Ever since the growth of an effective and affordable worldwide communication infrastructure, offshoring has been a predominant factor in many large companies. Especially in the IT industry, where countries with large, IT savvy, labor markets have now set up IT centers to provide a more affordable alternative to countries which typically have a high labor cost.
While the economical benefits of offshoring are undeniable, we should also focus on the disadvantages, if only to ensure that they are addressed within our own companies. A few well known disadvantages are:
1) Cultural and language barriers between the companies – The vast gap in culture and language can lead to business and personal misunderstandings and clashes under certain circumstances. Which may in turn lead to costly losses for both companies.
2) Loss of customer focus, from the offshore company – Since the majority of the offshoring companies are not facing the end customer on a day to day basis, a certain lack of customer focus can usually be experienced in the employee base
3) Time differences – Many offshoring companies operate within a 5 – 12 hour difference from the end customer. This occasionally tends to lead to difficulties in communication and project management
4) Heavy reliance on an onsite resource – Some offshore companies attempt to address these issues by having resources onsite. This however comes with its own set of problems as the company then relies heavily on these individuals for most, if not all, customer communication.
Are there any other major drawbacks you can see in offshoring? Let me know…