Outsourcing Doesn't Always Save Money

Overhype

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.