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Offshore Model's Benefits Add Up For Lands' End

The retailer says that in addition to cost savings, offshore outsourcing has helped improve internal IT processes.

Lands' End Inc. is in its fifth year of offshore outsourcing, and the retailer says the benefits have far outweighed the challenges. "When we have new projects or we're looking to turn over legacy support, what we tend to do now is say, 'Let's look at offshore first,'" John Loranger, VP of IS at Lands' End, said Tuesday at a conference in Chicago. Not all projects are appropriate for offshore outsourcing, but in many cases, it's more cost effective and can help free up IT staff to work on strategic initiatives, he said.

The Dodgeville, Wis., retailer is working with Covansys Corp., a U.S. outsourcing and IT services company with three development centers in India. It initially hired Covansys in 1997 for its Y2K initiative, which included analyzing 6 million lines of Cobol. That gave Lands' End an outside group of workers who understood the nuts and bolts of its legacy systems. Not wanting to waste that knowledge, the company cherry-picked some of the best workers from the Y2K project to work on other projects--some onsite, some off-shore. Most of the project managers and analysts are local, while much of the coding is done offshore--the ratio of off-shore workers to on-shore workers at Lands' End is about 4-to-1, Loranger said.

Covansys' work for Lands' End includes enterprise data warehouse development and CRM development projects. "We're integrating them with our own staff just like we would with a local contracting firm," he says. Many of the retailers' core systems were built 15 to 20 years ago, including order entry, batch-order processing, and order fulfillment systems. As the company decides when and how to replace those systems, it can lighten the load of internal IT staffers by using offshore outsourcing to support legacy systems needed for day-to-day operations. And if additional IT skills are needed to handle the replacement of legacy systems, off-shore outsourcing can help, Loranger said.

Offshore outsourcing also has helped Lands' End improve internal IT processes, Loranger said. "Our IT processes were pretty loose and pretty informal" five or six years ago, he said. In addition to providing thorough documentation of legacy systems, Covansys' employees helped bring more structure into Lands' End's development and testing methods.

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