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Going offshore has become less a strategic advantage and more a competitive necessity. Pioneering firms are adopting more aggressive plans and the followers are struggling to keep up. Approaches that were leading edge just two years ago are little more than an entry ticket today. By all projections, offshoring should continue to see unprecedented growth and will dominate business strategies in the coming months and years. This is particularly true for IT, which is often the first candidate to be sent offshore.
A recent A.T. Kearney study underscores this trend: More than 90 percent of executives in our survey say they are either somewhat or very interested in IT offshoring. Thus for many companies, the question is no longer, “Should we go offshore?” but rather, “What functions should we move offshore?” Using low-cost offshore locations to drive large cost reductions presents a compelling business case, yet there is growing skepticism about the ability to realize the potential benefits. Indeed, for one reason or another many companies fail to meet their offshore goals and therefore they fail to derive all of the potential benefits of going offshore.
This paper discusses the importance of “what to move” relative to the other elements of a firm’s IT offshore strategy. The guiding principle is that the objectives and measures will change over time as the firm builds internal capabilities and provider relationships, learns lessons from pilot projects and earlier phases, and responds to the constantly changing dynamics that are inherent in today’s global business world.
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