Is It feasible to offshore even if you run a Small IT company?

I have been asked this question innumerable time in various forms, shapes and words. Here is what the question essentially is:


“While there is no doubt that offshoring to India makes intuitive sense but is it possible, feasible and useful from financial and non-financial point of view for SME (Small & Medium Enterprise) IT companies.”


The question above, if you analyse carefully, has many sub-questions hidden under it, for example:


  • Given that most of the SME IT companies do not have the people with the knowledge, background and/or experience of getting work done 5000 miles away, how does one feel confident enough to send work to some unknown entity in India?
  • SME IT companies are small in size; hence they can offshore only a small amount of work. No decent sized Indian IT company is interested in such small sized work; the small Indian IT companies may have the technical skills but may not have the process and discipline to be as trustworthy as far as quality and timeliness of delivery in concerned.
  • It is not cost effective to create one’s own facility below 40-50 people. The offshore advantage kicks in only after some scale is reached. Also, to run a centre in India requires understanding of local culture, business practices etc. An understanding of process and control mechanisms to manage work sitting from so far away is also needed.

The above questions must have some clear answers before any SME business can take a decision. A wrong decision can create a major setback to the company.


So, what are the answers? Is there a silver bullet? At a more fundamental level can it even be done?


The good news, it is possible and can be done.


While one can write a book on it, let us try to summarize some key points here for the reader. Here are some ways to do it:


  1. Pick up the lowest risk work that you are doing, which if gets delayed or is not done properly will have the minimum impact on your business.
  2. Use that low risk work to get to know the vendor and its capability, get used to managing the work getting done out of your sight.
  3. Establish process and procedures to control the work and its quality.
  4. Establish regular and formal channels of communication. When your work is happening so far, it is critical to have formal communication rather than an informal one. When it comes to offshoring you can never under communicate.
  5. Have intermediate deliveries. This way you don’t get surprises at the end of the project. You will know that the vendor team is going in the right direction, is producing work of the quality level you expect and the work is going at a speed where it will meet the timeliness goals.

And like I originally said, one can write a book on it if they were to.


Having been in the IT industry for 30 + years and having worked on both sides of the continent and the pond, I can confidently say that it is one of the IT industries’ small but still unsolved puzzles. When done effectively, it can create a massive winner out of a SME IT company. When done incorrectly, it can knock the company down in no time.

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