ADVISORY ARTICLE
By Yogi Schulz
Calgary, Alberta, Canada
Many organizations have reaped significant or even huge benefits from offshoring parts of their IT function or major IT projects.
This offshoring success creates the question of when offshoring is appropriate and when it will be disappointing or even counter-productive. Project managers will face this question sooner or later, especially when management thinks their project estimates are too high. Here are some considerations that project managers evaluate for their projects.
IT functions suitable for offshoring
Successful IT offshoring examples include:
- Help desk.
- Data center operations.
- Network and security monitoring.
- Application operation.
- Custom application development.
- Website operation and content management.
- IT administration.
IT functions not suitable for offshoring
Situations where offshoring is unlikely to be successful include:
- Strategy development.
- Collaboration to achieve a consensus on IT goals.
- Consensus-building on requirements.
- Computing infrastructure build and upgrade.
- Significant people change management effort.
- Software package implementation.
- Technology evaluation.
The bottom line is that the larger the IT operation or IT project, the higher the net benefits for offshoring will be. Larger projects are better able to absorb the risks of offshoring described below.
Benefits of offshoring
Most offshoring benefits arise from cost and capacity. Offshoring is highly appealing to project managers because they always operate under cost pressure and capacity constraints.
This article does not discuss economic development benefits in the offshore service provider’s country.
Cost reduction
The primary driver for organizations to move IT work offshore is cost reduction.
It’s typical to find hourly rates for professional services for equivalent education and experience in the range of 25% to 40% of the North American rate.
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How to cite this article: Schulz, Y. (2024). To Offshore or not to Offshore? PM World Journal, Vol. XIII, Issue X, October/November. Available online at https://pmworldlibrary.net/wp-content/uploads/2024/11/pmwj146-OctNov2024-Schulz-To-Offshore-or-not-to-Offshore-1.pdf
About the Author
Yogi Schulz
Calgary, Alberta, Canada
Yogi Schulz has over 40 years of Information Technology experience in various industries. Yogi works extensively in the petroleum industry to select and implement financial, production revenue accounting, land & contracts and geotechnical systems. He manages projects that arise from changes in business requirements, from the need to leverage technology opportunities and from mergers. His specialties include IT strategy, web strategy and systems project management.
Mr. Schulz regularly speaks to industry groups and writes a regular column for IT World Canada and for Engineering.com. He has written for Microsoft.com and the Calgary Herald. His writing focuses on project management and IT developments of interest to management. Mr. Schulz served as a member of the Board of Directors of the PPDM Association for twenty years until 2015. Learn more at https://www.corvelle.com/. He can be contacted at yogischulz@corvelle.com
His new book, co-authored by Jocelyn Schulz Lapointe, is “A Project Sponsor’s Warp-Speed Guide: Improving Project Performance.”
To view other works by Yogi Schulz, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/yogi-schulz/
