You Can’t Have it Both Ways: Offshoring Can’t Be Done via Outsourcing Companies

So the title of this blog most likely yields a giant “no kidding” response from my loyal readership, which is totally expected. A few of my teams work with an offshore consulting company. I won’t mention them by name, but I will say that they are big enough and global enough that most people in and out of the tech circle know who they are. Like most offshore companies they have their marketing propaganda that breaks down their value by industry vertical, area of specialization and global presence. They gloat about their amazing “Centers of Excellence” which differentiate themselves from their competitors. News flash…nearly every global consulting firm touts a Center of Excellence, which is code for “Sometimes we show customers a room with computers, monitors and white boards. This room is where all of the magic and innovation of INSERT MAJOR SKILL HERE happens.” Of course we all know that these CoE’s are just marketing fronts that really don’t exist.


Today I read an email from one of our contacts of this offshore service provider informing me of not one, but two team members who are “moving on to greener pastures”. This has been a theme for us now for roughly two years. Back when the economy was tanking in 2007/2008 we agreed to expand our investment in this firm. We made it clear that we were not outsourcing an entire responsibility, but rather extending our team through third-party team members overseas. The service provider wanted our business and made it clear that they would be able to help us find and retain talent. We agreed that we would do our part to invest in the skill set and agree to incrementally increase compensation. If at any point we were at risk of losing a team member, the 3rd party would do its part to shadow resources and seamlessly replace the team member who left via attrition.

Well as I said, the last two years haven’t been anything like the first four years. We have had more folks come in and out of the team that in the previous four years combined. In this particular part of the world, job jumping has returned to Silicon Valley like conditions in 1998/1999. We are lucky if we see a teammate come on-board for 8 months without either the threat of leaving or actually picking up and leaving. For a while I thought it was us that was the problem. I thought it was our work. I thought it was compensation issues. I thought it was quality of work life balance. For the most part I know that we do our part to address what we can control: the type of work, conditions of work and the opportunities for learning. We have little control over compensation, though we push our 3rd party service provider to address promotions and role leveling on a frequent enough basis that I am confident we influence each team members position and standing in their organization.

Don’t get me wrong…we have had issues ourselves. Forces above me have influenced contract pricing. We have fought rate increases and expenses. The folks on our business side definitely see the relationship as pure outsourcing (professional services) and not offshoring. They are right to do so as this 3rd party company deals with all of the headaches that I and my company don’t have to deal with these headaches.


The lesson here is that you can’t have it both ways. You really can’t use an outsourcing company to act as your offshore team, no matter how each of you spin it to the other. As the recipient of the service, you have to maintain a vested financial interest in your offshore team. You have to be able to directly influence the culture of the organization and not just the team. You have to be able to influence the quality of work/life balance and conditions of work. While controlling the type of work and norms of the team is important, it’s not the same unless you can also influence the organization. Probably the most important point is that your own organization has to view your team members who reside offshore as colleagues and teammates of the company. Just because they live in an another country with a different economic system doesn’t mean they should be inclined to a constant pay rate and salary.


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