Cultural Reasons For Offshoring

from the it-ain't-the-money? dept

While I’ve made it clear that I think both sides on the outsourcing debate have taken their arguments too far, I don’t deny that the decision comes down to a money question. The companies that are rapidly pushing towards offshoring are convinced that it will save them a ton of money. What many are finding out, of course, is that it’s much more costly, for a variety of reasons (from cultural differences to communication problems halfway around the world). However, now some analysts are saying, beyond the money issue there are other good reasons for offshoring. They even believe that offshoring will help rejuvenate the US software industry by allowing developers here to focus on innovative products, rather than mundane projects that can be outsourced. While I highly doubt that any company is taking that into account in coming up with their outsourcing plans, it is a reasonable response to those who continue to favor protectionist policies that will only make the economic situation worse for the American software industry by making us less competitive.

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Comments on “Cultural Reasons For Offshoring”

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slim says:

You've been socially engineered dude


Come on dude, wake up. You obviously didn’t read far enough into this article, but its contents should have set your antaenna rising.

At the very bottom, you’ll find the disclaimer that explains why these two quote-analysts-unquote, think offshore outsourcing is Oh-Such-A-Good-Idea:

George Gilbert and Rahul Sood are principals at Tech Strategy Partners, a consulting firm that advises software companies on developing and running offshore outsourcing programs.”

Mike, your commentary should have been about how respected “news” organizations such as are allowing corporate shills to pass off obvious PR as a some sort of serious commentary on a technical-social-issue-of-the-day, and how smart “corporate intelligence” types can spot this sort of garbage a mile away.

(End of Flame)

Randy Crawford says:

Fallacious and self-serving article.

Nothing in the argument of these two authors is based in fact.

First of all, the R&D industry, to which they refer, spends absolutely no resources on software maintenance. Therefore offshoring will not save them a penny.

Secondly, moving US work off-shore CANNOT possibly help the US software industry. Short and simple, that portion of the US industry simply goes away. How does losing market share possibly help a “US” industry except to reduce costs, making it less US and more global. Sure the industry may benefit, but the “US” part of the equation cannot. As such, as a global industry, why should any of us in the US care if it succeeds or fails? Since its gain is based on my loss, I would much rather the industry stay exactly as it is or even fail utterly than take my dollars (wages or spending) out of my pocket. If globalization is necessary for the future success of IT, then I say good riddance to IT. You, sir, can go to hell.

The deliberate misdirection of these authors is a continuing theme in discussions about offshoring. Any company advocating offshoring is, by definition, a global company and NOT American. For every dollar saved by other US industries, a dollar is lost to US high tech. It is unmistakably a zero sum game. Do the US really want to sell off our seed corn? What future will US business have if high tech is forever more, Not Invented Here?

Finally, SHAME on C/NET for allowing a pair of carpetbaggers to advertize their company’s services disguised as thoughtful informed content. If this is news, then is meaningless.

Mike (profile) says:

Re: Fallacious and self-serving article.

I’m confused as to how this is a zero sum game. If (and it’s a BIG if) a company really can save money by offshoring, which can be used elsewhere to improve innovation or to employ other workers and stay competitive, it’s anything but a zero sum game.

Also, if the industry “stays exactly as it is” then that could mean that we lose out competitively. Unfortunately, then, the industry can’t stay exactly as it is since no one will be the products that are much more expensive – meaning that the jobs would be lost anyway.

Rick Colosimo (user link) says:

Re: Fallacious and self-serving article.

Well, maybe you are confused by everyone’s general talk about “market share” being important. Share of the market is a proxy for what really matters: share of the profit. As an example, my guess is that Gucci or Louis Vuitton have a relatively tiny market share for handbags. However, if you’ve done your Xmas shopping, you can see that they probably have a disproportionate share of the profit.

Anytime you can take resources that are earning less money and apply them to higher return projects, that’s a good thing. It’s the same idea as using some of your savings account money earning 1% to pay down an 18% credit card bill or even just put it into a CD at 2%. Money and human resources are being spent on less profitable projects, and they could be directed to better projects, increasing the return on invested capital for an enterprise. To me, this is consistently Mike’s point.

Don’t you outsource things in your own life? Drycleaning? Mowing the lawn? Changing your oil? The analysis is no different. And although I’m fervently pro-American, I think that preventing US companies from saving money through outsourcing is (to echo Mike again) just setting them up for failure vis-a-vis foreign competitors. If those countries and their workers are willing to take less money and be happy with it, more power to them. The US has made plenty of money having the rest of the world outsource agriculture, manufacturing, and entertainment to the US at different times. We’re all trying to move up.

Anyways, enough ranting. I hope you can see where your arguments fail to figure out where those additional dollars saved are going to be used. Add that into your calculation, and maybe you’ll see things differently.


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