Most life sciences companies depend on enterprise systems that go by three letter acronyms we know well (ERP, MES, PLM, SCM, QMS, etc.) to deliver critical customer service, operational, regulatory and compliance capabilities. When the implementation and regulatory compliance of these systems are led by system integrators using a large number of offshore resources, the promises are attractive: lower labor rates, scale, supposed global best practices. But buyer beware!
Recent high-profile lawsuits in the life sciences industry serve as stark reminders of the financial and operational risks companies face when embarking on large IT projects with system integrators relying heavily on offshore resources. The recent $172 million lawsuit filed by medical device giant Zimmer Biomet against a major consulting firm highlights what happens when offshore-dependent approaches go wrong—with claims that the consulting team was “incompetent and unqualified” and delivered a “wholly defective” system that crippled operations.
The Real Cost of Going Offshore
The Zimmer Biomet case illustrates how offshore projects can spiral out of control: what began as a $69 million contract ballooned to $94 million—36% over the represented cost—before ultimately requiring an additional $72 million in post-go-live remediation efforts. Beyond immediate financial losses, the company faced:
- Operational paralysis: The company was “barely operational through the third quarter of 2024, unable to ship or receive product, issue invoices, or generate basic sales reporting”.
- Patient safety risks: Disruptions to the global supply chain prevented timely shipment of critical medical devices to doctors and patients, putting patient care at risk.
- Market confidence erosion: The mounting challenges forced Zimmer Biomet to reduce its full-year 2024 guidance, contributing to significant market cap erosion.
This case isn’t isolated. The life sciences industry has witnessed multiple ERP implementation failures that share similar offshore-related challenges:
- Revlon’s SAP Implementation Disaster: The cosmetics company’s ERP failure resulted in $64 million in lost sales, manufacturing disruptions, and shareholder lawsuits after implementation issues at their North Carolina facility prevented fulfillment to major retail customers. The project was managed by a major consulting firm that allegedly underbid the project and lacked adequate expertise with the new SAP S/4HANA system.
- Avantor Performance Materials Sues their SAP SI: The biotechnology, chemicals and pharmaceutical products manufacturer sued their SI, alleging the consulting giant lied about their “Express Life Sciences Solution” being suitable for Avantor’s business, bringing operations to “a near standstill” and causing tens of millions in damages. The case demonstrates how large system integrators have been known to oversell their capabilities in specialized life sciences environments.
Why Offshore IT Projects Fail in Life Sciences
Research reveals that offshore projects tend to be unsuccessful because physical, time, cultural, organizational, and stakeholder distances negatively influence communication and knowledge exchange. In highly regulated life sciences environments, these challenges are amplified:
Time Zone Coordination: Round-the-clock development often results in losing two days instead of gaining one, as issues require extensive documentation and real-time back-and-forth communication in order to avoid miscommunication resulting in your onshore people finding out in their morning that the offshore team did not understand the full context of the objective they were expected to address.
Communication Barriers: Language nuances and cultural differences create miscommunication risks, requiring extensive documentation and verification processes that can actually slow progress rather than accelerate it. This is especially critical when dealing with the intricate FDA, EMA and other regulatory frameworks with which life sciences companies must comply.
Knowledge Transfer Gaps: Large system integrators often rely on high percentages of junior programmers offshore who lack requisite business knowledge, technical skills, and cultural understanding critical for complex life sciences applications.
Project Management Challenges: Research shows that miscommunication of problem specificity and inadequate documentation frequently cause offshore teams to work on wrong issues, requiring costly rework.
The USDM Life Sciences Advantage
Unlike large, tier 1 system integrators that rely heavily on offshore resources, USDM Life Sciences takes a fundamentally different approach by leveraging local experts who understand both the technical and regulatory nuances of life sciences operations.
Deep Industry Knowledge: Our consultants possess extensive experience in GxP environments, FDA validation requirements, and life sciences business processes—expertise that can’t be easily outsourced or transferred.
Direct Client Relationships: With local resources, communication is immediate and nuanced. There are no language barriers, cultural misunderstandings, or time zone delays that can derail critical project phases.
Regulatory Expertise: Life sciences companies must maintain privacy, confidentiality, and security as absolutes, requiring integration platforms that comply with industry best-practice approaches. Our local teams understand these requirements intimately and can ensure Computer System Validation (CSV) and Computer Software Assurance (CSA) compliance.
Agile Responsiveness: When issues arise—and they always do in complex IT implementations—local teams can respond immediately rather than waiting for offshore resources to come online or requiring extensive documentation to explain problems across geographic boundaries.
Accountability: Unlike offshore models where responsibility is often diffused across multiple teams and time zones, our local approach ensures direct accountability and clear ownership of project outcomes.
Making the Right Choice
The mounting evidence from cases like Zimmer Biomet, Revlon, and Avantor demonstrate that the perceived cost savings of offshore development can quickly evaporate when projects fail to deliver on time, on budget, and with the required functionality. As one analyst noted about these failures, large system integrators often “bite off more than they can chew” and “misrepresent the capability of their ERP system” to win business.
For life sciences companies, the stakes are too high to risk on offshore-dependent system integrators. Patient safety, regulatory compliance, and operational continuity demand partners who understand the unique challenges of the industry and can provide immediate, knowledgeable support throughout the project lifecycle.
USDM Life Sciences offers that local expertise, regulatory knowledge, and direct accountability that ensures your IT projects deliver real value rather than costly litigation. When your next critical system implementation is on the line, choose the partner who’s in your time zone, speaks your language, and understands your business.
