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INDUSTRY
INSIDER Onshore versus offshore. Security versus cost savings. India versus Russia. GIS professionals have long debated the advantages and challenges of hiring offshore vendors. Those of us in the industry compare the benefits to the concerns and try to come up with a solution that meets the overall needs of our customers while protecting business reputations and budgets. We regularly ask ourselves: "In using offshore vendors, are we achieving a significant cost savings only to jeopardize the security of our data?" This debate between onshore and offshore is much more heated considering the heightened security concerns that followed the events of September 11. However, security has always been a legitimate concern. Perhaps the prime dilemma involves that which is unknown. It can be a daunting task to unleash a key project requiring facility maps and large amounts of data to parties beyond the borders of the United States. New security concerns have opened the gates whereby legal departments are now important players in this onshore-versus-offshore debate–and with good reason. When it comes to controlling access to plant locations and operability records, GIS companies are clearly seeking legal counsel. Despite greater U.S. resistance, nearly every GIS vendor in North America and Europe has an arrangement–either formal or informal–with offshore conversion vendors. International Data Corp., an analyst firm, estimates that U.S. companies will spend $17.6 billion on international outsourcing in 2005. Some firms that claim not to outsource data conversion work have actually brought in qualified, foreign-based programmers and technicians who have been granted speedy access to the United States on special work visas. Both individual and geographic biases contribute to the domestic resistance facing this international outsourcing. For example, New York has adopted legislation that bars certain types of work from going outside the state. Regulations in other U.S. regions, such as the south and the southwest, largely give preference to local firms. Many government organizations also stipulate that only domestic firms are eligible for consideration. So, who is really better off? Is it the GIS company that employs the services of an offshore vendor, or one that stays close to home? What about blending both resources? Perhaps the real question should be: "Who sleeps better at night knowing that they have achieved a cost savings and also secured their data?" Security: Controlling Access and Preventing Piracy Outsourcing data conversion work creates a certain level of vulnerability. Just how vulnerable are we by choosing to outsource our work? In this post-September 11 world, methods of international outsourcing have changed. The U.S. Immigration and Naturalization Service shows increasing reluctance to award speedy work visas to foreign programmers and technicians. Lacking easy access to onsite foreign labor, companies must find ways to ensure that offshore production sites are secure. High accessibility to production sites and the overall information risk due to workers coming and going on a daily basis is also a cause for concern. Especially in countries of the Third World, access to production sites must be analyzed for risk. GIS companies need to carefully examine a number of security concerns before allowing their overseas vendor relationships to continue. Controlled access to all production sites is a must. Network connections at these facilities should be analyzed for proper firewall protection and encrypted data capabilities. Hardware network access at the floppy disk or CD-ROM level must be monitored. Controls over the workforce itself must be analyzed to ensure that information is not removed from the production floor via photocopy or digital means–or even via original paper documents. Companies should ensure that their secure client records remain onsite by implementing ID card-access systems at all production facilities. Electronic piracy is also a growing concern for GIS companies that use both onshore and offshore vendors. As GIS becomes more widely used, electronic theft of mapping software and datasets is growing. According to the Business Software Alliance, worldwide losses due to piracy are approximately $13 billion per year, accounting for nearly 20 percent of total sales. The highest rates for piracy are found in Vietnam, El Salvador and China. Some of the most common pirating techniques that have the greatest effect on GIS companies include the following methods:
After viewing this list it is obvious that GIS companies must take extra precautions when outsourcing any data for onshore or offshore data conversion. Companies should work solely with offshore vendors that match or exceed U.S. security measures. This includes running extensive background checks and identification requirements for anyone entering areas where a customer’s software code is accessible. In a reversal of their prior stance, India recently made theft of intellectual property a serious offense. Some offshore companies have even set themselves up as registered U.S. corporations. This means that U.S. law governs the contracts they sign, and any contractual disputes are litigated in U.S. courts. When all is said and done, every GIS companies is at risk, whether or not they choose to use offshore vendors. Security will always be a concern–one that everyone should have uppermost in their minds whenever project teams are assembled. No one wants to be forever tainted by even a single security breach. Is Offshore a Money-Saving Choice? If saving money is your company’s overriding motivation, you should probably seek out a new path. Although cost savings is always an important factor, especially in today’s touchy economy, it should never lead any business model. Labor costs for offshore production are typically 40 to 60 percent lower than its onshore equivalent. After September 11, this percentage has decreased only slightly. GIS companies must now consider additional costs to ensure site and personnel security. Additional funds must be allocated to ensure that site access is carefully examined and protected. More dollars need to be spent to prevent electronic piracy from impacting one’s place of business. Every penny that goes toward improving security measures is money well spent. Some companies assume that blending an onshore labor force with an offshore staff shifted stateside will automatically result in a cost savings. However, these companies will need to contribute additional dollars to seek out economical housing and transportation systems for their relocated staff members. Despite these additional costs, overall savings can be achieved by blending offshore workers with onshore businesses. In this scenario, having only a single, harmonious team in place as opposed to two geographic- and time-zone-challenged organizations will reduce management costs. Another means of eliminating costs is through data sharing. In the GIS industry we typically convert much of the same base information over and over again on a project-by-project basis. As the cost of offshore conversion goes up due to increased security expenditures, it may be more feasible to share already converted data among multiple GIS users. Whether or not one chooses to blend onshore work with offshore laborers, few will debate the overall cost savings that can be achieved by employing offshore vendors. Costs are reduced in the areas of contracting developers, communications in data, voice and video, overall transportation of personnel, plus equipment and legal costs. Recent research data released by Jupiter Media Metrix estimated that companies with significant customer or client-contact-center operations (rated at 200 seats or more) will save nearly $4 million a year by outsourcing this work to companies located abroad, especially those in India, Canada, Ireland and Northern Europe. India: A Leading Offshore Provider Developers in India have earned their solid reputation in the GIS industry because of their high-quality, low-cost coding assistance. The Delhi-based National Association of Software and Service Companies (NASSCOM) estimates that India’s revenue from IT-enabled services will grow by 54 percent in 2002, totaling about $1.4 billion. Many U.S. companies actually consider the time-zone difference to be an asset. Response times are reduced considerably when one company is always "on" when the other is not, thereby creating a true 24/7 work environment. Many Indian service companies take pride in fully investigating and implementing methods to ensure a company’s data security, privacy and physical site access control. With security and cost savings working hand-in-hand for many Indian developers, relationships will continue to thrive between GIS companies in India and the United States. Conclusion Providing data conversion work to offshore vendors obviously helps the worldwide economy. While readers may find this to be an obvious statement, it nonetheless serves as a solid reminder. Utilizing offshore services benefits Third World economies wherever skilled labor is provided. Completing domestic work overseas, when it may have been too costly to achieve onshore due to higher labor rates, creates benefits for both the U.S. provider and its offshore vendor. Of course, the biggest concern to companies choosing to employ offshore vendors is that of security. As previously pointed out, every GIS company is at risk–whether or not they choose to use offshore vendors. With the proper security measures in place, and with access to production sites analyzed and fully under control, U.S.-based GIS companies should not be deterred from hiring offshore vendors. Success factors in sending data conversion work offshore include the following:
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