Posts Tagged ‘Offshoring’

Offshoring: DO NOT Stop Sending IT Jobs Overseas

September 16, 2010

My response (and this is also posted in comments section of  George Tillmann‘s article/post on www.cio.com):

Offshoring: it’s Time to Stop Sending IT Jobs Overseas

The answer: DO NOT place a moratorium on offshoring!

Henry Ford drove the “Buggy Whip” and “Horse Cart” manufacturers out of business due to his invention of the assembly line and developing a product that could be purchased by the masses. The people who were designing and manufacturing “Buggy Whips” needed to retool their skill sets in order to be successful in a new market/economy.

I am sure that the owners of the Horse Cart and Buggy Whip manufacturers hoped that Henry Ford’s automobile would not succeed so they could continue on the status-quo. Unfortunately, similar to Henry Ford, offshoring is here to stay.

In order for US companies to be competitive in the world economy what we will need to do is retool our IT department’s skill sets!

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Which option is best for my organization: Offshore, Outsource, or Insource?

September 30, 2009

With the economy coming off of its lowest point since the great depression and CIOs being under extreme pressure to reduce cost and increase their return on investment for every project they undertake, many are asking the question of whether executing IT activities under a third party model makes sense for their organization. The answer to this question is quite complex especially when considering the third party’s experience in outsourcing, offshoring or insourcing. Allow me to first define the options that are available to most organizations.

1. Offshoring refers to sending both knowledge-based IT work (i.e. most often application development and maintenance) to third-party firms in other nations. The intent is to take advantage of lower wages and operating costs in such nations as China, India, Hungary, and the Philippines as examples. The choice of a nation for offshore work may be influenced by factors such as the language and education of the local workforce, transportation systems or natural resources. For example, China and India are graduating high numbers of skilled technicians, engineers and scientists from their universities. In addition, some nations are noted for large numbers of workers skilled in the English language, such as the Philippines and India.

2. Outsourcingcan be defined as the hiring of an outside company to perform a task that would otherwise be performed internally by a company (this can be done on an offshoring, local, or combined basis)–generally with the goal of lowering costs and/or streamlining workflow. Outsourcing contracts are often several years in length. Companies that hire outsourced services providers often do so because they prefer to focus on their core strengths while sending more routine tasks outside for others to perform. Typical outsourced services include the operation of human resources departments, telephone call centers, distribution centers, research needs, computer departments or services and design.

3. Insourcing refers to situations where an outsourced services provider moves into and sets up shop in or near a client company’s facility. It is common for major companies to sign agreements with IBM Global Services, HP, Perot Systems and other outsourcing firms whereby these firms take over and operate a client’s internal IT department. Coming up next (post): Discussion of the pro and cons of each option.