Few reasons why you should think twice before offshoring your operations?

If you could hire 4-5 people in China for the same salary that you give to 1 employee in the US, why wouldn’t you offshore your work to China? Doesn’t it seem like a perfect plan to save some recurring operating costs? Trust me; it might not be as easy as you think. Apart from obvious major risks like language barriers, culture differences, and copyright infringement; there are various other risks that can make your offshore venture a failure. In this blog, I will put some light on some of those hidden issues.

Increase in travel expenses: Most of the armature businesses will measure the success of their offshore project through the reduction in their recurring operating costs in the US. Often that performance metrics doesn’t take the overhead costs, such as traveling, in to the consideration. Successful outsourcing requires significant face time during the launch phase to establish the rules of engagement and regularly thereafter to maintain the relationship. And these costs greatly increase as both the client and the offshore supplier make lengthy and expensive trips.

High turnover: With more and more companies moving their workforce to India, China, and Brazil; the demand for offshore workers increases, so do their wages. Salaries in India, for example, are increasing by double digits almost every year. For some overseas locations in China, employee turnover is extremely high sometimes as much as 50%­ as employees are regularly recruited away from their current jobs. For a knowledge-based function such as software development, this high amount of turnover can be disastrous in the long run.

Negative ROI: On an average, it takes approximately 3-5 years before one can see the same amount of productivity from their offshore team. Research has shown that although the advertised savings for offshoring were around 60-80%, actual savings of 0-20% were common and in many cases it was negative. Most of the businesses fail to consider the additional costs that are required to increase their management and training efforts, so that they can have the same level of quality in their end product.

Of course, not everything is bad about offshoring. In my next blog post, I will discuss few ideas about……’why you should consider offshoring’. Until then, if you have any other ideas or comments about offshoring, then please feel free to share it here on my blog. Thanks – Bhavin Gandhi

 

Practical solutions to reduce time barriers between your Virtual Teams

I have seen various virtual teams that fails to accomplish their mission due to lack of communication. Virtual teams have many challenges like culture differences, language barriers, lack of personal touch, etc. But the ‘time difference’ is one of the most important challenge that a virtual team faces. As a part of my existing job, I manage various individuals from 3 completely different locations. And I have faced similar situations while managing these individuals. Through my experience, I have developed few practical solutions to resolve these challenges, and I would like to share those tips through this blog.

Define rigid working hours: I am neither a micromanager nor I believe in monitoring my people. But sometimes it is very crucial for a team to follow a strict schedule. Asynchronous communication channels like SMS and e-mails will only resolve few issues. But if you are working in a fast paced environment like me (Agile or Scrum approach), then it becomes very difficult to communicate through these asynchronous channels of communications. This approach makes it possible for me to meet with each and every individual at least 2 times a week (through video conference). From past few months, my team in China comes early every 2 days during the week and my team in USA stays late for those 2 days. This arrangement makes it easier to work with these people and it also helped me to increase my team morale.

Establish rules for e-mail communications: In the past, I have been in various situations when I will get an e-mail from my China team at around midnight in my time zone, and I won’t have any opportunity to reply to them until the day after. Thus, if you are working in a virtual team then you should be establishing few rules for your e-mail communications. For example: Tell your remote team in China to notify you regarding any urgent issues/concerns before midnight your time. Obviously, they will not be able to identify all the issues every time before you go to sleep, they might encounter few problems after you go to sleep. In that case, make sure that you always task them with some kind of other work, which is independent from that particular task. This will give them something to work on, before you can actually resolve their problem. This approach had helped me tremendously to increase the productivity of my team.

Make information go public: In most of the cases, people depend on each other for the information. Most of the professionals will take an educated decision in a given situation, if they were provided with the appropriate information. I made most of my information public in such a way that my team can have access to that information all the time. For example: during every meeting, I take meeting notes and prepare a list of action items. I started putting that information to our SharePoint site. This helped my team to have a baseline information and having the right information in their possession. This approach has reduced long chain of e-mails to get the same information that they would have got otherwise.

I hope, these tips will help you to reduce various time and communication related challenges with your virtual teams. Please feel free to comment on my blog, if you have any other suggestions for improving efficiency of your virtual teams. Thanks. – Bhavin Gandhi

 

Reminder: Business Challenges in the 21st Century

Doing business in 20th Century was comparatively easy. Rules were simple and complexities were very few. In today’s world, its not easy to do business. With new technologies and changing dynamics of the businesses, it is becoming more and more challenging to do business. In this blog post I will discuss about some of the new business challenges that many organizations are facing right now.

Globalization has really changed the entire world, with new markets – offering new challenges and opportunities,  especially in China, India, Brazil, and Russia. Therefore, global issues — including trade barriers, exchange rates, tariffs, and distribution — will become important elements of managerial choice.

Rapidly growing technology is another challenge that businesses in 21st century needs to face. Technology has increased accessibility, visibility, and connection. The connected world is smaller and rapidly changing, and has open information. For example: during the time of Web 1.0, companies used to broadcast their information and consumer had only one channel to know about various products and services that company offers. Thanks to Web 2.0, consumers can now connect to other consumers and get feedback of your product through their social connections. Managing your brand’s image in social media is one of the biggest challenge that businesses of 21st century has to face.

One of the other challenge that businesses of 21st century needs to face is – talent acquisition and retention. In today’s world, employees represent diverse demographic backgrounds not only race and gender but also personal preferences and cultural backgrounds. Also, employee expectations are constantly rising as they gain education and skills.

Other major challenges are increasingly segmented markets, increasingly attuned investors, and innovative and global competitors. With my blog posts, I will try to address these issues and provide some recommendations to resolve those challenges.

I hope my article was helpful and I am eager to hear your feedback. Thanks. – Bhavin Gandhi.