Root Cause #3 -- Project Performance Metrics Masking Problems
Our offshore vendor uses a comprehensive project-tracking system, and its employees are reviewed and rewarded based on customer-satisfaction surveys. You would assume, therefore, that this project's problems and our dissatisfaction were evident to the vendor's management, right? Wrong.
During our visit to the vendor's development center, the offshore project manager showed us data on our project. I was astonished to find that the data indicated things were perfectly on target, and the number of hours worked during each phase was precisely in line with the vendor's original estimate. The coding snafus and overtime hours weren't evident, nor did we detect any inkling that the project was at risk.
Likewise, the vendor's surveys appeared to be "managed." For instance, after the vendor completed our Siebel implementation, one of the vendor's employees requested that I fill out the post-project customer survey with all 5s, the highest score possible. These surveys are mandatory, but I'm still waiting for the survey to arrive for this latest offshore project. So, on a project that went relatively well, we were hounded to complete the survey, while on a project that didn't fare well, no survey appears to be forthcoming.
Savings Not So Big Although wages are generally 80 percent lower in India compared with the United States, total labor cost savings are just 10 percent to 15 percent for most U.S. companies that outsource to India, according to a report from Deloitte Consulting. What chews up potential savings? Higher costs for travel, communications, equipment and managerial oversight, along with lower productivity, cultural differences and incompatible systems. And, as U.S. workers make productivity gains, the savings gap could widen further.
Security AngleDespite the events of 9/11, U.S. corporate IT security worries still mainly involve worms or cyber-attackers. Doing business overseas opens up a whole new set of scenarios. For example, in August two bombings in Bombay killed 44 people and wounded more than 150, many of them critically. This followed a series of blasts that have killed 66 people since December 2002. These attacks, blamed on Islamic militants, struck at the economic base of India: Bombay contributes more than 30 percent of India's taxes and revenues. See CBS News.com.
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