Whatever business you’re in, your IT department, whether it’s one person or 100, is an integral part of your success. From retail to manufacturing to professional services, IT is the backbone of a company. Without it no business succeeds, and when it doesn’t go right, the consequences range from inconvenient to incredibly serious. Just ask any one of the retail companies who’ve suffered security breaches in the recent past. Regardless of what your core business is, IT can make or break you.
All businesses are also concerned with cost; everyone wants to save money, and the IT department can be a tempting target. Software, hardware, infrastructure, personnel – it all adds up. But be careful and judicious when you start looking for ways to cut IT costs, especially when it comes to personnel and offshoring labor, a popular option. A recent Staffing Talk article makes some good points about the consequences of using cheaper offshore IT labor, specifically in India. It points out three potential problems with doing so:
- Remote IT staff are less effective because they are farther away from your core business
- Cheap resources have higher turnover rates
- Core staff members waste time communicating with and training offshore staff
I would expand on the author’s focus to include “cheap” labor in any country, including here in the U.S. For me, the article proves the old adages “you get what you pay for” and “buyer beware.” Anytime something is significantly cheaper than what you are currently paying, it behooves you to understand how those savings are being achieved, and what negatives may be involved. The reasons above are what I would call “soft” reasons offshore labor may not be the bargain that it seems. You also definitely want to be sure that savings aren’t being achieved because laws and regulations are being skirted, environmental consequences ignored, or workers’ rights disregarded.
The real point is to avoid sacrificing quality for cost savings. Several years ago I wrote a column for Staffing 360 that made this point as well (I’m Too Poor to Buy Cheap). It’s not necessarily India, offshoring, or outsourcing that has inherent problems and can only deliver bad results. It’s about understanding the potential pitfalls of any business model and guarding against them. It’s about recognizing where you simply cannot afford to sacrifice quality for cost. It’s about making sure that you partner with stable, reputable companies that know what they’re doing, all the time and in all geographies.
When it comes to IT, don’t underestimate its critical role in your business and its importance to your overall success. Staffing Talk’s article gives Target’s security breach as an example of what can happen when your core business and your IT function are disengaged because of geographical distance. Don’t make the same mistake.
I’m not suggesting unchecked spending or bloated IT budgets, I’m a business owner too. I’m not railing against offshore or outsourced talent. I’m advocating for smart cost cutting and point out that IT can be a tricky space and to truly balance the IT needs of your organization with reasonable costs requires attention and continued vigilance. Understanding Indian and other overseas IT labor markets is key since this can help you mitigate certain risks like high turnover. Understanding some of the challenges in working with remote staff can ensure that you put processes in place to avoid disconnection between one area of your company and another.
The lesson here isn’t as narrow as “don’t use cheap Indian IT labor.” It’s bigger than that. The best lesson to learn is to appreciate the integral part that IT plays in your business, possibly a mission critical role, and to make spending decisions with this in mind. Don’t skimp – save, and save wisely. There are plenty of examples out there of people who forgot this and paid a far greater price – both in terms of money and reputation.
CEO and President
ATR International, Inc.