If a company doesn't create solid in-house processes, "the vendor will have to put more people onsite to compensate for your inadequacies, and they'll spend all of your savings," says Meta Group's Davison.

DHL America's IT department spent a full year to get to CMM Level 2 in2002. Kifer is aiming to be at Level 3 in the United States this year, with the ultimate goal of achieving Level 3 across the entire global IS team. "It's a big project, and it entails a significant level of training and education," he says. "But if you're going to take full advantage of offshore outsourcing, you have to raise your own maturity level." Not everyone was gung ho about the new level of discipline required, but Kifer lit a fire under them with annual bonuses tied to certification.

The ability to write clear specifications is also critical to achieving offshore savings.

"When you're doing this stuff internally, you tend to be much more cavalier," says Hergenroether. "When you have to package specs to go outside the company, that has to be done exceptionally well." Creating a great spec package is costly and time-consuming. On a 1,000 man-hour project for example, Hergenroether's staff will spend 100 hours to create a spec package.

At the other end of the process is quality assurance (QA) testing, an area which must become more robust in an offshore arrangement. "We essentially picked up two shifts of people in India working while we slept. The work we sent out at 4 p.m. came back to us at 10 a.m., and we didn't have a QA funnel big enough to handle that," says Radio Shack CIO Evelyn Follitt, who now hires more temporary QA staffers during development time.