The idea behind offshore outsourcing seems simple enough. India, China, Russia and other countries have thousands of high quality IT workers at exceptionally low cost. Yet, for this bonanza of talent, companies can expect project management and communication tasks to take on a new level of intensity or watch cost savings evaporate and quality plummet.

To get a feel for the complexities of a project outsourced offshore, consider that most companies will encounter several if not all of the following issues within the first six months:

• Employee backlash
• Immigration issues
• Quality and schedule problems
• Time differences of up to 12 hours
• Cultural barriers and misunderstandings
• Miscommunication and poor documentation
• Developers and subject matter experts in different location

In spite of the difficulties and all the complexities, many companies are reaping the benefits of offshore outsourcing. Successful companies are seeing lower costs, employee resources freed for additional projects, and a flexible work force that can scale to changing business demands. But these companies are not achieving positive results on their own. The research firm Gartner believes that in general, companies that outsource need to do more to ensure success. Adding expertise is required to reduce their risk. Ian Marriott, VP of IT services and sourcing at Gartner says, "enterprises must gain staff and add new skills to make outsourcing work"

Vigilos Inc., a small startup company with a good idea and a strong business model, needs to bring cutting-edge, enterprise software to market quickly on a tight budget.

Two teams working together around the clock to produce one product. The local team of Vigilos employees is comprised of a few senior level developers and system architects who create the platform architecture, system API, core modules and strategic components. Vigilos employees also build use cases and define requirements as well as provide templates and models for the remaining components. The remote offshore team builds components based on the use cases and requirements. The offshore team follows the system API and uses core infrastructure modules to fit their tasks into the overall architecture. Both teams build, integrate and test their code together daily to ensure a solid fit to requirements, function and design. Defects and source code changes are managed tightly between the two teams. Communications and documentation are standardized and follow defined protocols.

Vigilos Inc. introduces their product at a high profile industry trade show in less than six months and obtains venture capital funding. Both teams continue to work together and Vigilos' product advances on a compressed schedule and with a budget that could not support an entirely local team. Customers enjoy the wealth of new product features brought to market by Vigilos.

Metagyre brings over 15 years of first-hand experience in managing offshore and near-shore outsourcing relationships. As your independent adviser, Metagyre provides you with assistance in building strategic goals and plans, selecting an outsource provider, developing a tactical road map, and managing risk. Metagyre also provides buyers with key tools and processes to help avoid many of the outsourcing pitfalls. For example, the costs of management time and travel are often overlooked or underestimated and can quickly add up, dragging down cost savings. However, applying management oversight appropriately with correctly timed travel will protect your offshore investment. Cultural differences present another potential pitfall which can make too much management oversight just as debilitating as not enough. When trying to build ownership and accountability in your outsource provider, knowing the cultural issues are key. Metagyre helps offshore outsourcing buyers understand what tasks are important and the appropriate timing for those tasks in order to build a successful outsourcing relationship.

A regional health care insurance provider has millions of lines of code throughout their legacy programs requiring Year 2000 (Y2K) modifications to prevent system failure. Additionally, business opportunities prevent freezing the code while systems are retrofitted with Y2K patches. With multiple groups modifying code across the entire enterprise for different purposes, source code management and schedule integration take on levels of intensity seldom seen in IT projects.

68 individuals across three teams, in three locations working together to apply Y2K patches. Using a customized systems life cycle methodology to meet business and system requirements the local onshore team works closely with senior executives, business analysts and the subject matter experts to direct and control activities as well as resolve requirement conflicts. The near-shore team works with operations management to ensure mainframe capacity planning and back up retention as well as directing the system test efforts and archiving the client approvals for a secure audit trail. Applying the Y2K patches, executing full system tests, program reintegration and code merges are performed by the offshore team. The health care insurance provider's employees continue to modify systems in order to meet changing business demands.

The health care insurance provider receives top marks from customers and auditors when the clock rolls over the century mark and business continues to operate smoothly and accurately. Total cost for the project is among the lowest of all regional insurance plan members. Domestic staff remained in place and continued to evolve the systems to meet business' ongoing needs.

Offshore outsourcing is expanding beyond IT. Companies are finding that the opportunity to outsource new activities is only limited to seeing beyond preconceived ideas. Customer call centers, technical help desks, operations monitoring, human resource activities and revenue generating business processes are all opportunities for offshore outsourcing. As demands to control the bottom line increase, companies who are looking to go beyond traditional outsourcing need to first explore low risk options. Systems in a maintenance mode are good candidates for outsourcing since they tend to be stable and time is available for knowledge transfer. Once the offshore processes are in place and understood, the company can expand their outsourcing at a faster pace with reduced risk.

General Motors requires new systems to support changing business demands. Currently the subject matter experts are tied up maintaining their legacy systems, preventing the best resources from planning and designing the next generation of business systems.

Outsource maintenance of the legacy systems to a near-shore outsourcing center. The outsource provider invests in the partnership by sending lead resources to GM to learn the legacy systems. A knowledge transfer plan is executed successfully and the maintenance responsibilities are transitioned to the near-shore team. The outsource provider continues to make modifications and ensure smooth operations until the system is retired.

Key subject matter experts are available to plan, design and develop General Motors' strategic business systems without sacrificing the necessary legacy system maintenance.

Metagyre delivers assessment, advisory and management services to the buyers of offshore outsourcing. Working exclusively for buyers, Metagyre applies years of experience on their behalf to maximize client's return on investment in the outsourcing of information technology and business processes. Whether you are looking to evaluate current trends and opportunities, mitigate your outsourcing risk or face the challenge of mastering offshore outsourcing, Metagyre can help. Hands-on experience and proven processes with the buyers interests first, makes Metagyre your independent outsourcing advisory choice.