Offshoring Debate Continues Amid Backlash

Computerworld - LAS VEGAS -- Although the backlash from offshore outsourcing is doing little to slow the accelerating trend, it's increasingly noticeable at conferences attended by managers who make and execute offshoring decisions.
The focus on political and emotional issues associated with offshoring is turning portions of these conferences, such as the Outsourcing Strategies 2004 confab here last week, into a mix of pep talks and gripe sessions. Also, fewer users are willing to appear on conference panels to talk about offshore work, and some are canceling appearances. Deals, once touted by vendors, are often no longer publicly announced.
One IT manager who said he was wrestling with an outsourcing decision raised his hand at a conference session and asked, "How do I justify it to myself?"
The justification is complex. The manager, who asked not to be named, was advised by panelists to ensure that the economics are compelling. And he heard the frequently expressed view that job loss is a fact of life that requires an adaptable workforce. According to that line of thinking, the U.S. sheds thousands of jobs annually for a variety of reasons unrelated to offshore work, such as productivity improvements gained from technology. It's an article of faith at offshore outsourcing conferences that the U.S. economy is dynamic and that innovation will generate jobs.
What's not in dispute is corporate interest in offshoring. The political controversy "is not changing or slowing the impact to our business," said Michel Janssen, a consultant at The Everest Group, a Chicago-based firm that advises buyers of outsourcing services. "The trend is just happening faster and faster."
Strong Emotions
But that doesn't make it easier. "It is emotional for lots of people," said David Elmo, president and chief operating officer of Corbus LLC. "Backlash connotes emotion."
Dayton, Ohio-based Corbus is an outsourcer that does development work in India. But the company says it has an approach to mitigate some of the backlash while delivering savings through a process it calls "microsourcing." The process focuses on select IT functions, particularly where there are backlogs, and not entire departments.
Elmo argues that companies can outsource too much and leave themselves vulnerable to changes in business processes. "I think we have to take responsibility for what's happening, and I think we have to think it through," he said.
Stamford, Conn.-based Gartner Inc. earlier this month said the trend is in fact toward selective sourcing of IT and business processes, characterized by smaller agreements and fewer unwieldy megadeals.

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