Offshoring: The Management Layers and Physical Communication Costs Are Significant

Vodafone New Zealand has taken another look at its IT offshoring strategy, and concluded that it’s more effective and cost efficient to hire the IT staff in New Zealand:

Vodafone NZ is embarking on a campaign to fill 100 IT department vacancies, following a decision to move its offshore operation in India back in house.

Chief technology officer Sandra Pickering says the telco has decided it will be more efficient and cost-effective to hire permanent IT professionals in New Zealand, rather then continue with its current offshoring arrangement.

…. traditionally at Vodafone, only parts of the product development life cycle were handled by New Zealand staff, and a large part of its development and testing was conducted offshore. Pickering says there were multiple suppliers but she wouldn’t name them or say how much these contracts were worth, citing commercial sensitivity.

…. the reason for offshoring is often cheaper labour, “but by the time you add in the management layers and the physical communication to get it done… New Zealand’s a lot smaller and the scale doesn’t necessarily support the additional cost.”

Interesting times. This is a good example of where the costs of remote collaboration outweigh the benefits derived. Congratulations to Vodafone for making a sensible business decision.

Read more: Computerworld New Zealand

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