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The third wave of outsourcing has The larger the project, the greater the
begun, spurred on by companies no time and money spent on vendor
longer willing to accept the pains of selection. But the key advantage for
traditional offshoring but still seeking nearshore outsourcing outfits is their
cost competitiveness versus their proximity to the United States. This
competitors. For many, “nearshore” alone significantly reduces travel costs
for teams of personnel sent to meet with
the nearshore firm face to face. In fact, location via transoceanic data lines,
key technological epicenters in Mexico which could take months and cost in the
such as Monterrey are a short distance six figures, not to mention monthly
from most major US cities, making day maintenance costs.
trips completely possible. Contrast that
to the 14 or 20 hour marathon flights The Cost of Layoffs
from the US to India, not to mention the
severe jet lag and time differences. One of the biggest mistakes a company
can make is looking to make wholesale
Beyond the hard savings of travel costs, replacements of existing employees with
there is something reassuring in working new outsourced people. This is typically
with a firm located on the same done when executives are blinded by the
continent. The barrier of a vast Pacific false promises of offshore outsourcing
Ocean creates a psychological wall that without fully understanding the total
makes the selection process of an Indian costs. Instead, look to outsourcing to
offshore outsourcer a more meticulous compliment existing project teams or for
one. Thus, the greater the time spent, participation in future initiatives.
the higher the costs climb. Finding a Blended teams, if managed correctly,
nearshore partner with strong and indeed add talented staff at a lower
references and examples of work can cost.
significantly reduce the time to select.
There are many costs associated with
The Cost of Transition laying off existing employees, both
financial and psychological; both should
With a vendor chosen, the real fun not be underestimated. Terminating
begins. Companies then need to begin a employees incurs severance payouts,
smooth transition process, not only in accrued vacation payouts, potential legal
staffing and training personnel, but action defense and lost productivity
infrastructure as well. during the transition. The psychological
impact on the morale of remaining
Most agree that the quickest way to workers can include fear of future layoffs
ensure that new employees or leading to an unwillingness to take risks,
contractors are brought up to speed is to pent up resentment towards
bring them Stateside for training. The management and ‘survivor’s guilt’.
more proprietary and complex the
project or application, the greater the The Cultural Cost
number and the longer the stay. Again,
close proximity of Mexico versus India Recent experience has shown the
keeps costs low during this phase. differences in culture between India and
the U.S. to a major sap on development
Going with a nearshore firm in Mexico efficiency, with some numbers reaching
also does away with the need to lay 20 percent according to a Meta Group
expensive infrastructure such as study.
networking a US location with an Indian
to minimize, mitigate and manage
Indian workers traditionally look to avoid project risk. Having such a process is a
what they see as conflict, and instead key element to ensure the successful
agree to everything even if a goal is not delivery of projects on schedule. The
achieveable. Thus, many a project team process should incorporate elements
has been puzzled as to why milestones such as discovery, planning,
are continually being missed even development, stabilization and
though the offshore team is reassuring deployment. Ask for examples of actual
that everything is fine. Nearshore projects where their process facilitated a
workers in Mexico are much closer to successful outcome.
their American neighbors in terms of
communication. Summary