pressed for comment on this, Will said, “If you say, `I think I’ll save some money, I’ll offshore this project,’ you’ll fail because you didn’t take the time to think about it. It’s never as cheap as you originally think it is going to be.”
Protecting Intellectual Property
As you do your initial planning, consider what knowledge you are willing to give away to another company if you send a project offshore. Johanna Rothman said it best in “11 Steps to Successful Offshoring,” in Computerworld:
… every time you outsource a project, you’re giving away part of your assets to the outsourcer, the intellectual capital that your technical staff learns every time they complete a project. Eventually, these outsourcers will know your business better than you do. And when that happens, the company’s management and then the company won’t be needed anymore.
Will adds that “We often fail to think about R&D, intellectual property, which includes copyright and trademarks, too. In the case of IP, even just international laws are not in our favor.”
The cure for this, claims Will, is to “…offshore items that are common property. If I have a search engine that anyone can buy, I’ll offshore that as part of the project. So if they want to take it, it won’t matter because I can buy it anywhere.”
Protecting Your Investment through Contract Negotiations
Here in the US, contract negotiations can protect a company’s investment. If international laws are not in our favor, it is absolutely necessary to make sure that the contract is solid and all loopholes closed. Always retain control of the work being done and the finished product. To protect your company against someone other than the workers you’ve hired doing the work, have a clause in the contract that the work cannot be subcontracted to another organization.
Executing Your Plan-Communication
As Lori indicates (see the boxed item on the next page), building a shared vision and creating a common language through communication is a good place to begin executing your plan. Building careful communication into the plan is important for managing a successful offshore operation. In your planning, you must examine how much of an issue communication will be.
If you are going to send an existing project offshore-for example, a software system that has been in production for awhile-you should consider the years of knowledge built into that system. According to Robert, “Most companies don’t have updated documents…. There is a constant amount of communication-it takes longer to communicate between the managers in this country and the workers in foreign countries. Here in the country of origination, in the companies who did the software in the first place, you have something called `tribal knowledge.’ It kept things working. You could go to the guy who helped code the system and that guy has a context for how the code was developed.”
One thing to remember is that context and understanding are different in the new environment. Management here believes that a good coder will focus on development but may not realize that the development environment here contains “a plethora of coding idiosyncrasies-the typical thing that happens after years of shortcuts and spaghetti code.” When you send that system overseas to a group of talented developers with plenty of knowledge, there is no understanding or context. You will have to provide the context and the understanding by communicating with all the players involved.
Communication is just as important on the home shore. In an article for CIO magazine, David Raspallo, CIO of Textron Financial, wrote, “CIOs must take time to communicate with their staffs, being `brutally honest.’ If your intention is to lay off some workers and move work offshore, let them know. If you want to move legacy systems offshore and retrain staff for other systems, tell them that. And constantly reinforce what the vision is.” Raspallo sets time aside for a monthly meeting with all staff (offshore included) by video. “In the beginning, we spent the whole time talking about the offshore proposition,” he explains. “If you don’t spend that time doing that, your staff is going to make up stories about what’s happening to themselves. Without this kind of communication effort, offshore endeavors are doomed.”
Maintaining Contact Despite Time Zone Differences
Another communication challenge to consider is global time. Managers must learn to deal with time zone differences as they conduct business and communicate in a global market. Adjustments for the time difference must be built into work schedules if you expect projects to span the globe. Time differences will affect work in all phases of a project including design, implementation, and production.
For example, Indian workers in the call centers must work the third shift in order to speak to US workers during the daytime hours. Will said, “There is a huge time lag between here and Asia. In India they are leaving work as we are arriving, so when it’s 5:00 pm there, it’s at 6:00 am here. Here, your developer sits down the hall and you can just go for a chat if you need to.” Jane said the workers she was supervising in India would just be starting their meetings as the rest of the department was leaving for the day. “We had to schedule some meetings to start at 6:00 pm to catch the workers in India in the early morning.”
The time lag adds an extra layer to the communication concerns. Be prepared to extend the hours of workers earlier in the morning and later in the evening to compensate for the time zone difference.
Making Sure the Work Gets Done
Setting clearly defined milestones is important for any project. I asked Will how he made sure the offshore work actually got done. “We have clear milestones and a clear schedule.” The work on any project is segmented into pieces, and each piece has a clearly defined milestone. “At any milestone, you could say to your developers in the foreign country, `You didn’t do good work on that milestone.’ At that point, you could pull the project.”
Jane said that being a step ahead and generating work requirements for her project in India was the most stressful for her. “I was really the blockage. They were so talented and quick that they picked everything up very fast, and I was kept busy finding things for them to do.”
In the end, the person making sure the work gets done is the manager who has carefully laid the plans to build consensus, communicate with the teams, and put tests in the system at milestones along the way.
The practice of sending projects offshore is a fact of business life today. For managers who are tasked with leading global organizations, the job can be daunting. If you take the time and resources to plan, communicate clearly, and train your employees, your offshore project has a much better chance of success, and you will achieve it with less frustration and stress on everyone’s part.
About the Author
During her thirteen-year career as a technical writer, Joan has written numerous articles of interest to technical communicators. In the past year, she has researched trends in offshoring jobs. Joan is the Employment Committee Manager for the Puget Sound Chapter of the Society for Technical Communication.