Many companies jumped at the opportunity to leverage the low IT wage rates, which were prevalent in other countries, as a way to reduce their project costs. The first projects were simple, "non-value added," Y2K projects where programmers abroad employed "rote" methods to change millions of lines of procedural code. Since then, companies have endeavored to make the offshore model work in more challenging circumstances.
Changing or modifying existing code, upgrading systems to be compatible with later versions of COTS products, is not the same as designing and implementing new strategic projects.
Ben Bernanke, when he was the nominee for the Chair of the Federal Reserve Board recognized the risks and said:
"For the foreseeable future, most high-value work will require creative interaction among employees, interaction that is facilitated by physical proximity, personal contact, and shared cultural experiences. Moreover, in many fields, closeness to customers and knowledge of local conditions are also of great importance."
He said this was particularly true of "high-value jobs."
Additionally, as work became increasingly "virtualized" by information technology, studies were undertaken in the late 80's and early 90's which pointed out the risk.
"Projects with all the key stakeholders adjacent and on the same floor had a higher success rate than those separated by floors in the same building, or even across campus or town."
Separation by time, distance and culture increases risk to already technically challenging activities. Management should be trying to reduce risk, not magnify it. Failure, even at half the previous cost, is not a management option.
Delaying the delivery of a project means:
In order to help clients mitigate these kinds of risks, OCI has developed services and has been engaged at several levels.
The following web page explains option 2 in more detail.