Five tips to keep IT outsourcing on track as global providers cut

Are you prepared as global IT outsourcers shrink onshore staff? These tips will help you keep projects moving as offshore IT service provides cut back on the on-site staff that used to work as liaisons between customer and provider.

If you've been sending IT work offshore for a while, chances are you've noticed a trend -- fewer and fewer on-site resources provided by the outsourcer to manage the work. While providers of offshore IT services -- both Indian vendors and their U.S.-based counterparts -- once frontloaded their IT services projects and relationships with onshore staff serving as liaisons between onshore client and offshore provider, most have been quietly shifting more of that work overseas.

Reducing the number of U.S.-based workers has been driven in large part by continuing pressure on IT service provider profit margins. But issues with skilled worker visas -- many of the onshore roles are filled by outsourcing staff with H-1B or L-1 visas -- are also being blamed, as offshore outsourcing providers point to increased fees, rejection rate, and processing delays accompanying these visa applications today.

CEOs at three of India's top ten outsourcing providers recently told the Times of India that they plan to "reduce on-site work by up to five percent over the next year and handle traditional onsite projects such as managing takeover of an existing outsourcing contract& through videoconferencing. (The Times did not name the CEOs or their companies.)

As the whistleblower case against Infosys, alleging that the Indian IT services provider misused B-1 visas to bring offshore staff to the U.S., heads to court later this year, it's unlikely that scrutiny of the temporary worker visa system will subside. And, as of Monday, talks between the U.S. and India intended to address these visa complaints among other issues, were called off indefinitely.

So savvy offshoring customers should prepare now for the inevitable effects of reductions in onshore and on-site headcount:

1. Conduct a Process Design Review

Make sure that essential on-site roles required for seamless operation of global delivery will be filled. Consider contract resources to handle short-term gaps, advises Amneet Singh, vice president of global sourcing for outsourcing consultancy Everest Group. Longer term, developing such skills in-house maybe a better bet. "Buyers are picking and choosing certain roles to bring back in-house," says Esteban Herrera, chief operating officer of outsourcing analyst firm HfS Research.

2. Invest in Change Management Efforts

Prepare users for potential tweaks in the delivery model and changes in their day-to-day working experience, says Singh, and execute an effective communication strategy to address any uncertainty in the business.

3. Consider Nearshore Alternatives Providers with alternate delivery locations, like Mexico, do not have the same temporary visa restrictions as a result of the North American Free Trade Agreement (NAFTA), Herrera points out. They can more easily transfer workers across borders to manage projects and knowledge transfer.

4. Beef Up Your Technology Backbone

Your offshore provider is likely to require more high-end videoconferencing or digitization capabilities to manage future projects. Ensure you have the right infrastructure and software to handle the proposed technology enablers of diminished on-site staff, says Singh. Also, make sure to design and execute effective internal training programs for the new tools.

5. Revisit Contract Pricing

If your IT service provider is planning to move on-site roles overseas, it's probably a good time to renegotiate price, but don't play hardball. Sharing the upside of sending more work to less costly locales will result in a happier and healthier relationship long-term.

Stephanie Overby is regular contributor to CIO.com's IT Outsourcing section.

Read more about outsourcing in CIO's Outsourcing Drilldown.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

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