Robert Cringely has written several articles about outsourcing, both onshore and off. His point is that, for the most part, outsourcing is a short-term solution which typically lowers quality and ultimately increases costs through expensive corrections of mistakes made by the outsourcerors.
Now, as someone who works for a multinational corporation, I work with engineering groups in Bangalore, Waltham, Provo, and Mexico City. That’s not necessarily outsourcing, though: Novell has a subsidiary in almost every country in the world and they all report back to regional, continental, and global bosses (the global bosses are not mysterious beings, either– we call them Jack and Chris. Sure, they’re from Mars and have tentacles, but the names make them so friendly!)
We outsource a number of functions here. For example, the people who clean our offices do not work directly for Novell. (Nor, for that matter, do the people who clean Wal*Mart stores, which has led to Wal*Mart getting in trouble for hiring contractors that hired illegal immigrants. Lesson: outsourcing can help you place blame!)
IT outsourcing, for the most part, is a bad idea because it’s more complicated, and less fungible, than, say, floor-cleaning. If Ace Cleaning screws up washing your windows, you can call Acme, and they’ll come over and clean them. If CSC screws up your multimillion-dollar three-year IT rollout project, you can’t call SBS and have them take it over right away. Each job is different enough that it’s not feasible to switch vendors quickly, or for that matter, switch vendors at all.
In some cases it does make sense, though. A lot of companies, especially nontechnical companies, pay for web design, and it doesn’t matter at that point of the web design company is in Bangalore or Boston: you have your teleconference, you mail your comps, and you pay your bills. Same with web hosting, or even Exchange mail hosting.
Outsourcing your core competence to a competitor is a terrible idea. Outsourcing a complicated, difficult-to-replace service is usually a bad idea, unless you’re way too small a company to afford a whole solution– say, the ten-person bookstore with a part-time email administrator. Outsourcing a non-core, simple, fungible service, whether it’s printer-servicing or some random part of IT, can make sense, if done properly.
Whether it’s done in Bangalore or Boise doesn’t much matter, ultimately: it’s still outsourcing.
More later.
Secretly Ironic 