Proven Practices for Effectively Offshoring IT Work

Global information technology networks can lower costs, increase quality, reduce response times and disperse risks. But agile IT networks require an immense amount of hands-on management, and micromanagement can significantly increase transaction costs and erode any potential savings. Data derived from interviews with clients and suppliers is used to identify best practices in dealing with offshore suppliers of IT throughout each of the phases of development. In the early stages of developing an offshore IT network, it is critical to select the appropriate location for offshore activities and it may be best to begin with several smaller pilot programs. As offshoring efforts become more mature, you can diversify your supplier portfolio to spread risk and maximize competition. The article discusses how to structure contracts and break up projects in ways that provide incentives and protect intellectual property. Fifteen emerging best practices are described that will allow for more value-added practices once a full and mature global network exists. When using these best practice methods, most companies have found that the results are very much worth the additional effort.