Outsourcing Doesn't Always Save Money

from the well,-duh... dept

We’ve talked about this before, but I think all this focus on “offshoring” is way overhyped. First, I think that the companies that are rushing to do it are doing an exceptionally bad job thinking through what they’re doing, and aren’t actually saving much money. In many cases, they’re simply shuffling problems around in the mistaken belief that putting problems half way around the world will somehow solve them (instead of make things worse). While the numbers game suggests that you save money, the reality is proving otherwise. A growing number of companies that rushed to move jobs offshore are realizing that it’s not saving them the money they expected. The cost of managing operations halfway around the world is extremely costly (in some cases 4.5 times the actual cost of labor – nearly wiping out the salaries that are 1/5 of what they are in the US). It also tends to slow operations down, since there’s a limited time period of “overlap” where decisions that require input from both areas can be made. Meanwhile, I don’t think all the “anti-offshoring” protesters are doing any good either. They’re simply pushing for protectionist policies that aren’t necessary and will actively do damage to our ability to compete. They should just let a few more companies realize their own mistakes, let the economy pick up a bit more, and suddenly the threat of all jobs heading to Asia won’t seem so likely.

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Comments on “Outsourcing Doesn't Always Save Money”

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Anonymous Coward says:

Follow the Sun

The cool thing about outsourcing techsupport is that it’s blatently obvious to any american (maybe less so Aussies and Brits).

So, when Dell out sourced their tech support, I immediately noticed the differnece (and quality) of support. Now, when I have a room full of machines that need a support call, I call when India is on-line, I insist on on-site support for every unit, even if the unit only needs a BIOS upgrade or something similar (uh, that’s right… the integrated NIC doesn’t work, I need an entire motherboard replacment).

The average american worker isn’t union inclinded, but when it comes to fscking managment when they disrespect their labor pool, we’ve got it all over anyone else in the world.

Follow the Son says:

Re: Follow the Sun

Hmmm. I am sure Dell is tracking cost of ownership of each customer and you are high on their list. I think there is still a quality of service issue but I have noticed the new quality is better than before. Most of the CS reps I speak in India are actually looking to help you. When I speak to a rep in the US, I usual end up feeling like they are doing me a favor.

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