Long Term Effects of Outsourcing

simulate writes "There have been several postings about outsourcing and offshoring in the past few weeks. Is outsourcing just a fad? In Outsourcing Programmers is Bad Strategy for Software Companies author Michael Bean compares offshoring to the enthusiasm for Internet startups in the Nineties. He claims that outsourcing programmers is bad for companies not because of the programmer layoffs, but because technology companies lose their capacity to innovate. Offshoring is a mistake when technology companies confuse operational effectiveness and strategy." I don't think the comparasion to Dot Bombs is entirely accurate - the trend to globalization overall has been going on for decades. Still interesting piece.

Comments

It'll get worse before it gets better...

[soluzar22]

While I don't think it's what you're referring to precisely, there has been a considerable move to outsourcing customer service call-centres in recent years. I think that in some cases this has led to a much higher level of customer service from the companies concerned. That's outsourcing taken care of. Offshoring, or moving the business outside of the UK (in these cases) has been considered lately as well. This seems to be having the opposite effect, as the new centres in foreign parts are staffed with inexperience workers without the requisite communication skills. It's going to continue as a trend though. Because it makes money. Cost rules all these days. No one cares about the service level, just about the profit margin. Right?
If I seem a little hostile about this particular trend, it may be because the jobs of a few people I know are under threat as a result of it.

Re:It'll get worse before it gets better...

[tekiegreg]

Yeah, I do wish they'd move their residential call centers back as well. After having an old power supply on a Dell Dimension Pentium II 350 break down, I decided to try and keep the computer running, and wanted to see if I could get an OEM power supply from Dell.

I call their tech support number, and get a guy in India, after indicating what I want, I go to their sales department which appears to still be back in the states (American accent anyways). After saying that he can't help me, he transfers me back to India for tech support. After which I just hang up...

Ultimately I searched the web and found someone who does sell Dell Parts including for the older computers.

However Dell gets a Failure mark from me on this, which will affect how I buy my computers in the future. If I can't even get a straight answer about a power supply, can I get a straight answer about other issues that I could have? All I really wished for was a "Yes this is how you order your power supply" or "Sorry this power supply is no longer offered" sheesh...

Did some of this have to do with the fact that one part of the company was in India, and the other part of this was in America, and nobody really knew who to talk to, so I could get a straight answer? Probably...

Anyways herein another issue is realized, collaboration becomes more difficult. It is harder to instruct people on what to do, and what not to do when they aren't in the same place, and instead are half a world away. They don't go to the same management briefings, the support people never hang around the water cooler with the sales people, and in general are the last to know in any such policy changes. Thus would be the least likely to know where I could get a power supply.

Anyways I've vented enough but hope I've provided enough insight on to the difficulties of Outsourcing vs. In-House.

Re:But...

[MisanthropicProggram]

I'm in a MBA program and my professors stress that out-sourcing strategic assets is a very bad idea. Because, you never know where your IP will end up - regardless of which country/company you out-source it to.
The trend we're seeing is people who are just looking at the their numbers, which were probably fsck'd up anyway, and not at the long-term ramifications to their IP.
I just finished a class last semester that drilled into our heads that projects can be calculated in ways that will show them to be profitable, or calculated another way, to be unprofitable. Unfortunately, there's a lot of people out there who think accounting is a science.