Operational Agility

Is anyone else getting the feeling that the mood is really changing against off-shoring?

Based on anecdotal evidence from my own range of contacts in enterprise sized companies, I am starting to notice a trend towards bringing business processes back in house.

In fact this is not just about off-shoring.  Even local outsourcing is being affected.  Companies are starting to realise that most business processes can be done more efficiently in house, especially with the aid of technology.

This is leading to a new wave of efficiencies, and just as importantly, local control of business priorities.  It is leading to a new ability to manage the ever changing business landscape.  This is leading towards the nirvana of increased business agility.  Powerful stuff and I am happy to say that Blue Prism is playing its part in delivering the vision.

I may have to rethink my last post about UK banks not being evil, after reading that Lloyds TSB subsidiary, C & G (formerly Cheltenham & Gloucester Building Society), is shifting 210 IT jobs to offshore centres.

Lloyds has a history of progressively off-shoring IT, call centre, and back office jobs to India, so one can only presume that they know what they are doing and understand the full impact of off-shoring.

I just hope they are doing it for the right reasons and not just to save cost.

What frustrates me most is that we have the means to be so much more efficient in our own country without having to ship jobs to distant, remote locations. Perhaps the problem is one of misguided management, and management turnover, combined with pressures to report results in ever shorter cycles.  If I was a middle manager in a bank, and was targeted with short term cost savings, knowing that in two years I will be in a different job, so my third year measures won’t count against me, then I guess I would take a short term view too.

Interesting piece in the UK Independent today reporting rising Indian wages rising to 75% of the US level (20% only two years ago).  This is good news for Indian developers but bad news for companies who have off-shored purely and only to save cost.  No wonder US companies are finally starting to bring software engineering work back to their shores.

In the UK where IT off-shoring has been prevalent but not quite to the same degree as the US we wait to see if the same trend emerges.

Maybe we are getting to the stage where work will be placed for reasons of skill, geography, culture, convenience, service and team motivation - not just for cost reasons.  Or maybe work will just start transferring to the Far East, Russia, and Africa.  UK and US universities have plenty or representatives from these regions so the skills must be emerging.

Of course, I am referring only to the IT sector.  The Independent reports Indian call centre wages still significantly lower than in the West, although staff turnover is starting to spiral.  Smart companies who have outsourced important customer service operations (to the detriment of customer service), should take note before this turns into another wage spiral and eats up their ROI.

An exchange of blog comments has found me and Bill in agreement yet again.  Management’s sole reason for outsourcing is to save cost.  Period.  (Or may I say “full stop” depending on which side of the Atlantic you are?).

However, outsourcing does not necessarily prevent co-location (outsourced staff can remain on your site), so in theory at least, using agile software development is possible.

But what about corporate allegiances?  Once they were part of your organisation.  Now outsourced staff, at some point post-contract (and it can take a while) have to go native and support the outsourcers corporate objectives – which include making money out of the client.  This doesn’t sound very compatible with creating mutual respect between business and IT and it especially doesn’t sound like an environment conducive to delivering a high quality solution that meets business needs.

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Last year Blue Prism sponsored some research into off-shoring business processes, front office processes - contact centres.

The shocking (not) conclusion was that Young People Don’t Trust Offshoring.

It’s very clear that customers do not like off-shored services so why do it?

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I read a lot of IT blogs and many of them bemoan the off-shoring of software development to India and other “low cost” locations.

I’ve seen very few successful off-shoring experiments.  At Blue Prism we do not off-shore any software development.  We have a very small team who produce 5 times the quantity of code that a much larger team could produce and it’s top quality too.

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