Outsourcing on its way home

There are plenty of good things to say about outsourcing and plenty of bad things, too. A new trend is beginning to emerge as some companies are losing faith in the value of sending work overseas. U.S. companies are feeling the impact of rising prices from India as the value of the Indian Rupee grows and the value of the U.S. Dollar declines.

"While it is less expensive than operating solely in the U.S., the cost of doing business in India has become more onerous because the demand for talent there is so high now that workers want more money and staff turnover has increased," says Mindy Blodgett, research analyst at Yankee Group. "It is also better [public relations] for a U.S. company to be able to say, 'We are outsourcing, but not offshoring.'" U.S. companies and their CIOs must find a balance between costs and delivery of what they need when they need it. It is a struggle that is likely to continue for quite a while, according to experts.

For example, security appliance maker WatchGuard decided to end its offshore contract in India after experiencing staff attrition and complaints from customers about service. "The attrition there was uncontrollable, and we also had issues with the quality of staff available to us. Add onto that customer complaints and language barriers and the situation becomes a time and resources drain," he said. What is an IT executive to do to make things better? Do careful research about what you will get with offshore contracts and be ready with a fall-back position if it does not work out. Remember, there is no point in saving money if you lose customers in the process.

For more on the problems with outsourcing:
- See this CIO-Insight Article