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Onshore Outsourcing Benefits

While the business value of outsourcing includes the predictable benefits of cost savings, reduced time to market, and increased attention on core competencies, the debate between onshore outsourcing and offshore outsourcing has been reinvigorated in part due to the troubled economic climate and increased competition for outsourcing work.

The reality is that neither offshore or onshore are superior for all business models or project types. Both onshore and offshore outsourcing offer particular advantages and greater fit based on the particular constraints, objectives and goals for various project types. For example, if you are a United States or European Union technology company seeking to outsource the development of a prototype for a new high-tech solution, the onshore strategy may offer increased confidence to intellectual property (IP) stakeholders concerned about the pervasive disregard of IP rights in certain geographical areas.

Additionally, deep talent and experienced human capital may be more available in North America. For instance, if you are creating video games, social media tools, software as a service business applications or other new technology products, Silicon Valley, Boston and Austin offer a tremendous number of proven technology veterans surrounded by ecosystems of complimentary resources and firms. For biotechnology innovators, the resources available in San Diego and South Florida are unmatched throughout the rest of the world. In fact, the availability of technology expertise in North America for the majority of the high-tech sector, from networking to telecommunications to revolutionary technologies, is generally considered unsurpassed.

Experienced North American professionals not only understand the technology, but are also well versed with knowing how to commercialize and capitalize new technology for target markets and go to market initiatives. These life cycle skills and experience are extremely helpful in producing products and services that customers actually need.

Safe guarding IP is paramount when evaluating outsourcing firms. Many countries bidding for outsourced development project have a sorry reputation for not observing copyright laws, failing to enforce legislation and failing to prosecute corrupt acts which cost US and EU firms billions of dollars each year. While IP theft and breaches can occur anywhere in the world, they are less likely to occur in the North American market, where legislation is stronger, enforcement if prevalent and the culture is one that recognizes the inherit value of IP.

Proximity and common time zones are key advantages for onshore firms. When your outsourcing firm is within a short plane flight, face to face meetings are more frequent, communication is enhanced and outsourced projects benefit from a more iterative development process. Trips to far away locations are neither convenient nor economical which discourages face to face interactions, relationship building and the growing of a common culture.

We have all come to learn that America and England are two countries separated by a common language. If a North American company elects to use an overseas outsourcer, both parties may be speaking English, but from a practical perspective, it may sound like a modern-day Tower of Babel. Language barriers with offshore firms are improving but continue to be an obstacle not encountered with onshore firms. Even if an overseas outsourcing company's key personnel speak English, the pace and fluency of their language skills and the lack of understanding of key expressions leave room for errors in the communication process.

A bi-directional dialogue between the customer and outsourcer can be very valuable in improving the iterative development process and achieving high quality project results. North American companies emphasize a great deal of teamwork and communication between the customer and the outsourcer. For example, a project manager or software designer may request a product of certain dimensions, for example "I think the product should be this shape." An experienced outsourcer could add value by responding with the comment, "I know you would like it that shape, but if it were another shape it would actually cost less and produce more value." This type of collaboration and brainstorming presents trade-offs which achieve balance between what the customer wants and what the outsourcer delivers and ultimately results in higher quality project results.

In offshore cultures where the norm is to manufacture what you are instructed without offering feedback, the finished product may meet the specifications, however, not perform according to customer and market demands. Instead, the creative contributions are missed and the resulting product misses the mark or results in multiple iterations and cost overruns.

From a cost perspective, the most underestimated cost of offshore project management is another significant variable that offers a key advantage for onshore resourcing. Far less time and project management is typically necessary when using onshore firms because of the dynamics previously cited.

In the appropriate situations and project types offshore outsourcing clearly makes sense, such as in high volume manufacturing, quality assurance and product maintenance. However, failing to recognize onshore advantages for other project types ultimately misses what may be a superior solution for many organizations.


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