The current economic climate might have slowed the $50bn-a-year offshoring business, but it is still projected to grow at 10 per cent in 2009.
At the same time, water cooler conversations are turning to help desk frustrations, growing rumblings about the quality of offshore software development, and increasing errors showing up in code.
These errors can wreak havoc in productivity as business processes are slowed, customer service is compromised and IT becomes tagged as counterproductive overhead.
So why is that when an offshore development project is a success, the return on investment is included in every presentation to the management team yet when something goes awry, the finger pointing is always outbound?
Before blaming offshoring for every ill, there are three critical and often overlooked factors that will determine the success of the project.
These factors -- visibility, risk mitigation, and governance and compliance -- are ultimately in the hands of the client and addressing them "at home" can dramatically alter the outcome of an outsourced software development project.
Increasing visibility into the technical and business aspects of the software development process helps address the common issues associated with time zones, high staff turnover and a vendor's lack of understanding of the client's business.
What needs to be clarified first is that complaints about time zones actually speak to time delays and their impact on deadlines. When bad code is sent back to the client, days of work may have been squandered due to errors that have been manually yet inadvertently put into the code. Time zone differences exacerbate the issue.
Meanwhile, staff turnover has consistently plagued the IT industry and the numbers continue to rise globally. In fact, India has reached a high with turnover hovering around 28 per cent. Clearly, a revolving door of developers inevitably lends itself to a wider margin of error.
In terms of knowledge, there are many companies that don't believe that comprehension of a client's industry is required to execute the assignments. However, when you consider the nuances of financial services, manufacturing or telecommunications, selecting an offshore vendor with experience in a specific industry can influence the quality of service.
While these issues can't, won't and shouldn't be resolved entirely by the client, there are mechanisms that can be put in place by the client that will minimise their impact. For example, from a technical perspective, alerts in the software that automatically halt erroneous code from moving forward in the development process can increase visibility without adding a layer of complexity.
It is widely agreed that strategic vision and execution are requirements for reducing the risks in offshore software development. Certainly many companies have vision at the onset of the offshoring project but are convinced that it was the overseas execution that affected the results. Since this explanation doesn't change the outcome, companies should take a closer look at the missing pieces in this puzzle.
In many instances, the code that is lost in translation is the result of inconsistent and varied approaches by the client and vendor with regard to software design and development. These misunderstandings will inhibit the proliferation of best practices and compromise security and overall performance.
Since the cost of fixing the code after the requirements have been locked can be 50-200 times higher than if the issues were addressed as the code was being created, it's in the best interest of the client to articulate fully the development approach and methodologies to the vendor before the actual heavy lifting begins.
Governance and Compliance
Governance is one of those terms that is sometimes confused with compliance. While complementary, they play different roles, especially when it comes to software development.
From an IT perspective, governance is about making sure that a system of checks and balances is put in place automatically to identify and flag where the code doesn't match up with the agreed upon specifications.
Compliance is differentiated by the way it uses technology to review whether a company is in adherence to self-imposed or government mandated regulations.
Governance and compliance are integral to offshore software development from productivity and legal standpoints as well as a cost savings perspective. However, when governance is built into the software design, it can automatically create those checks and balances without interrupting the flow of work whether it's done in-house or overseas.
While the offshore software development process is still far from perfect, some common issues can be avoided so that the project actually delivers on its promised economic benefits.
The author is the president and chief executive of WebLayers.
Copyright: The Financial Times Limited 2009