It could be best described as a side-effect of the success of offshoring. The offshoring model has worked wonders for some while for the others it has failed to live up to its promise. Most firms falling in the latter category fail to realize that offshoring is more complex than they perceive it to be. And therein lies the problem.

A 2007 survey by KPMG revealed that 79 percent of its respondents did not even know the cost of selecting a vendor. More startling was the finding that 42 percent of outsourcing relationships did not have a framework to measure the effectiveness of the arrangement. The notion is that offshoring is just about finding someone who can do it cheap. Consulting firm Zinnov has outlined ten fatal myths associated with offshoring.

1. I can save 70-80% by offshoring:

Excessive media coverage had created unrealistic expectations on the offshore cost savings. When firms fail to realize the expected savings, it’s the vendor who gets the boot. Firms often overlook the soft costs associated with managing the remote teams and calculate the saving solely based on the direct cost saving. Though it is true that the resource cost can be as low as 1/16th of the onsite resource cost, the soft costs involved such as communication overheads, travel, new tools, additional infrastructure, management overview etc. can bring the savings down to 30-50% of the onsite costs.

2. Vendors are the same, let me choose the cheapest:

Selecting the wrong vendor is the single most significant factor in the failure of offshore relationships. Companies overlook the capabilities of vendors and often look for vendors who can provide the services at lower cost. With over 1000 vendors in India, many of who claim to provide any IT service on earth, it is absolutely necessary to get a realistic view of their capabilities and business focus. Though cost is a critical factor for offshoring, it should not be the only factor while selecting an offshore partner. Tangible and intangible benefits along with risks should be thoroughly analyzed before selecting an offshore partner.

3. I want my offshore team productive from day one:

Companies consider the offshoring effort to be plug and play. They often are not aware of what is involved in the setup and ramp up of offshore operations. Depending upon the complexity of the tasks and the desired skill sets of resources, teams can take between three to six months to reach a productive state. But in majority of cases due to inadequate planning in initial stages, the ramp up time to reach the steady state can be over a year. During the ramp up time, mismatch of expectations in productivity can lead to frustration of both onsite team and offshore team. Wrong and unrealistic expectations often result in onsite management to quickly lose trust in the performance and ability of the offshore team.

4. Off-time communication is not an issue:

Many companies deny that their onsite resources are stretched to manage or interact with the offshore team. In reality, working with offshore teams especially during odd hours can lead to burnout. Though most companies do accommodate the lost productivity due to odd hours interactions, few companies still expect the same level of performance as offshoring is an additional responsibility. This coupled with communication challenges can cause frustration in both teams which typically leads to the failure of the offshoring efforts.

5. I need no help, I can do it myself:

Though offshoring is no rocket science, it is a time consuming and information driven process