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IT outsourcing

Viable alternatives to reshoring

PentaGuy
PentaGuy
Blogger

Is IT reshoring the new buzzword on the ITO market? Although not common yet at global level, the concept of IT reshoring, meaning when companies decide to bring back home their IT activities (mostly outsourced to India), is becoming a real trend. Daimler, Procter & Gamble, General Motors, American Express are just some examples of companies that decided it’s more viable to bring IT operations back to the U.S. from India: “We want better control over our IT activities to remain competitive”. Some leaders also evoked a so-called “patriotic choice”, but I believe that the reasons they resort to reshoring are actually more practical than that. 🙂

In practice, the related constraints – cultural gap, language problems, different time zones, wage inflation, turnover – can sometimes happen to make an offshore outsourcing operation a less positive financial picture than expected. Who is to blame for failed IT outsourcing projects? The service providers that did not rise up to the required quality level are the first who come in mind. However, clients are also sometimes responsible for the failure of their offshore projects: not every company is ready for offshore outsourcing, and not all remote projects are successfully managed. Good results only come when the client:

  • is actively involved
  • adapts certain internal processes and even management methods
  • knows how to correctly specify his needs
  • is ready to make compromises to build a fair and balanced business relationship that clearly reflects both parties’ constraints and objectives.

Financial and management issues have led some American companies to “relocate” their IT activities to their homeland. But they would better think twice before making this decision. The loss of flexibility, lack of qualified workers, skyrocketing payroll that may come with it can endanger a business. Even if there are some cases of successful reshoring projects, finding the best balance between cost, quality, innovation ability, time-to-market and global competitiveness after bringing back an offshore project may take a long and precious time which is likely to result in market share loss and profit margin decrease.

Why give up on reshoring and rather consider nearshore alternatives? The answer is as easy as the question:

  • Reduced costs as compared to an “in-house” solution
  • Advantageous time zones
  • Westernized culture
  • Qualified professionals who speak your language
  • Cultural proximity
  • High level of responsiveness
  • Mature methodologies and quality assurance strategy

Before risking your initial business performance by reshoring your IT activities, check out our twofold proposal, especially imagined for meeting the different needs of our USA and European customers: nearshoring and domestic sub-contracting.

Also check Frederic’s post: Eastern Europe, a stage on the way to reshoring?

Let our experts prepare your offshore outsourcing or relocation project: Pentalog Institute, the Consulting Department of the Group, guides your technological and strategic choices, and provides you with the necessary tools to optimize your IT operations.


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