Mar, 8 2018

In my last post (January 2018, The Alternative) I wrote why we created U.S. Onshore - it was a new resource alternative for a new set of CRM technologies.  Horses for courses - a new horse for a new course.  Thirteen years later business has changed.  It now focuses on digital transformation, a group of technologies that go beyond CRM.  The question is, does the onshore horse belong on the course?

Excluding an employee, onshore is one of four resource options available to IT.  The options are:

  • Staff augmentation
  • Onsite, typically a traveling consultant
  • Onshore, U.S. based consultants in a non-urban location (some call it rural sourcing)
  • Offshore, any resource outside the U.S. border including nearshore

When evaluating which horse to ride for digital transformation, there is no Secretariat running away with this race.  Each option has its strengths and weaknesses, and each has its own unique value proposition that may or may not work or endure for a DT strategy.

In an economic downturn offshore demand rises because IT wants to reduce its costs.  As offshore increases other staffing alternatives, U.S. based alternatives, correspondingly decrease.  The last two recessions were good examples of this cause and effect.  Today we’re in an expanding economy.  A good economy will always drive U.S. based resources.  This is especially true in a new technology era such as digital transformation.

Last week I read an article about the ERP domain.  To paraphrase it stated, with the current ERP technology, business has squeezed out most of its inefficiencies.  We hope so.  U.S. businesses have been wringing out their P&L since 2001.  This article wasn’t a revelation, but combine it with a good economy and it’s easy to conclude business will invest somewhere else.  If it’s not in expense reduction, the domain of ERP, it will go to revenue production.

When we look at forward facing technology investments, technologies that engage the business or the businesses customer to produce more revenue, there are several absolutes.

  • Whatever technologies IT invests in, the results are business will get closer to its customer.
  • As business gets closer to its customer, an imperative will be an increased quality experience.
  • In whatever way experience and quality are defined – increased functionality, lack of defects, ease of use, user experience, ease of process, etc. – the bar is increasing daily.

As business embraces this new game-changing technology strategy, it will seek to control quality and risk in its resource strategy.  All this pushes for U.S. based resources.  Overlay agile and a speed-to-market development philosophy and this pushes even harder for U.S. based resources.  When risk is the dominant concern, as it is today, this will increase demand for onsite consulting services. 

The problem with onsite is, it’s the most expensive option.  Compound this with a new technology era and we can easily envision future DT budgets being under funded.  This opens the door for staff aug, a lower cost alternative.  But, it’s unlikely this option will save the day.  Its marginally lower cost won’t significantly reduce the growing backlog DT will incur.

At a macro level, I don’t think many people believe customer facing technologies and agile are in offshore’s wheel house.  Combine this with the immigration debate and new visa restrictions, and it’s not hard to conclude offshore will have its issues.  There was a recent article that stated in 2017 Cognizant hired more consultants outside of India than within India.  This was an historic first.  It also went on to state this is going to be the new trend for offshore companies.

I’m not going to make the argument offshore can’t solve this problem, or won’t solve this problem.  At some point it will.  What’s obvious is, it’s not going to be solved in the near term.  This leaves a void…and the last horse in the race is U.S. Onshore.

Thirteen years ago, we created a new resource alternative because onsite consulting and staff aug couldn’t solve IT’s cost problem, while offshore represented too much risk and not enough quality output.  Today, onshore is needed for the exact same reasons but for a different set of technologies.

With thirteen years of experience, onshore has come of age.  Evolving to a near-onsite capability level:

  • Salesforce
  • Application development for both .Net and Java
  • Integration
  • Data management
  • Business intelligence
  • Testing
  • and, all Agile experienced.

Consultants with expertise from the developer to project management at a cost that is approximately 40% lower than the onsite consultant.  Thirteen years ago U.S. Onshore was an idea.  Today, it’s a highly talented group of consultants experienced in the core digital transformation technologies.

The onshore horse has a course and Eagle Creek’s technology centers are in the race.