Many CIOs could win huge additional benefits from India, but only if they remove their blinkers.

Offshoring IT work to India is now the norm for many organisations, particularly in the private sector. Many of us have done this for over ten years, with varying success rates and benefits delivered, but for certain types of work it is now the accepted norm.

However, with the credit crunch bearing down on us, is it time to re-evaluate the value that offshoring can deliver? Is this the way to continue to deliver to your short term needs and free money up for your longer term strategic agenda? Well yes, but only if you are willing to take a less blinkered approach than you currently do.

Most firms would now consider offshore for applications maintenance of all but the most sensitive systems. The rigorous approach of the offshore vendors to things like training and knowledge transfer make this a relatively risk-free option.

Some development work also lends itself to offshore easily, but there are still whole swathes of work considered out of bounds. Take agile development, for example. Currently – and rightly – it is a hot topic for CIOs in all sectors. Its mixture of continuous user collaboration, rapid iteration and constant user testing is acknowledged to offer many important benefits. ‘Time to value’ is typically shortened by early release of prioritised functionality, while changing business priorities can be effectively managed. Risks and costs are reduced, and visibility and control increased. Published case studies from companies such as BT, Standard Life and Tarmac show it’s not just theory – it works in practice too.

Agile is no barrier to offshore

Most CIOs, however, would consider it a non-starter to do agile development offshore. But the world is changing, and Indian IT centres in particular are wide awake to the benefits of agile and the need to work in this new way with their customers from Europe and North America. In my own company, as in others, the use of 24/7 operations in India together with advanced video-conferencing has proved to us – and a select band of forward-looking clients – that globally distributed development is no barrier to the use of agile methodologies. The end product will be more easily maintained and extended - again due to all that rigour and process expertise which the offshore vendors bring.

But most crucially, the combined IT and business team are more empowered to deliver what is really needed now, not what yesterday’s outdated plans dictated. And you avoid the old problem of building applications that are never used and need never have been produced.

If you take things like large scale package implementations, many CIOs have become comfortable with things like traditional development and data cleansing being done offshore. Some unit testing is also a natural fit. But the real prize is to get more of the upfront design and configuration done offshore. India is recognising that different skills are needed for this type of work which interacts directly with the business client. Lots of issues still abound, but some real ground-breaking projects now exist in the SAP and Oracle space. Think about it - if you are doing a global roll-out of an SAP template, housing the core model in India, then some distance between the core team and the local politics can be beneficial in maintaining the integrity of the core model.

Dave Harris, director of IT solutions at luxury fashion company Burberry, has made extensive use of offshore for both support and development as the company rolls out its new SAP solution across the world. He says: “Like all companies, we’re under pressure to make best use of our IT budget, and offshoring has enabled us to achieve levels of service we simply couldn’t have afforded with a 100% onshore operation. The key to making it work is to get the right balance between onshore and offshore, locating certain key people from the offshore provider right here within our businesses in the UK and our deployment locations around the world.”

Why pay 40% more?

Data security is clearly a very hot topic at the moment, and the movement of sensitive data offshore is still seen by many as a non-starter, especially in the public sector. However, as Salil Parekh of Capgemini India told a UK public sector conference recently, this can mean that taxpayers are paying up to 40 per cent more than necessary for IT development. As a result, it is not surprising that people are now looking hard at solving the data security challenge that offshore could pose. There are many ways around the security issues. Testing using artificial data has now moved from the experimental to the proven. Increasingly close attention is being paid to EC Directives for the safeguarding of personal data. Moreover, personnel security measures in India, following the events of last November, are now starting to match and even exceed those commonly used in the UK.

The best Indian practitioners appreciate that ‘application security’ is a critical business requirement, and check for vulnerabilities at every stage – from design to support. For example, once development has been completed offshore – and before UK go-live - source code can be subjected to a comprehensive (and independent) security review.

So if you are feeling the credit crunch, perhaps it’s time for a fresh look at what India has to offer, and to update yourself on what India has been doing to address issues such as security and agile development.

As always, our jobs come down to balancing risk on one side and cost/value on the other. Revisiting your offshoring strategy, however, could be one way of putting more days back into that stretched IT budget, especially if you are willing to take a fresh, unblinkered look at what is on offer.

Liz Benison is VP Technology Services at