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Onshoring Versus Offshoring; Decisions, Decisions

Bob Evans on April 7, 2014

Offshoring is a term often heard within the CRO community from clients who seek to find the lowest cost provider for bioanalytical services. Rather than use the phrase “lowest cost” we would like to suggest it to be replaced by “highest overall return,” a phrase which encompasses the multiplicity of factors that need to be considered before making a decision. Let’s examine a typical scenario for a pharmaceutical or biotech company moving from pre-clinical to phase 1 in their drug development pipeline. Typically, at this stage they would need a bioanalytical assay to be developed as part of an FDA submission and would be conducting a small-scale clinical trial.

Initial contact occurs; either via the web, Scientist, social media or personal contact. We have found that the optimum methodology for scoping out the project and developing a proposal is to have direct contact between scientists, often with a phone call or Webex session. We cannot stress enough that having this call at the scientific level, and in a similar time zone, makes an enormous difference in project execution. We like to describe our interaction with clients as an ‘extension of your development team.’ This deep level of interaction and trust building enables a faster development and significantly reduces scope creep and misunderstandings.

Overall, the key project measurable is ROI: defined as a function:
> ROI=f(speed, communication, responsiveness,)2+f( regulatory, quality, technical expertise)

Taking these in turn, speed, communication, and responsiveness (SCR) have a greater multiplier in a successful and timely study completion than regulatory, quality, and technical expertise. The second set of parameters are a ‘given’ for any organization that operates in this space. If they do not have these qualities then they will not be in operation for long!

The key parameters, speed, communication, and responsiveness, significantly assist in driving ROI by enabling your team to keep to project deadlines. More importantly, knowing that the CRO team is acting as an extension of the internal team and that they can be relied upon to meet all of the project criteria without ‘hand holding’ and micromanagement provides enormous benefits in project management and team dynamics. We have found, on many occasions, that clients may focus on the technical and regulatory aspects first. However, after that poor experience working with organizations that don’t respond effectively or that need constant attention, they soon develop these metrics as part of their selection criteria for working with a bioanalytical CRO. Given that Regulatory Conformance, Quality Systems, and Technical Expertise are the essential requirements for a provider, the key decision-making criteria for an offshore vs. onshore partner decision can be represented in this table. Ranked from 1 to 10 with 10 being the most important:

Attribute Ranking Score Ranking x Score
Speed 7    
Communication 10    
Responsiveness 10    
Price 5    

We have solid experience successfully managing projects for clients. Based on these successful collaborations, we would rank the key elements as being Communication and Responsiveness. Only after these two important attributes are considered, come Speed and then, finally, Price.

Pricing is often times considered a deal-breaker. However, we would prefer to look at the total cost including lost opportunity delays within your organization. We should also note that the onshoring vs. offshoring decision works both ways. If you are a domestic provider seeking clients overseas, make sure that you can accommodate all of your clients’ SCR needs. How do you fare with the following?

  • Can you hold meetings at your clients’ convenience in the early morning for Europe, while at night for clients in Asia?
  • Does your team respond to clients’ emails and questions 24/7?
  • Are your communications methods clear, concise, and do they look ahead to answer potential questions?

To conclude: after establishing that a service provider can meet all of your regulatory, quality, and technical requirements, the key elements you should focus on in making your decision to use an onshore or an offshore service provider should be: speed, communication, and responsiveness.

In your experience, which metric is most important in an offshoring vs onshoring CRO decision? Chime in below with your thoughts – we look forward to hearing from you.