Los Angeles, California
There was an interesting short article in Computer World on Monday, August 27 (link here) that described a trend in which outsourcing customers are bringing disaster recovery back in-house. Having witnessed this debate on an ongoing basis several times, I read this article with a combination of cynicism and intrigue.
Outsourcing has had a difficult year in North America. There are many explanations, some point to quality concerns, some to governance concerns, and some to a reduction in value caused by the combination of labor shortages and currency fluctuations. All of these represent a change in the risk-reward analysis that many are seeing with regard to outsourcing. The bad-news stories in the press continue to pump up the “risk side†of the outsourcing equation – particularly to Asia – while the currency fluctuations and tightening labor markets reduce the “reward side†of the same equation. The “plus side†of outsourcing is notably silent – there are simply no “good news†stories in either the press or the paid media.
TPI’s Peter Allen, in a recent blog posting in “The Dealâ€, asked whether it was better to offshore a business process using a captive or third-party model. Interestingly, the article offered no real conclusion to the question of which is better, but did highlight the most important aspect – and the biggest shortcoming – in many outsourcing relationships: The client’s inability to get past the labor-arbitrage model and, instead, focusing on outcomes.
Outsourcing News