"If I need a lot of .Net programmers, it's easier to call an offshore provider," agrees David Baruch, CIO at Equity Office Properties Trust, one of the largest owners and managers of office buildings in the U.S.

Baruch also agrees with another of the study's findings: Companies are moving past external factors such as political backlash to confront internal ones, such as the managerial and organizational changes they have to make to take advantage of offshoring.

Chicago-based Equity Office started outsourcing three years ago when Baruch needed to supplement his relatively small staff of 100 people to complete a big project. He signed on with a U.S.-based provider that used offshore staff for the project. Baruch has continued to expand his use of overseas resources, albeit with a different provider. Today, offshore personnel account for about 20 percent of his staff's peak work output, including maintenance and higher-level project work.

The first challenge of the transition was getting his own staffers to accept the offshore model.

"While it was painful in the short term, they realized there were benefits in the long term because it was work they didn't necessarily want to do," Baruch says.

The second part was getting IT staffers to pass along required knowledge to the offshore provider and "having them understand what we're trying to do from thousands of miles away," he says.

Today, Baruch sees the relationship more as co-sourcing than offshoring.

"They have a certain set of responsibilities in the development process, we have a certain set, and we measure each other to be sure we're each holding up our end of the bargain," he explains.

Baruch says that low cost is just one benefit he gets from tapping overseas talent. It also gives him variable staffing capacity, which allows him to maintain a stable workforce with deep business skills. Outsourcing gives him scheduling flexibility, so he can ramp a project up or down as needed. In addition, it enables marginal projects to achieve returns on investment that they otherwise never would.

"For projects that people would have historically passed on, there's now value in doing them because it takes a third of the cost to do it," he says.

Over time, Baruch can see other business processes that Equity Office currently outsources eventually moving to an offshore provider.

"It's all a question of what you want to outsource, how you want it to be done and the value derived from doing it," he says.

"Then you can talk about where the work lends itself to being performed -- onshore or offshore, with high-priced or low-priced talent."

As others with offshoring experience gain this type of understanding, Scardino predicts, "offshoring will be recognized pretty universally as a destination, not a strategy."

SIDEBAR

Skills play catch-up

In his three years of experience with offshoring, David Baruch has contracted with two different service providers, and he's in the process of gearing up to switch to a third. As CIO at Equity Office, he has found that these frequent changes have helped him develop what is increasingly considered an important competency: the ability to successfully find, engage and manage global sourcing providers.

"Clients are becoming more sophisticated and thinking about [outsourcing] more proactively," says Greg Kirchhoefer, a partner at Kirkland & Ellis LP in Chicago.

For instance, he says, they're creating offices of strategic sourcing and appointing chief sourcing officers, sometimes as an outgrowth of the procurement function.

"They're seeking opportunities for improving processes, effecting change and getting a better overall return," Kirchhoefer says.