More companies realizing the downside of outsourcing

[OhioChick]

January 23rd, 2008

The latest survey from Robert Half Technology says that most CIOs do not outsource technology jobs outside the U.S. Ninety-four percent of the CIOs surveyed said their firms don’t outsource. Nearly six in 10 CIOs whose companies do outsource said they are discontinuing the practice mostly because of the management challenges it causes.

A piece in the most recent issue of Workforce Management says that Zmerican companies are starting to “backshore.” Backshoring is the term used when companies bring jobs back home after experiencing disappointment and frustration with remote, foreign workers.

The article says that backshoring is driven most by five factors:

1. Cultural misunderstandings-Offshore workers don’t understand our culture and so never have an understanding of our product requirements.

2. Unexpected management needs-Domestic management must do a lot of hand-holding with overseas workers. “You can’t ever get rid of your workforce management responsibilities.”

3..High turnover in the offshore workforce–Call center attrition rates are around 40 percent to 50 percent, and IT rates are around 15 percent to 20 percent.

4. Low skill levels–If a company tries to offshore highly complex work, it can’t find the skills, and it can’t train the people because they don’t have the background.

5. Work that’s too complex–The more cutting edge the technology, the harder it is to offshore. Well-defined tasks are better for offshoring.

The Workforce article cites a problematic relationship between an offshoring group and the Los Angeles-based Arvani Group, a management consulting firm that helps international mobile and wireless companies. Arvani contracted with a group in India to do some research. They were hoping to take advantage of the time zone difference-provide a request the night before and have the results the next morning.

Instead, the research reports came back a week late, containing the same information that Arvani had sent, only in a new format. Arvani ended the contract and brought the work back to a U.S. firm they’d used before.

http://blogs.techrepublic.com.com/career/?p=252

[allalone]

1. may I present Boeing (sp?)

with the empty shell of the dreamliner. The electric systems and machined parts were
outsourced. oops. they aren't here yet and management has to send production managers
over to get it done.

[Vincardog]

2. Speaking a a Programmer who watched his job disappear I am not surprised at all

I watched my position be replaced by people who couldn't and wouldn't do my job at a much lower rate of pay. To all those board room masters of IT good luck with your stock options next quarter.