A Simple Offshoring Model

I recently had the opportunity to travel to India to meet with a large provider of IT services. The purpose of the trip was to understand how best to work with this organization to deliver additional resources and thus business results to my organization. Some of the questions that needed answering where: When does it make sense to utilize offshore IT resources?, What is the best way to run projects using offshore service providers?, What are the criteria for deciding if a particular project is a fit for the utilization of offshore resources? What follows is a model I created based on my observations and peer discussions. This model has in it some implicit lessons learned from this particular trip as well as previous project experiences. The model is fairly self describing. The underlying principals are that projects with a high dependence on institutional knowledge require greater in-house resource involvement whereas projects that involve more standard business processes or technology are better fits for the utilization of offshore resources. Also, larger projects lend themselves better to the utilization of offshore resources due to the inherent overhead involved in managing offshore resources. Most IT managers will likely find this a common sense line of reasoning, the model simply provides a simple and clear representation of this logic.