Rebuttal to InformationWeek VP Rob Preston’s “SORRY, BUT OUTSOURCING ISN’T EVIL”

Rob Preston, VP and Editor in Chief of InformationWeek, recently posted the commentary “Sorry, But Outsourcing Isn’t Evil”.  To read the full article  CLICK HERE.

I have objections to his commentary, some based on the content and some based on the style.  First, my style objections.  Mr. Preston said that “Outsourcing providers and customers are portrayed as miscreants and dolts.” He was presumably objecting to the use of name calling on both sides of this issue.  So, I found it disconcerting when he referred to the IT (anti-outsourcing) people as “drones”. 

Second, Mr. Preston’s main argument in favor of outsourcing is that it’s growing in popularity. I can think of a lot of things that are growing in popularity that are just bad ideas.  I’m sure that you can, too.

And lastly, still on the style of his article, he polarizes the discussion by implying that those against outsourcing must be union members or sympathizers when he says that outsourcing is “… so widely derided by the rank and file, especially when the work that’s outsourced is moved offshore.”

I think that the style and language of his commentary don’t do this subject justice.  So, let’s talk about the content.  Mr. Preston asks, “If so many leaders are so leery of outsourcing, why do so many organizations continue to do it?” I’ll tell you exactly why.  Outsourcing, and most particularly offshoring, is popular because company leaders are forced to prioritize short term profits ahead of long term goals, in this economy.

One must be careful not to confuse outsourcing with offshoring. Outsourcing is simply the use of an external provider, to replace functions that were previously provided by your own staff.  There’s nothing wrong with that, particularly in areas of esoteric knowledge, where the technology is changing faster than your own small staff can keep up with.  We outsource our IT functions, and we’ve been much more successful doing so.

What I really object to is the offshoring of services that can be provided domestically.  When an Indian developer offers programming for $20/hour, that costs $50/hour in North America, it’s only because they are cutting corners.  They are not providing their staff with healthcare, or they are not protecting your intellectual property and there’s no recourse against them if it’s misused, or they are not spending as much time testing their products, etc.

Poor communications makes for an unreliable product.  When your developer is 9 time zones away, is not in direct contact with your end-users, has a challenged understanding of North American business processes, and was not involved in the creation of the programming specification, it’s a recipe for, if not disaster, then customer dissatisfaction.  Much of the cost benefit actually disappears, but short-sighted business leaders are too busy counting their supposed profits to notice.

Those same business leaders wonder why there’s a North American recession.

Doug Deane is President of DSD Business Systems, a national provider of on-demand (cloud) and on-premises ERP and CRM software, specializing in wholesale distribution, manufacturing, warehouse management, inventory, business intelligence and eCommerce software.  DSD offers Sage 100 (formerly MAS 90), Sage 300 (formerly Accpac), Sage 500 (formerly MAS 500), NetSuite, Sage FAS, Sage HRMS (formerly Abra), Sage CRM, Sage SalesLogix, Extended Solutions, and Custom Programming.

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