John Akerson's Thoughts

Business, technology and life

The Biggest Offshoring Myth

Eweek has an interesting article – “Outsourcing Myths have no Grounds, Says Deloitte CIO”

Deloitte’s CIO does his best to debunk various offshoring myths.  The first myth that he debunks is that “Offshoring… has not been successful.”  his response is:

“That’s absolutely not true,” Quinlan said. “We’re seeing significant upticking in global offshoring activity.” With the maturation of the offshoring market, there has been an accompanying decrease in the hype and media attention devoted to the process; but nonetheless offshore continues to grow in scale and complexity.

So – what does “success” mean?  If defining “success” means that there has been growth in terms of increased usage – then Offshoring has absolutely been successful. Mr. Quinlan doesn’t say that it produces results, improvements, increased efficiencies. He doesnt say that offshoring lowers costs for equivalent results, or increases results for a like cost…  If success is to be defined as using offshoring to accomplish something at a lower cost, then there’s not any evidence that offshoring has ever been a success.

Another myth that Deloitte’s CIO debunks is that: Titanic Offshoring Myth

“Outsourcing is Bad for the U.S. Economy”

“There are different points of view on this,” Quinlan conceded about the outsourcing debate’s traditional third rail. “Like many religious arguments, perhaps, the issue is really about what’s going to happen; and we see the trend of regional centers and global centers really continue.” By citing the opening of outsourcing centers in the U.S. as well as places such as India and China, Quinlan seemed to suggest that companies would avoid any political fallout from their outsourcing policies by distributing the work within the U.S. in addition to overseas.”

Quinlan presented a list of “lessons learned” about the steps needed to successfully outsource a company’s operations:

    *      Focus on gaining leadership support
    *      Create a blueprint
    *      Make off-shoring someone’s full-time responsibility
    *      Combat the change management challenge and communicate
    *      Create an employer-of-choice destination
    *      Don’t underestimate the complexities
    *      Learn from others
    *      Invest in process excellence
    *      Focus on quality
    *      Have fun

Interestingly – these things are missing from his list:

    *      Create a baseline of processes & services
    *      Ensure offshored/outsourced processes & services are measured
    *      Document and evaluate any improvements
    *      Document and evaulate any declines

Companies that care about things, measure them. Companies that don’t care, don’t measure. My point is that without an objective, base-lined measurement of offshoring in terms of successes and failures, there can be no way to determine if offshoring is ever really successful. If Mr. Quinlan says that any increase in offshoring equates to success – well, he has sort of defined success as almost ANYTHING.

Is that success? Really? Does that merit any leadership, management, executive or boardroom buy-in? Is it success that merits any reproduction? Is it anything beyond an organized drain on resources and talent?

 I’d submit that the biggest Offshoring Myth is the one that wasn’t debunked.

The biggest Offshoring Myth is that Offshoring “Works.”

  Considering Mr. Quinlan’s approach – perhaps that is a myth that other people will need to debunk.  

So – how can that be debunked? Is it a myth? I would be amazed if any company could

People measure things that are important...

People measure things that are important...

really debunk that. I don’t think it is a myth. I think Offshoring fails because offshored processes, deliverables and costs are almost never measured objectively. I think Offshoring fails because offshoring projects define success as “the expansion of offshoring” rather than as the “delivery of improved services, products, projects, or results for the same or less cost.”  I think offshoring fails because the jobs lost to offshoring result in incredible losses for our country, our future, our tax base, and for things that are much harder to quantify. 

Many current CIOs’ careers started with work on help-desks, as developers, engineers, architects, project managers, administrators, and ground-level technologists. Offshoring success is a myth because offshoring positions like the one’s that current CIOs they once filled will mean that the pipeline of future leadership will evaporate, replaced by a pipeline of leaders who define success without regard to results and deliverables.

Could you debunk the biggest Offshoring Myth? What do you think?

November 16th, 2009 Posted by | Business, Competitive Advantage, Continuous Improvement, Life, Technology | one comment