The Three Non-Negotiables Of IT Offshoring
Anna Frazzetto’s article from Forbes.com on May 24, 2019.
Offshoring technology development is not a venture without risk or requiring compromise. When business clients I work with contemplate the numerous global destinations and providers for information technology outsourcing, I often remind them that they will have to make some concessions. Balancing time zones and cultural differences, for example, can be tricky. However, after working in IT and business process outsourcing for years and spending a good deal of time in the Asia-Pacific region, I’ve seen firsthand that these concessions are counterbalanced by a tremendous advantage: quick access to bright, at-the-ready tech teams with skills in a wide range of sought-after areas, such as artificial intelligence (AI), augmented reality, data science and cybersecurity.
And while there are certain areas that require a give-and-take perspective to set up successful tech offshoring solutions, there are three areas I believe you should never compromise when it comes to outsourcing destinations and partners: intellectual property (IP), language and talent:
1. IP is your business.
Today, all businesses are technology companies in one way or another. For example, the media companies I work with are creating smarter software for sharing and producing content. Finance companies are building tools for sophisticated mobile banking. Health care businesses are leveraging AI and data analytics to analyze research in order to develop better patient care practices and medicines. All of those tools and software represent IP with tremendous value to the businesses and their customers.
As the World Intellectual Property Organization notes, “Outsourcing requires the sharing of a wide array of proprietary knowledge.” That’s why a business should never assume that IP protection is a given in any outsourcing relationship. The first consideration is the location you’re considering and legality. China, for example, is an offshoring destination for many industries, such as manufacturing and technology. However, it is also a location where IP protections have been limited to date. A March 2019 CNBC survey found that, within the past year, one in five North American-based companies on the CNBC Global CFO Council had their IP stolen by Chinese businesses.
So how can you ensure your IP is protected? The first step is to ensure your legal team is carefully involved in developing the outsourcing contract and reviewing local IP laws. Consider whether the work you are offshoring requires heavy protection, and leverage data from organizations, such as the World Trade Organization, to assess the level of IP protection you can expect from local governments. For example, in destinations such as Singapore, Vietnam and Canada, there are strict IP protections in place that are rigorously enforced. Find out how your selected destination protects against IP threats, and ensure in a written, legal contract that your IP is safe wherever you outsource.
2. Language is key.
Businesses today can outsource technology development and support to almost every continent. Global innovation centers are seemingly everywhere, which means vast opportunities for partnership and cost savings, as well as vast communication complexities. While technology has plenty of common working languages, such as coding and project management methodologies, outsourcing still requires a common communication language. Development teams in different time zones and working on different aspects of a shared project need to be able to communicate quickly, clearly and correctly. I have seen important development projects completely derailed because of a simple linguistic misunderstanding about deadlines or requirements.
When choosing an offshore provider, take time to assess the language skills of members on the potential project team. Many countries around the world offer outstanding English capabilities. India, for example, has been said to be the world’s second-largest English-speaking country. In Singapore, English is often taught in schools. In Vietnam, the government directed higher education programs to implement English in their classrooms.
In other outsourcing destinations, technical skills might be top-notch, but English language skills could be lagging. For businesses looking to outsource in locations where English proficiency isn’t as common, it is good practice to request meetings with the team in advance and to do a trial run. Test for any communication gaps or challenges ahead of signing a contract. While English might not be an official language of the country in which you offshore or a requirement in its schools, some outsourcing providers offer rich language learning programs that build tech teams with strong English skills.
3. Talent turnover and migration are big factors.
A strong and stable tech talent pool is the third and final nonnegotiable factor in selecting an offshoring tech partner and place. The talent shortage knows no boundaries, which adds another important factor for consideration in selecting an offshore destination: Will the talent you need be there — and stay there? Some offshoring destinations are seeing large-scale migration among IT workers because there is opportunity everywhere. In India and the Phillippines, for example, workers are often encouraged to embrace bigger and better opportunities, even if they are located in other countries. However, in other cultures such as Vietnam, familial ties often keep workers closer to home to help support their families.
Before settling on an offshore destination, take a look at how the global IT talent pool is affecting the local economy and the tech talent that supports it. Are there migration trends that could mean high turnover among an offshoring team? Or, is the local pull of family, good opportunities and good employment keeping strong talent in the country?
While there is give and take in all good relationships, there should also be limits. Make your offshoring limits clear when it comes to strong IP protection, communication and stable talent. If these remain nonnegotiable, you have the beginnings of a strong foundation for offshoring success.