Outsourcing : a destination not a strategy

The word offshoring still causes some IT professionals to break out in a cold sweat and others to reach a low boil. Debates continue to rage on the merits and morality of getting technology work done by non-Americans for wages lower than those of their U.S. counterparts. But meanwhile, the practice of offshoring has not only become more prevalent, it has also begun to mature.

Call it Offshoring 2.0. The corporate view of this practice is evolving from the relatively simple idea of moving commodity work from the U.S. to (usually) India with the hope of reaping cost savings, to much more complex, multishore arrangements with more nuanced and strategic goals. These include achieving variable staffing capacity, freeing internal resources, finding the best talent, increasing speed to market and enabling follow-the-sun support.

In effect, offshoring has grown up. In its infancy, just a handful of adventurous companies sent highly codified work overseas. During its rebellious adolescence, it stirred a furious national debate, and the practice’s previously unrecognized management challenges and hidden costs came to light. Now it’s poised to enter a less tumultuous young-adulthood. At this stage, there is less mystery, and the benefits and pain points are better known. This enables companies with some experience to approach offshoring as part of a broader strategic sourcing strategy rather than in a tactical, one-off way.

“The ‘not built here’ mentality has really dissipated,” says Danny Siegel, director of data warehousing and business intelligence technologies at New York-based Pfizer Inc., which uses several outsourcing providers. “With budgets shrinking and requirements growing to improve quality and timeliness, there’s a lot of pressure on IT management to really rethink how they source for technology projects.”

It’s reached the point, Siegel says, “that I couldn’t care less if the people come from Chennai, Shanghai, Poland or the Ukraine — that’s irrelevant. As long as it’s a high-performance work team that gets the job done at a competitive price, great.”

Siegel considers it the job of the service provider — whether based in the U.S. or India — to provide him with the best and the brightest, whether onshore or offshore, “and that means global sourcing,” he says.