SIDSEBAR: INTERACTIVE WORK SHEET

Do the Maths

You can figure out your own best and worst case scenarios for going offshore when you calculate the costs for yourself. Use our online calculators.

Detailed version: Use this to include the individual amounts to be spent in each category.

cio.com/dothemath/domathlong.html

Summary version: Use this if you want to enter one overall cost for the entire contract.

cio.com/dothemath/domathshort.html

SIDEBAR: Doing Your Offshore Homework

Offshore outsourcing may save you money; then again, it may not. Rather than accept offshore vendors' claims, you need to calculate your own ROI. Here are some tips to get started.

1. Know what your internal costs are. If you don't know what your own real labour rates are for accomplishing tasks you plan to send offshore, how can you know how much you'll really save?

2. Ask your peers. Organisations such as the Australian Computer Society and CIO conferences are great places to get the real information from peers who are outsourcing offshore.

3. Contact vendor references. Ask these CIOs what unforeseen costs they've encountered in their offshore engagements.

4. Estimate potential soft costs. As much as possible, figure in factors such as lower morale and cultural changes.

5. Create a three- to five-year plan. Include your identified hidden costs as well as anticipated scope changes.

SIDEBAR: What CIOs Can Do

If you have to outsource jobs offshore, here are six ways to minimise the destructive impact on your workforce

1. Whittle, Don't Hack Successful offshore outsourcing takes time - at least two to three years, say experts - so use that time to cut your workforce through attrition rather than retrenchments.

2. Offer Training CIOs owe it to their staffs to give them an opportunity to become the kinds of employees whose jobs won't be outsourced offshore, at least in the short term. Offer training classes in less transferable skills such as requirements analysis, architecture planning, business process design, contract management and business relationship management.

3. Find Out Who Wants to Leave Employees may not always want to keep their jobs. Perhaps they're close to retirement or are desperate to leave but just haven't done it. Ask for volunteers before you start cutting.

4. Communicate Employees won't like you if you tell them their jobs are going to be outsourced in a few months. But they'll hate you if you don't tell them. Hate has more long-term implications for you and your company than dislike.

5. Don't Hold Benefits Hostage Employees who are forced to train their offshore replacements to receive severance packages feel humiliated and angry. Find another way to get foreign workers up to speed if you can.

6. Lobby for Curriculum Changes Universities need help to change their curriculums to make IT graduates more prepared for global competition. Call university faculty and tell them what you see happening.