Outsource IT overseas... Is it working yet?
| posted by Outervillage OutervillageOutsourcing IT functions to overseas countries like India seemed to
be all the rage just a few years ago. A lot of hype was put into
justifying outsourcing strategies for IT. The lure of cheap labor
overseas helped fuel the fire.
Now a few years into the hype we've begun to learn some lessons.
Outsourcing IT overseas has not lived up to its promise. There are
several reasons why outsourcing IT initiatives fail. Most of these
reasons can be applied to any outsourcing initiative. Issues like
quality, communication, culture, legal, and overall responsiveness to
business change are all issues that impact the effectiveness of an
outsourcing strategy. Gartner has also suggested lack of IT skills and high turnover in the tech industries as contributing factors to failures.
I think we'll start to see a shift back to internalizing some of the
things we once thought were "outsourceable". Things like software
development, help desk, systems/database administration. In fact I
think we're already seeing it. Recent salary surveys from CIO Magazine (see yesterday's post on 2008 IT salaries)
suggest that salaries for these types of specialties are going up. This
is just another indication that companies are scrambling to bring this
talent in-house. Some firms in India according to this post
are shutting down due to higher wage costs and poorer quality. I'm sure
we'll be hearing more and more of this in the coming months. I think
the "Outsourcing Bubble" is ready to pop.
Vassilios
http://www.outervilage.com
