Technology off-shoring has become quite common in the large to mid size recordkeeping companies. With leading consulting firms deeply entrenched in technology consulting within the US and abroad, they are able to market their offshore capabilities for most aspect of technology services. Managers and product owners are confronted by the choices of whether or not to offshore and how much to offshore. In many cases, it’s not even a choice but a corporate mandate to offshore.
To complicate decisions, most offshore companies have lax quality standards and their teams do not necessarily understand or appreciate the risk and complexities of a variegated financial system.
So, is off-shoring retirement technology projects a bad idea? Not necessarily. Based on several years of experiences in working with offshore and onshore teams, we have come up with scenarios when off-shoring may or may not be a good idea.
Scenarios when off-shoring may be a good idea.
1. Project or task is well defined and does not take specialized skills. It is repetitive and can be taught fairly quickly. Examples include unit testing specific well-written use cases or monitoring of jobs.
2. Project does not require management oversight or supervision at all times and clear metrics can be defined.
3. Long term project (3+ years) that takes into account, the time taken to build and train the offshore team.
4. On site team or consultants has experience working with offshore team.
5. Project Does not get impacted by high employee turn over rate.
Scenarios when off-shoring may not be a good idea.
1. Short-term project (<1 year) that has a strict deadline and budget constraints with no clear cut requirements.
2. Requires domain and process expertise and ability to adapt as business grows and new plans are brought in.
3. Specialized technology skills and need for architecting complex solutions with requirements that change over time.
4. Projects that requires constant knowledge transfer, requirement changes and governance.
To summarize, retirement technology is not an easy cost center that can be off-shored with an expectation to save money instantly. Unless there is a patience to build, manage and go through multiple iterations of training, it is very hard to achieve measurable results. In most cases it takes 2-3 years to build an established offshore team that understands your business, your clients and your technology road-maps.
So, is it worth it to spend such a time and effort and money on such an effort that may or may not work out when you can just keep your resources on-shore? From the recent trends in the retirement industry, where the turnaround time on projects is shorter due to the changing nature of retirement business, the answer seems to be, No.