Though hardly a new concept, offshoring activity has escalated recently as telecommunications and cross-border barriers have dissolved worldwide, causing a real IT skills shortage across the whole business intelligence (BI) sector in the UK. Some blue-chip organisations have previously offshored parts of the business to countries in the Far East, as they believe this will allow them access to quality skills, experience and expertise. Nakis Papadopoulos, joint CEO of IMGroup warns businesses of the dangers of offshoring BI projects and why they work more effectively if implemented in-house.
Historically, BI projects have not worked well with technical skills offshored because UK businesses need to employ people that understand the countrywide business issues. BI is a sector so fragmented that it further dilutes the skills available in the market. Rather than face cost implications such as offshoring, businesses need to take the opportunity to build on existing skills.
The current trend to offshore IT skills means that UK businesses are often lacking IT specialists and an in-depth understanding of how businesses work. Knowing and understanding the 'bread and butter' of your business is critical to providing effective IT support. Company knowledge is crucial to the support environment, and training people in-house is the key to staff retention. A lot of work needs to be done over the next few years, in order to ensure that skill levels meet the needs of businesses.
Many businesses cannot resist the temptation to offshore parts of the business simply because of the labour savings. Other persuasive factors for recommending offshoring include:
* People - Being proud to work for an international company and motivated by targets and incentives, offshore workers tend to be more productive and proactive in enhancing processes than their onshore counterparts.
* Market discipline - These firms compete in an open marketplace for business, so there is a strong focus on continuous improvement and customer service.
Offshoring can work well in some instances with larger teams that are working on long and complex applications such as coding for development. However, complex and highly focused projects such as BI, do not work well offshore.
Therefore, it is important to remember that offshoring does not work for everything, particularly for BI projects. In fact, many companies that have tried to set up instant offshore operations in India over the past few years have failed.
That failure rate stems from several factors. For one, not every process is a good candidate for offshoring. Processes such as BI that are core to the business, require significant personal interaction, involve high levels of customisation and will therefore not transfer well to an offshore environment.
Though attractive, the returns on an offshoring investment typically take a few years to start rolling in. Companies must explicitly consider all risks in transitioning business processes to an offshore location. More importantly, they must develop an exit strategy or effective fallback plan in case the offshoring initiative ultimately proves unsuccessful.
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•Date: 16th Dec 2005 • Region: UK • Type: Article •Topic: BC general
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