Sending complex IT projects to offshore firms frequently costs businesses more time and money than it would have cost to do the work onshore. That's particularly true in data and analytics, where face-to-face contact between business customers and technical teams is critical to project success.
A recent survey of U.S. businesses by Forrester Research notes that a growing number of organizations are bringing IT work back onshore. Many say that both the quality and timeliness of offshore work are problematic, as are the security challenges involved with sending data offshore.
According to the report, "Most survey respondents identified onshore and nearshore providers as best suited to handle customer engagement, application development, data and analytics and organizational transformation."
There are a number of reasons the onshore model is better suited for complex data and analytics projects. Among them:
The need for speed. The business world is changing rapidly and organizations of all kinds are increasingly dealing with massive volumes of data. The sooner they can turn that data into business insights, the more competitive they can be.
But before a business can gain insights from its data, it needs to understand what data it has and what questions to ask. It's easier to achieve that understanding when business customers and data scientists are working in the same room, in the same time zone, and speaking directly with one another. Under such circumstances, many highly complex questions about the data can be resolved in minutes, enabling agile teams to work quickly and iteratively toward innovative solutions.
It's harder to resolve issues, work iteratively, and deliver innovative solutions when business and technical teams are 12 time zones removed from each other, and the business must carefully and extensively document project requirements and then engage in extensive back-and-forth discussions with the technical team, costing valuable time.
Engineering discipline and rigor. The Forrester study, based on a 2015 survey of 300 business and IT professionals at large U.S. companies, uncovered serious concerns about the quality of offshore IT work. Thirty-one percent of respondents who had moved offshore projects back onshore cited "poor quality" as a reason.
At CapTech, our data and analytics work is firmly grounded in engineering discipline and rigor. As we partner with a business to turn data into something useful - for example, a customer churn analysis or Anti-Money Laundering model - we ensure that what we've built can withstand the stress of daily use and that it can deliver reliable results without consuming excessive memory or CPU and without requiring routine operations support to make it run.
A part of our commitment to excellence involves a willingness to ask questions. Too many firms simply review project requirements and start building, never stopping to ask questions or suggest a more effective solution. Our consultants are trained to listen carefully, discuss requirements, ask questions, and ensure only the best solutions are brought forward for consideration. This is particularly critical in data and analytics, where it's often the case that business customers aren't sure what data they hold, what insights they might gain from it, or how to gain them.
Entering production quickly. Failing to put solutions into production in a timely manner can be fatal to any business. Yet, 41 percent of the U.S. firms that had repatriated IT projects told Forrester that "late work" was among the reasons they had brought work back onshore.
After developing an effective proof of concept or prototype, we iterate quickly and employ automated testing, continuous integration continuous deployment (CICD) and DevOps capabilities to push the solution into production quickly. One way we accomplish this is through the use of small agile teams, typically consisting of five to nine members, that work shoulder-to-shoulder with business customers.
Some offshore firms, in contrast, assign many more resources to a project. Instead of increasing velocity, they typically increase communication breakdowns. The problem is that as the number of team members increase, so does the number of communication channels. Add in multiple physical locations and a 12-hour time zone gap and the risk goes up. High levels of employee turnover, which plague many offshore firms, also increase the disruption of communication channels even further.
Conversely, the use of small, co-located agile teams that work directly with the business promotes excellent communication. That, in combination with engineering rigor and discipline, as well as the use of DevOps, automated testing, and CICD capabilities, helps the business get answers quickly, manage costs, and achieve return on investment sooner.
Security. Another notable concern that has led almost half (47 percent) of U.S. firms to bring offshore work back onshore involves security, according to Forrester.
Some companies try to avoid the security issue by asking their offshore teams to work with test data. Although this eliminates the problems that can arise when confidential information is sent abroad, it can create a whole new set of problems. That's because creating test data is a discipline unto itself. We've seen cases in which it wasn't done effectively - the test data didn't resemble production data - and, as a result, solutions weren't built properly. That led to substantial rework, delays, and additional cost.
There is a role for offshore firms. Routine work that doesn't require iterative development works well. For example, production monitoring, on-call support, defect resolution, and routine maintenance can all be effective when done remotely.
But when you're trying to quickly gain insights from high velocity, complex data, a co-located agile team can get you the right answers in much less time. And time is money, especially in a fast-moving market.
 Forrester Research. "Onshore/Nearshore Services Thrive in the Age of the Customer." May 2016. Available at https://www.captechconsulting.com/site%20assets/white-papers/onshore-nearshore-services-thrive-in-the-age-of-the-customer