Study: Outsourcing Losing Luster

[OhioChick]

While organizations turned to outsourcing during tough economic times to cut costs and boost efficiencies, a study by Deloitte Consulting has found that few organizations have realized the benefits they expected and some are bringing outsourced projects back in-house.

The survey of 25 large organizations with a combined $50 billion in outsourcing contracts found that 70% have had negative experiences with outsourcing projects and are now taking a more cautious approach. One in four companies has brought outsourced functions back in-house and nearly half have failed to see the cost savings they anticipated as a result of outsourcing.

The study, titled "Calling a Change in the Outsourcing Model " and released last week, concludes that companies will need to alter their approach to outsourcing as the economy expands. While cost savings will remain important, companies need to look at outsourcing more strategically to determine when handing off IT projects makes sense, says Ken Landis, a senior strategy principal at Deloitte.

"When revenues were down made a lot of sense and it was a perfect tool for publicly held companies to manage their earnings," Landis says. "But in a growth environment, the questions of complexity and friction, the difficulty in relating cultures between two firms and a lot of other questions come to the fore."

http://www.nwfusion.com/news/2005/042505-outsourcing.html

[ThoughtCriminal]

1. My former company's outsourced projects

were disasters. Buggy code, strange user interfaces, poor support, missed deadlines. The claims of better product at a fraction of the cost was pure hype. There are good coders in India, but there's a lot of crap too.

[OhioChick]

2. More crap than good..........n/t

[HockeyMom]

6. Customer service is coming back

The Help Wanted Ads are full of customer service jobs lately. I know I called up and complained to both my bank and cable company when I got India on the phone. Not only because I couldn't understand what the hell they were saying, but I don't want somebody in a foreign country messing around with my bank account.

[Tandalayo_Scheisskopf]

8. A friend of mine...

Works for a very major company. They tried outsourcing their database work. What they got back were these huge flat files. That were passworded. No end of grief.

The suits were much more interested in their Blackberries.

I do hope Andy Stern at SEIU is reading this stuff. Sounds like a tailor-made organizing lever.

[EC]

3. And of course as jobs start coming back

the wages will be lower, and no benefits...and of course Bushy will take the credit for creating jobs...

[politicat]

4. Most tech people could have told their upper management this years ago.

We've been seeing the cost benefit of outsourcing as negative for years; we always had to rework and extend the contracts when we outsourced. Bringing in contractors was not too bad, but we found when I was in IT as a tech writer for a major fortune 500 co that if we hired someone as a contractor for more than 6 months, we should just hire them in fact; at the end of 1 year, we'd pay more for a year of contracting than for 6 months of contracting and 6 months of hire.

Duh.

Considering how many were HB-1 visas, we now have 5 years worth of gap in the training cycle for internal computer professionals. DH, who is a senior programmer and architect, is seeing this to his great dismay. Junior programmers treat programming as tinkertoy work, connecting fragments of code found online to make new function.

[idlisambar]

5. The link at the bottom tells the real story

Indian outsourcer Infosys sees revenue soar 50%

Infosys Technologies, India's second largest outsourcer, Thursday reported revenue of $1.6 billion for its fiscal year ended March 31, up by 50% from $1.1 billion a year ago.

Net income for the year also surged, by 55%, to $419 million, the company said. Infosys expects to cross the $2 billion mark in revenue in its current 2006 fiscal year, it said. .....

http://www.nwfusion.com/news/2005/0414indiaoutso.html

[warrior1]

7. Say Hi to the new slave nation

$20,000 says bush and your a millionare. Bite me you ass.

[yella_dawg]

9. Wow!

I never would have expected this.
No. Wait...

Wasn't I the one that waxed abusive about the concept of maturity in the software industry and the dangers of massive transfers of software development from a somewhat mature development environment into one so new it didn't even understand the idea of mature development process? Nah. I would never chortle, point, and giggle "I told you so."

Not me.

[ibid]

10. Fortune 50 companies have just started outsourcing high tech

"relationship" jobs may be the only jobs left in the US

meaning servants to the rich.