Offshore outsourcing may be on the decline

Has the wind been taken out of the sails for overseas outsourcing? Probably not. But there are plenty of cautionary tales about the changing terrain of getting things done cheaply abroad. The first issue is the value of the Dollar, which is definitely heading downward worldwide. As a result, the value of India's currency, the Rupee, has been going up, making the cost of outsourcing a more expensive item on your bottom line. In addition, employee turnover continues to rise and skilled labor shortages are beginning to surface offshore.

What does this mean to an American-based business looking for ways to cut IT costs? It means plenty, and it underscores the necessity to shop for the best value for everything you need. "We are seeing both offshored and outsourced initiatives coming back," said Scott Lever, a managing consultant in PA Consulting Group's IT Consulting practice. J.P. Morgan recently terminated a $5 billion deal for offshore work. And that may just be the beginning of a shift that might be emerging in the tech market. "There now is more likelihood than we have seen in 10 years of work being insourced," said Max Staines, the North American managing director for consulting firm, Compass. "It is still relatively rare to see whole, big outsourcing functions return home," said Graham Pascoe, an outsourcing expert with PwC in London. A 2008 trend just may be the return of smaller functions that perform better within arm's reach. "We are seeing a lot more maturity about outsourcing," said Pascoe. "That's what is driving this."

For more on the perils of offshore outsourcing:
- Check out this CIOUpdate Article