The Basics of IT Offshoring Q: First, what is IT offshoring, how is it different from outsourcing, and which is better?
Wright: Outsourcing uses external resources to supplement or replace inhouse IT personnel. It is done to utilize experts in certain business solution areas or technologies, access pre-existing intellectual property, keep IT services costs variable instead of fixed, manage risk, and avoid distractions. Offshoring, which is a type of outsourcing, utilizes skilled technical staff in lower-wage countries to supplement or replace inhouse IT operations. The primary drivers for offshoring are cost reduction, quality improvement, and availability of a 24-hour work cycle. It is far better to use a vendor with significant domain experience and fully local staff. But cost is a significant consideration. Hence a third concept, SmartSourcing, which combines deep local domain expertise with highly technical offshore resources. SmartSourcing uses local resources for tasks such as diagnosing the problem, conceptualizing the solution, designing the system, and managing the engagement; lower-cost offshore resources for activities like system construction and unit testing; and local or offshore resources, as appropriate, for other tasks.Q: What's driving the interest in offshoring?
Q: What IT services do companies offshore?
Wright: The range is broad, from application development to system integration, ongoing maintenance, testing, operational support, and help desk services. By using highly certified vendors with well-educated and highly trained employees, extremely complex projects can be handled successfully offshore. In the pharmaceutical product lifecycle (see "Pharmaceutical Lifecycle") every activity, from R&D to clinical trials, manufacturing, sales and marketing, and product planning is supported by IT. Offshoring opportunities exist in all these areas and cover a range of systems: product planning portals, data warehousing and business intelligence systems, supply chain management, customer relationship management, and enterprise application integration.
Q: How long does it take to set up an offshoring system?
Wright: Actually, it's pretty quick, if the vendor has a proven model and existing offshore facilities. Depending on the size of the project or engagement, companies should allow one to three months for knowledge transfer and completion of system requirements and design on-site. During this time the offshore team is constituted and trained. Following that, the hybrid on-site/offshore team begins working as a single, effective development team.