Does Location Really Matter? Part I

Welcome to the first installment of what, from here on out, will be an ongoing blog series in which we’ll be tackling issues and raising questions about how to best achieve and deliver value in nearshore IT outsourcing. For our first installment, I’d like to delve into a topic that often comes up in deciding whether to outsource to an offshore or nearshore provider – location. Specifically, I’d like to challenge the notion that location doesn’t matter.

Today’s digital infrastructure is sufficiently solid in all of the developed world and in most emerging countries as well. Technical skills are abundant in many different places. There’s no physical good to be transported, and telecommunication technology connects people virtually everywhere. Since software development is a knowledge-based activity, it can be performed at any place where the knowledge worker is, right?

It’s no surprise that Tom Friedman got his ‘aha moment’ that inspired him to write “The World is Flat” when visiting an executive from an offshore outsourcer. This company built processes to facilitate globally-distributed work and make them as seamless as possible. They invested in certifications that proved these processes to be mature, and therefore more likely to be successful. They have clients in every corner of the planet, and serve them from their central hub in India. And their processes proved to be so superior to those of local competitors that these processes achieved the “best-in-class” status and were emulated around the world.

This is all true. But there’s another critical truth missing from this puzzle. Software development is a team activity, and it’s crucial that the client is part of that team, especially if the outsourcing project is developing custom applications (which will be the focus of this blog). The client is the primary and indispensable source of knowledge in defining what must be developed, answering questions related to the business and some related to technology, providing feedback on what is being produced and accepting the quality of the deliverables.

Is this possible when the client is in one place and the development team in another? For the most part, yes, for the reasons listed above. Unless you want to have everyone (including vendors) co-located in the same building (and pay the price for the infrastructure), even if you partner with local providers the team will be somewhat distributed. You’ll use teleconferencing, web conferencing, instant messaging and other tools even if your partner is across town. So, what does it matter if the person on the other end of the line is in the city, in the country, in the continent or even in the planet? Not so much, and in that sense the world does seem pretty flat.