Outsourcing continues to be a huge and multi-dimensional industry all by itself. In India alone, over 2.8M people work in outsourcing providing services to the US and western countries, and over 9M additional people are employed as a direct result of the outsourcing industry. Given the size and scale, it’s often hard to see the whole outsourcing elephant when it’s up close—so here’s some help to dispel some of the myths of outsourcing.
- Outsource = Offshore
Not always! Proximity of the work outsourced to the client can be across the street or in a neighboring state. While the economic drivers of outsourcing can push the work to low-cost locations such as India or the Philippines, sometimes it makes more sense to keep the work in the same time zone for reasons that are unique to your business. There might be companies right across your street, or in the next state, that can do the job you want to be done.
- It always costs less
Not always! There are many reasons for outsourcing and sometimes buyers really need access to talent or scale that they cannot find in their home location. If you need a project completed with true scale and complexity with 1000 programmers with a certain mix of skill sets, you often might choose to pay more to ensure your project is completed on time and in budget to support the business. Alternatively, get it cheaper and hazard the certainty of completion.
- It is always low-end
A wise CFO once shared that he initially outsourced for the lower cost but stayed for the quality. Some of the best underwriter teams in the world are in Bangalore, not Cincinnati. Just like the above-mentioned point, what you outsource it does not need to always be low-end work, although the bulk of what you might want to farm out when you start outsourcing is exactly that. If the experience is a happy one, most companies entrust the vendor with more complex work in time.
- You will have security issues
Any time you outsource, you run the risk of compromising your secrets or data. If it’s outside your building (or inside if the really bad guys are attacking you through the internet), you run the risk of compromise. IT and BPO outsourcing companies have built some of the finest security protocols in the world to accommodate handling large numbers of clients (and their data) in a single location. Today your data is probably more secure at the outsourcing provider’s location than it is in your own facilities.
- We will contribute to joblessness
True, there is a loss of jobs (in your company) as work moves out of your firm and into another. In the western world, IT workers have at the tactical level been hit the hardest with over 2.8m jobs having been moved to India that used to be performed in the US and other high cost locations. Yet IT workers in the US always enjoy a statistically lower unemployment rate than the rest of the work force.
- The economy will collapse
When U.S.-based companies outsource to India or China or Poland, the average US citizen gets goods and services at a lower cost, leading to more prosperity—and the savings are spent on other areas, opening up new jobs. The economy actually benefits. Unfortunately, the new jobs created may not be of use to those who lost their jobs, and while that is indeed painful, reskilling is an option that optimists are choosing. This is fallout of the global economy and people in developing/poor countries face exactly the same condition.
- Outsourcing is not for startups
While large companies have been instrumental in making outsourcing a routine activity, startups have not exactly been shy about wooing “outside” partners. In fact, size does not matter here. Often, startups know exactly what they want from the vendor because they are just beginning a Greenfield project. They end up saving huge amounts of time before launching their project.
- Product development cannot be outsourced
It is absolutely untrue that products cannot be developed outside of your own company. You may have the idea, but many times the entire design and development is undertaken by a team sitting miles away. Most often, intellectual property rights remain with you, although we’ve seen companies sharing IPR with their development partner, a more evolved form of outsourcing. In fact, there are companies that specialize in product development work—ranging from software products for a variety of industries to healthcare devices, to software for entertainment in airlines to the latest range of cancer drugs.
- There are too many cultural barriers
In the global economy, the only corporate culture is to build your company, take it forward and keep it there. With the internet as teacher, students and workers from every continent are on the same page where information is concerned. Yes, there will always be cultural differences, but these need not transform into barriers. Hire a cultural expert if you’re wary to start with and I guarantee you’ll enjoy the diversity.
- I will/won’t sleep at night
This is a myth that works both ways. Some fear they won’t sleep, others dream they will. Neither is entirely true. You will work out a rhythm to manage your outsourced work and more often than not the outsourcing provider will be the one working late into the night to communicate with you the client. Soon you will learn to make your decisions early in the day US time to allow your offshore team to get the work done while you sleep.
As humans, we love myths and yet are thrilled to see them busted. Let us know of any myth that you harbor about outsourcing and we will be happy to bust it for you! I look forward to your comments below or email me at [email protected].