The discussion about outsourcing continues to be an on-again, off-again affair -- that is, onshore and offshore.
Certainly, the basic value of outsourcing has been well documented. Benefits range from dramatic cost savings to reduction of inventory and allowing companies to focus on core competencies. What is still up for debate, however, is whether to adopt an onshore or offshore approach.
While each approach has distinct merits, it is instructive to examine specific outsourcing scenarios to determine which line of attack is optimal. For example, if you are a North American company seeking to outsource development of a prototype for a new high-tech offering, or software development for a major upgrade to your company's flagship product, the onshore strategy is a significantly better method. Let's examine the rationale.
Practical experience: Talent available onshore is extensive in certain domains. For example, if you're developing video games, the United States and Canada offer a wealth of experts. Or consider biotechnology: The competency of the human capital in this area is beyond reproach. In fact, the availability of expertise in North America for virtually any high-tech sector -- especially telecommunications and networking -- is unsurpassed.
But it's more than just the knowledge base that is critical. The North American professionals not only understand technology, but know how to commercialize that technology for specific customers and markets. In other words, they can be instrumental in developing products your customers need.
Intellectual property protection: Protecting intellectual property (IP) is vital when using an outsourcer to work on a proprietary project. Many countries abroad -- most notably in the Far East -- have a reputation for not fully observing copyright laws and legislation relating to IP protection. This is clearly a concern when dealing with any proprietary information; it is magnified when the IP revolves around a company's core competency or technology foundation.
While breaches can occur anywhere in the world, it is less likely to happen in the North American market, where the legislation is not only stronger to begin with, but is enforced with far greater passion.
Location, location, location: One of the key reasons why onshore outsourcing is frequently a better option is proximity. When your outsourcer is only a few hundred miles or even a thousand miles away, you can hop on a plane for an in-person meeting. Taking a trip to India is neither convenient nor economical, which discourages the face-to-face interaction that, while not essential on a daily basis, can become critical if a project begins to veer off-course.
Time is a close relative of distance. In North America you are never separated from your outsourcer by more than four time zones, so it is relatively simple to set up a conference call. Now try booking a call between New York and China. It is likely to mean that at least one of the parties will be forced to get up too early or go to bed too late.
Language barriers: One of the most obvious quandaries of an offshore setup is the language issue. Even if an overseas outsourcer's key personnel speak English, they may not be versed in the quirky phrases and local dialects that can make English hard to comprehend.