Capping IT Off

Capping IT Off

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Help – we are in big trouble!

Category : Governance
People from India are invading the Swedish IT market, taking our jobs! Is this the case? Is offshore (and nearshore) really a threat to Swedish IT job opportunities, or is it something that actually vitalizes the IT consultancy market and stimulates it to grow? As always – various point of views tend to result in biased answers to these questions.

However – regardless of what anybody might think of moving work offshore – there is one question that deserves a straight answer: how can Swedish companies and other organizations benefit from having access to offshore capacity and competence, while at the same time avoiding pitfalls and minimizing any disadvantages? The opportunities are clearly there to be captured! In India, for example, more highly trained English speaking IT engineers are graduated each year from world-class universities than you can imagine, and IT professionals are available at very low rates. Furthermore, India is in the front line when it comes to IT research and development, and process maturity is in most cases high above what Swedish organizations are able to achieve. It would be a pity if this couldn’t be taken advantage of in some way or another.

In my company we are constantly facing increasing client requirements, which in large extent can be met with solutions including well balanced offshore components – and it’s not just a matter of cutting costs. It is also about access to resources and expertise, to achieve innovation and renewal, and not least flexibility and scalability.
Let’s try to sort out the concept and look at the options. As I see it, there are 3 ways of utilizing offshore capabilities:
  1. Remote delivery, i.e. services delivered directly from offshore locations by an external supplier (and/or by own employees in a captive unit).
  2. Local delivery, work performed by for example Indian professionals in Sweden.
  3. Mixed delivery, where the work is distributed between local and remote locations.
Which option is the best and what to choose? It obviously depends on what you are after (cost savings, access to experts, capacity etc.), but also on the level of experience and maturity within your organization.

Remote delivery by an external supplier is more or less equal to any outsourcing in general. If responsibilities and work is handed over to someone else to execute, then you have to define the requirements in the right way, making sure both parties share the same understanding, and then be careful with how deliveries are controlled and accepted. It doesn’t really matter where the work is being done.

To cut cost, get access to an enormous competence base and inject innovation, a mixed delivery solution based on offshore is a fantastic opportunity! Not least in situations when the client wants to participate actively in the work with their own people, for example in development projects. Ways of working and interacting has been developed a lot during the recent years – for us it’s basically no difference in having a team split between Stockholm and Gothenburg, than to have it in Gothenburg and Mumbai. Obviously different cultures and languages can create some misunderstandings and ambiguities, but with the help of learning and experience, good processes and tools, mutual respect and understanding of pre-requisites this is not really an obstacle. Within Capgemini we call this Rightshore®.

But why go for local delivery, i.e. bringing foreign specialists to work in Sweden? The cost advantage is more or less consumed by travel, accommodation, cost of living and taxes (for those that are working in Sweden more than six months). Here I believe the level of experience and maturity plays a big part. Of course – to collect all team members in the same place is an unbeatable way to get team members to know each other, and also for Indians and others to learn to know their client’s environment. But apart from such initial gathering, which normally is needed for a short period only, local delivery is probably the result of lacking experience from managing distributed delivery. It’s about habits, pre-assumptions and ideas on how things are done and works, not least about how to be in control. If you are not used to distribute work between locations and even countries, it is safer and simpler to do as always before; to hire professionals to work within your own premises. And by all means – as said it might be a good first step to build relationships. But in order to take full advantage, my view is that local delivery should be followed by further steps towards a more advanced and cost efficient distributed delivery model.

It is unfortunate if offshore and distributed delivery is rejected because of lacking knowledge and experience, or even worse on the basis of single bad examples, horror stories and preconceptions. Offshore is a fantastic opportunity, but as always you need to do your homework first. To start with selecting a partner with both willingness and capabilities to bring knowledge, experience and best practices from the entire process on the table, from idea to realized sourcing solution.

Lars Boström
Expert on Application Outsourcing within Capgemini

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Lars Boström

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