Outsourcing Spending on the Rise

There may be a bright Spot on the horizon for Outsourcing Vendors. It appears as though outsourcing spending may be on the rebound. According to The 2009 Black Book "State of the Outsourcing Industry" report released today. This information may be on the bittersweet side for unemployed US citizens, but it is good news for some of our HR vendors.

In the wake of the recent offshore scandal at Satyam and subsequent admissions of the founder, the outsourcing industry in India was scrutinized. Gartner published a report titled What the Satyam Debacle Means for the Indian IT Industry”. In that report, it was noted: “Drawing parallels between the Satyam and Enron scandals has become common in press reports.” Ultimately, transparency, in the form of frank discussions with their clients saved the industry.

According to the Black Book –“ India is still considered one of the top locations to procure outsourced workers”. The Black Book’s introduction has this to say about the reasons:

“Recent endorsements of South Africa, Nigeria, Pakistan, Kenya and Jamaica proved unreliable... Such criteria do not insure data safety or business continuity offshore….”

However, one sentence from that same introduction to the survey points out the potential flaw in their own conclusions: “ As the savings gap between India and other world locations widens to less than ten percent, the value proposition is tempered by potential threats.” With all the laid off engineers, (who are among the most commonly outsourced) available (for much less than before), why not hire within our own country?

If further support for this argument is needed, the Black Book goes on:

“The reality is terrorist attacks, typhoons, crime and corruption will disrupt your corporate operations via offshore outsourcers. Client organizations need to realize that outsourcing does not decrease risk unless there is proper oversight including the business-crippling hazards that are lurking among offshore delivery locations. Every company that outsources is fully exposed to the downstream risk unless they can establish the threats and hazards in the regional location where their operations are hosted. Weighing the risks against the savings and improvements offered by outsourcing faces corporate development and location specialists daunted by the task of determining the best choice for their organization. The necessity for an effective vulnerability management matrix has grown ever greater over the last few months.”

It seems to me that these same arguments, which are written in support of using India for outsourcing, can be used in favor of just hiring laid off US workers just as well.

Posted by Dawn Passaro

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