A RISK PROFILE OF

OFFSHORE-OUTSOURCED DEVELOPMENT PROJECTS

Even the best project management skills will not guarantee
success in the complex world of offshore outsourcing.

As part of a development initiative, Life Time Fitness, a U.S.-based health club chain, outsourced the implementation of a software application to an Indian information technology (IT) services vendor. The application was a decision support system to evaluate prospective gym locations. The company’s decision to pursue offshore outsourcing for its development was motivated by the opportunity to tap into low-cost, well-trained IT talent.

Life Time Fitness pursued this initiative with fervor. The vendor was evaluated carefully and the project was planned in detail, but despite these efforts the development initiative ran into problems. The quality of the early deliverables was poor due to inadequate knowledge transfer

between the U.S. resources and the Indian professionals. Moreover, miscommunication between the two groups compounded the project troubles, resulting in delays and overspending. The woes continued to escalate until Life Time Fitness terminated the contract and brought the system back