Dean Lane might have mastered the art of offshore outsourcing. As senior IT director at Cupertino, Calif.-based Symantec Corp., Lane found a way to please both executives and IT workers alike. He successfully implemented an offshore outsourcing plan that saved the company money and didn't result in any job losses -- to date. But to Lane, offshore outsourcing is not primarily about the money, it's about becoming a global competitor.
Lane tells SearchCIO.com that the key to implementing a successful offshore outsourcing plan is to establish a blueprint and stick to it. Find out what other trade secrets this seasoned IT executive can offer companies entering into offshore outsourcing agreements.
Gartner has said that CIOs need to embrace outsourcing and set an example within their companies by showing what should and should not be outsourced. Are you leading your company's outsourcing efforts? Do other execs look to you to set the example?
Lane: Yes, they do and, yes, I am. I call it 'establishing the blueprint.' The blueprint consists of all of the things that you might outsource. That exercise could yield items beyond IT, but certainly our focus and our interest is within IT. Once we have a complete list, we take all the items [within IT] and put them on a scale that indicates which items are high intellectual property [IP] and which are low intellectual property.
Outsourcing/offshoring is much like the effort that I went through in the mid-'80s. So, what [are] the manufacturing items of IT? I believe it is the code we produce and also quality assurance testing. Those are the items we deemed to be lower IP and more appropriate for outsourcing. As a contrast, at the pinnacle of the spectrum, a company's product is viewed to be higher IP. Within that high IP category, you may have the actual physical 'guts' of how a program or algorithm works, and that is the highest IP. Whereas the GUI -- the user interface -- the navigation of how it gets from place to place is still high IP in the context of all IT, but lower than the actual product and how it works.
What were the drivers for going offshore?
Lane: There were, and still are, a significant number of reasons to [go offshore]. One is definitely a cost component. Most people jump to this reason for offshoring. There are other reasons. When an organization is striving to become a global company, it will seek the highest value for the least amount of money. Quality is another reason for offshoring. We found that domestic consulting firms we were utilizing were not CMM5, which is the highest quality [software] rating. We also determined that India has companies that have been certified by terms defined here in the U.S. as being CMM5. So it was also an issue of quality, what we could get and being global -- ultimately, having a presence in other parts of the world.
Where did you decide to outsource to?
Lane: We did a significant amount of investigation. The answer is India, but we looked at the three I's -- India, Ireland and Israel. We investigated Russia and the Philippines. We went to a significant number of places in search of where should we offshore. China is definitely less expensive than India., but offshoring is not just a matter of cost; it's who has the infrastructure, who is more mature in their processes, how long have they been doing it, what the turnover rate is, how well can they communicate, among other numerous considerations. After conducting a worldwide search, literally, we felt that, for the value of the money being spent, India was our 'best bet.' I knew India and Ireland were popular, but I wasn't aware of Israel as a hot spot for offshore outsourcing.
There are a number of firms offshoring to Israel. Israel offers highly technical and extremely intellectual engineers. So, if you have tough mathematical problems that require real brain power, Israel fits the bill. If that was the kind of operation we were looking to offshore, I probably would have sent our venture to Israel.
The key to [offshoring] success is implementing the right kind of understanding up front.
Dean Lane, IT director, Symantec Corp.
What about safety issues in areas where war and terrorism are issues? Israel is one of those places.
Lane: You are exactly right; that is an issue … all over the globe. However, you don't hear as much about it in some parts of the world. The media primarily informs us about Israel and the Palestinians. When I was in the military 25-30 years ago, I worked out of the embassy in Manila, and I was there fighting al Qaeda. You don't hear about that. There are still things going on in the Philippines today that just aren't covered by the media. And India almost had a nuclear war with Pakistan a few months ago. When I was [in India] doing research, a bomb was set off, but you don't hear about that either. While China may not be at war per se, they're not necessarily known for human rights.
A war-torn, or a perceived to be war-torn, area is definitely something to take in to consideration; there are many other important factors to take into account as well.
What do you feel are the biggest obstacles to sending work offshore?
Lane: There are two hurdles in offshoring that I consider to hold a higher position in terms of being obstacles. The first is taking the time to establish the correct blueprint. People often become dazed or enthralled by the low cost and so they rush into offshoring not knowing how to properly go about it. When offshoring, organizations do one of two things: they either hire a company here in the U.S., increasing costs significantly, or they undertake and establish a blueprint. If, in fact, you hire somebody that knows how to follow this blueprint, you can successfully map out a plan and establish the contract with the offshoring company in 90 days. Getting the blueprint right, finding the appropriate company to work with and establishing a suitable contract are most important. Essentially, the key to success is implementing the right kind of understanding up front. I consider these tasks most important because they are the first step(s) -- the foundation.
Equally important, and the second major obstacle, is the method in which work is managed once it has been sent offshore. You must ask yourself, 'what mechanisms or what processes will be used to manage the project or item that you have offshored?' I know this is an issue because project managing technical IT work is complex even if you are in the same building.
Some additional dimensions are added by having the IT work offshore. Examples are:
- Scheduling meetings are more complicated (and costly) because of time zone differences.
- Establishing a communications link.
- Implementing proper security.
- Dealing with employee fear and morale (of the U.S.-based employees).
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