Overseas Outsourcing: The Advantages of IT Offshoring - - BioPharm International


Overseas Outsourcing: The Advantages of IT Offshoring

BioPharm International

Q: How is training managed?

Pharmaceutical Lifecycle
Wright: Typically, training on the client's business situation and on the system itself occurs through a formal knowledge transfer process on-site with key project personnel from offshore. This group takes the knowledge back to the larger offshore team, which they train and manage. A vendor should provide technical resources with significant education, work experience, and training—not new university graduates. Additionally, a vendor should have a process for training and educating employees on an ongoing basis.

The Advantages Q: Why should life sciences firms consider IT outsourcing and offshoring?

Wright: Today's pharmaceutical, biotech, biopharma, and medical device companies are in a situation they've never been in before. On one hand, tremendous pressure on market share and product revenue is forcing companies to accelerate product lifecycles. At the same time, huge pressure on the bottom line is creating the need for tighter controls over expenses. This puts life sciences companies in a bind: do they spend more to get products to market faster, or do they focus on cutting costs? They have to do both. Outsourcing and offshoring can help firms develop innovative IT solutions that can drive up revenue and, at the same time, keep costs down.

Q: Can you give us an example of how IT outsourcing or offshoring can help?

Wright: Today, IT is a critical part of a life sciences company's business. It's often an innovator of business process improvements and technical solutions that can reduce time-to-market by shortening R&D cycles, speeding up clinical trials, and facilitating regulatory approval. However, IT can't innovate if 50 to 85% of its budget is spent on maintaining and operating existing applications. By outsourcing these kinds of tasks, IT organizations can apply a greater portion of their budgets and key internal staff members toward innovative solutions.

Q: What savings can companies expect?

Wright: That depends on the level and length of engagement and on the outsourcing model chosen. For a simple offshore software development project of three to nine months, a firm could save 20 to 30% of overall costs, all told. A full lifecycle project spanning several years (from conceptualization and design through development, testing, validation, deployment, support and maintenance), could mean much larger savings: up to 40 to 50% over time. Further savings can be achieved by taking advantage of a vendor's build-operate-transfer model (if offered) and transferring ownership of an offshore facility to the company after a few years of operation.

Risks, Best Practices, and Compliance Q: Isn't it risky for companies to turn over their IT operations to an offshore company?

Wright: Outsourcing isn't inherently risky. According to DataMonitor, the pharma Big 11 outsourced 57% of IT services in 2003. As for offshore, it's worth noting that life sciences companies are already offshoring tasks like manufacturing, packaging, and clinical trials. Handing over IT support is a natural transition. More importantly, to not seize this competitive advantage now could be the more risky choice. Regarding security, good offshore vendors have stringent policies to protect intellectual property, prevent electronic data access, and control physical access to facilities. Buyers should select US-incorporated vendors to guarantee enforceability of contractual protections. To further minimize risk and ensure a successful offshore engagement, quality offshore providers impose strong methodologies and prepare companies for issues like cultural differences, communications, and employee role changes.

Q: Are there special capabilities life sciences companies should look for in outsourcing vendors?

Wright: First and foremost, does the vendor have real depth of relevant business experience? Does it have technical expertise in the types of software applications that the buyer's solution requires? Does it have the global presence needed to support the buyer's employees and customers around the world? Does it adhere to good business practices?

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