Building Sustainable Advantage in Offshore Sourcing

During the recent Bush/Putin economic summit in Russia, a little noticed but highly important IT joint venture was announced by Moscow State University (MSU) and Exigen Ltd. (a U.S.-based company). Under the agreement, Exigen will create a new IT research and development center on the MSU campus that will develop software and provide IT solutions and support for global enterprises inside and outside Russia. MSU is Russia's premier university with over 21,500 faculty and over 40,000 students.

Lately, announcements of new offshore development centers are rapidly increasing, but this announcement stands apart because it relies upon an established and strong infrastructure of both academic and business leadership. The technical leadership and expertise that Russia developed over the past century was primarily incubated in and around MSU. There are cultural issues that will need to be addressed in order to convert technical expertise into commercial success, but that's a hurdle that has been scaled before.

Market Impact

The offshore development industry has been criticized as one that exploits low cost labor, produces low quality output, and then moves on to the next low-cost venue rather than investing in the host venue. Is the offshore business model really only about cost savings or can quality and centers of excellence be applied to this business model? Can users expect to obtain work that is not simply inexpensive, but based on global best practices? Will IT professionals ever become as enamored with offshore development as accountants are?

We believe that the offshore sourcing industry is undergoing a rapid evolution that will change IT professionals' perceptions of the value of offshore sourcing. We believe the criteria for successful offshore sourcing begins with the technology stack and component roadmap. By mapping a geography's workforce capabilities and renewable thought leadership to the technology roadmap, an IT operation can create a center of excellence that will: 1.) mesh with other globally sourced technology components; 2) provide global leading-edge services within their space; and 3.) help drive next-generation solution development faster and better than would have been otherwise possible.