A Reality Check on Going Offshore

Computerworld - You've heard the hype about how going offshore can save you big bucks on IT expenses. Your CFO thinks it's a great idea. You've completed a baseline of your IT portfolio. Now you're ready to develop your sourcing strategy and determine which work to outsource and whether you want any of it done offshore. In addition to the concerns that go along with outsourcing any function, some special considerations need to be addressed as part of the offshore decision:
• Intellectual property. Determine to what degree any intellectual property you either take offshore or develop offshore will be protected in the courts. Some countries don't offer the same levels of legal protection found in the U.S. and Western Europe.
• Privacy and security. Laws such as the Health Insurance Portability and Accountability Act and California's Cyber-Security Act mandate the way data must be handled and the actions that must be undertaken in the event that data is compromised. European Union law regulates where data must be physically stored and what data can be transmitted across country borders. Lower-cost countries follow U.S. and European law to differing degrees. Beware.
• Geopolitical risk. War or terrorism could hurt the ability of your offshore provider to operate. While 9/11 proved that the U.S. isn't immune to terrorism, each part of the world has its own risks. The U.S. Department of State maintains a Web site (http://travel.state.gov) describing the potential risk of terrorist activities by country.
• IT infrastructure. Lower-cost countries don't always have the same capabilities we take for granted in highly industrialized countries. When I was CIO at Dole Food, we had to remove several PCs from remote Philippine farms because the locals stole the telephone wires to sell the copper.
In Honduras, we had an uninterruptible power supply (UPS) to keep the computer running when one of that country's frequent blackouts hit. Unfortunately, we didn't have a UPS for the computer room's air conditioner, so we kept it as cold as possible and gave the staff ski jackets. When the power went out, the staff spread plastic sheets over the computer to prevent the condensation from overhead pipes from dripping into the computer.
• Travel. Geography may not be your friend. If it requires 18 hours in a plane (and an expensive ticket) to get to your offshore facility, you won't visit it very often. Moreover, travel inside a Third World country can be very time-consuming and difficult -- roads and bridges may be poorly maintained or targets of terrorist activities.