Study: Outsourcing Boom Is Over

[Guest.Visitor]

Study: Outsourcing Boom Is Over

The last sentence in the report says it all. "Despite the turnoff overall, Weakland said that U.S. IT managers are adapting to outsourcing and gradually implementing it as a comprehensive corporate strategy, rather than as individual contracts for distinct IT tasks". Outsourcing is becoming a part of overall corporate strategy. It's beyond the control of I.T. and in the hands of bean counters. The percentage of on-shore vs off-shore will flucuate but outsourcing is not going away. Tom.

[R.Daugherty]

Study: Outsourcing Boom Is Over

They don't, for a number of reasons touched upon in this thread. I am reading two books by James Bamford concerning the NSA, and those reasons are spelled out. As I have said in other posts, the US government does what is easy, not what works. An example is flight ban lists of names, just names, of people of suspicion. Names are not very unique, nor were the correct names likely to have been used in acts that aroused suspicion anyway. Yet names are compared to this list, and people pulled from boarding if they have a name on that list. That is what passes for intelligence in the United States. The Romans were able to get away with acting this way for awhile too, while Nero fiddled. But not for long. rd

[Guest.Visitor]

Study: Outsourcing Boom Is Over

I lost a very good job and stayed without work for 3 years simply because of my name. My TN visa was up for renewal on September 2001. Going to INS for renewal could not have been worse. If they were smart guys, my name combo would have interested them. Hassan is a typpical Shia name and Farooqi a typpical sunni. Then my middle name Moinuddin is pure Sufi. It is like someone having the name John Mohammed Cohen, Paul Krishna Klein, or Peter Sudharta Kahn. My name can not appear on any terrorist list. This name is impossible to have. Yet INS kicked me out. After I was kicked out, I was amazed to read that Mohammed Atta's visa was up for renewal and INS send his dead body a notice for renewal. What a performance!

[jgolds2]

Study: Outsourcing Boom Is Over

Outsourcing is continuing to grow. Companies want to control costs especially when sales are flat so they can maintain or grow their margin and avoid the terrifying "Company X has missed the street analyst's prediction of y profit per share". In the IT world we now have to carry our share of this burden. We are expected to accomplish the same results for less dollars. Part of this is our own fault because we refuse to understand and integrate with the businesses we support which makes us relatively more expendable than say accounting or finance departments (not to say that they are forever protected). When you want to cut costs in IT there are usually three areas to look at: hardware, network and software. The hardware and network portions are fixed so the only area to play around with is software development. For CFO's who are told that they must come in flat over last year or x% less than last year, outsourcing is their best and maybe only option and for CFO's displaying real or percieved cost cutting is higher up on the management food chain than quality. The point about the US govt does what's easy (or rather what will get the media off their backs while keeping their monied supporters happy) rather than what works is completly true. Unfortunately it has always been thus. What kept them on track in the past was the presence of real labor unions that could effect the outcome of elections. They're gone now so business leaders have all the say.

[David Abramowitz]

Study: Outsourcing Boom Is Over

jgolds wrote: Companies want to control costs Well then, , , , , ,according to Deloitte, and other accounting firms, these companies only have a 30% chance of succeeding in this goal. A full 70% of companies that use outsourcing services will end up losing more money than if they hadn't outsourced at all. And that really is the bottom line. In other words, a really good message to companies considering outsourcing services is to check out the white papers before believing the hyperbole. Dave

[mpavlak]

Study: Outsourcing Boom Is Over

If you were a factory worker in 1985 and reading a thread like this you might think you were safe. I agree with some of the comments above:Outsourcing will find its way into most IT shops. SMB's may appear as safe haven as the outsourcing is just not that convenient, so far. The folks who are trying to sell you outsourced contracts are smart and they will learn from the same white-papers you think your managers should read. But as we all know, the bottom line will prevail! And if it is cheaper over there, then it will be cheaper over here, soon. Just like the mid-80's, many comments were lobbed at the Asian and Mexico factories about poor quality. And now the top 10 cars in quality are all foreign! So, continue to make yourself more valuable than an outsourcing contract. The term is relevance! If the boss offers you a new technology, learn it! If you see something coming in the door, take a night school class. Open source technology is practically free to learn, all you need is time. And yes, time is the most precious commodity. But if you lose your job to an outsourcing contract, you may end up with more free time than you care for! At the end of the day, don't give your boss a reason to outsource, and maybe he won't. But even if he does, you may find new work easier if you maintain a good network and skill set. Just my 2 cents!

[R.Daugherty]

Study: Outsourcing Boom Is Over

The reason is money, not skills. The advice is standard but the standard is flawed. rd

[B_Sing]

Study: Outsourcing Boom Is Over

Ralph, you say that like the money's only supposed to come your way. The reason is value, not money. Update: I'd refine that to say value AND money...

[R.Daugherty]

Study: Outsourcing Boom Is Over

I personally would not. That gives false hope. Promises trump proven value, until the promises prove to have no value. rd

[David Abramowitz]

Study: Outsourcing Boom Is Over

Ralph Daugherty wrote: Promises trump proven value, until the promises prove to have no value. Unfortunately this is the case only if the internal person responsible for bringing in outsourcing to a company is no longer there, or is not at high level. The outsourcing salespeople know this, and that is why they direct their sales efforts to CFOs or CEOs. Almost never to CIOs or IT Directors. When (ultimately) the outsourcing effort proves to have no value, or negative value, the executive will do what he is trained to do best - - cover his own ass! At this point, someone internally (probably someone who initially opposed the effort) will be blamed. Then the contract with the outsourcing firm will be doubled. This will be done just to prove how valuable outsourcing really is, and how right the CFO was for making the decision in the first place. The board of trustees will rubber stamp the whole thing because they don't want to look like they made a bad decision hiring the CFO. The above is not conjecture. I have personally witnessed these events more than once, and read about the same on many occasions. Outsourcing projects do get cancelled:

[*]When IT directors are in charge, and have the authority.[*]When the CFO gets canned for other reasons (hand in the cookie jar perhaps - kickbacks?)[*]Shareholders start asking embarrasing questions.[*]Investigative business reporters start publishing their findings in Business Week (This happenned with Enron months before the collapse).[*]The board of Directors misplace their rubber stamp, and get a whiff of responsibility (This is happenning a little more often thanks to Sarbanes-Oxley).[*]The CFO retires right after the contract is signed leaving others to mull over the cost/benefits (This happens more often than you may think).[/list]Dave

[Guest.Visitor]

Study: Outsourcing Boom Is Over

And another point no one has mentioned is turnover. When someone in India is offered another 10 cents per hour by another company, this "highly intelligent?" person leaves. This increases training costs and reduces efficiency and continuity. Once again, leaving the overall option more expensive (of course, accountants will slice it so it looks like a savings).

[Guest.Visitor]

Study: Outsourcing Boom Is Over

Well it isn't exactly 10 cents per hour, although it might have been reported that way. I mentioned in my previous posting about lack of opportunities in India. The outsourcing is now creating opportunities there, especially South where the literacy rate is phenominally high. South India is now the land of opportunity. Smart people were initially hired for pennies. Now there is competition for these smart people and the "smart people" feel "stupid" working for pennies. Especially when they find out that for every penny they are billed for a dollar. The rates for these guys have gone high now. So these companies bring people from North, North West, and North East on pennies. These guys comes for opportunities for pennies and then change lanes. When INS slammed US doors on me, I went back to Canada. Then someone fought my case and brought me back. They paid me $22.5/hr to me and billed for $85. My client was told I am getting $75 out of it! I took the offer and when I honestly felt that I gave back my sponsor all the money he invested in me, plus huge profit, I changed lanes. Maybe the client was told I ran away "for a few dollars more" (as he had exaggerated what he paid me) but in reality it was for twice the money. Maybe these guys are really shifting for huge sums but the outsourcing companies, who were sucking their blood, are lying.

[David Abramowitz]

Study: Outsourcing Boom Is Over

Your statement begs the rhetorical question: How many $50 - $60 dollar per hour guys were put out of action when you accepted $22.5? Dave

[R.Daugherty]

Study: Outsourcing Boom Is Over

I don't know, I lost count quite a few posts back. rd

[Guest.Visitor]

Study: Outsourcing Boom Is Over

"How many $50 - $60 dollar per hour guys were put out of action when you accepted $22.5?" A couple of guys whose total worth was not even $22.50/hr?