Sunday, May 16, 2010

Chocolate and Boxes

Having been part of IT organizations in a diverse mix of American companies for close to ten years now, I have seen a representative sampling of the “benefits” of indiscriminate outsourcing, In my experience, the only shops who have their information technology act together are staffed almost entirely by local programming talent with most of them being full time employees rather than contractors. The contractors that these shops do have on board, tend to be senior level and expensive. Clearly, they are not participating in the race to the bottom economics that is the driver for most outsourcing decisions and are thriving despite that.

Most importantly, they have a workforce that enjoys the work they are doing, take pride in it, feel a strong sense of ownership of the work product and are happy to stay on with the company. For an outsider such as myself, the difference in project outcomes is quite remarkable. I always tell clients looking to add contract staff for a project that they will get exactly the talent they pay for.

Even if they looking to shop in India, top quality talent is expensive. When the math is all done, an A player based in India may actually turn out to be more expensive than someone of similar caliber that is local. If you pay for cheap the quality of work will reflect it – does not matter what the geographical location. The chances of a client being able to vet a local candidate to their satisfaction is always higher than taking a chance with someone they have never seen. Then there is the matter of face recognition and reputation – things that are easier to establish and validate locally than remotely.

Yet there are instances where outsourcing works out very well. It seems the trick is to do just enough - not too much (and lose edge in strategy and innovation) and not too little (and keep the organization mired in operational inefficiency). In this article the author Michael Bean gives a great example of outsourcing done right - a lesson than any IT shop would do well to learn.

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