Overseas Outsourcing: The Advantages of IT Offshoring

Sep 01, 2004


Drew Wright
Life sciences firms haven't exactly been jumping on the offshore outsourcing bandwagon. But faced with unprecedented cost constraints, competitive pressures, and regulatory scrutiny, the industry needs new solutions to its business problems. Some experts think information technology (IT) "offshoring" offers a solid alternative; others question the idea. This interview with Drew Wright, senior vice president of global resources at Ness Technologies, a global IT services provider specializing in the development and integration of end-to-end software solutions, explores how offshoring may enable new business models and opportunities for life sciences firms. Wright, an expert in offshore outsourcing issues, has held senior IT management positions at Pfizer Pharmaceuticals, Exxon Research and Engineering, and Singer-Kearfott.

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?



Wright: The foremost factor is cost. With today's economic and competitive pressures, life sciences organizations are looking to reduce costs. Savvy firms want their limited IT dollars to work harder and need to focus more of that work on improving the bottom line. That means offloading routine operations and support to lower-cost resources and redirecting key inhouse and local vendor personnel to envisioning and designing new initiatives that will shorten time-to-market for new regulated products.

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.