A Third View of Offshoring

Bill Hackos
Vice President, Comtech Services, Inc.
www.comtech-serv.com

An article on the Zdnet Web site also relates to the costs of IT offshoring, The hidden Costs of IT Outsourcing, by Olga Kharif, provided to Zdnet by Business Week, October 29, 2003, http://techupdate.zdnet.com/techupdate/stories/main/Hidden_Costs_of_IT_Outsourcing.html. In this article Olga Kharif uses a number of case studies to demonstrate that the costs involved with offshoring are about the same as work done in the United States, if you consider the quality of work.

Kharif illustrates examples of software development projects done offshore that were so badly done that local outsourcing companies have been hired to fix the software; it typically contains far more bugs than software developed at home. In fact, some local companies are making good profits fixing work from India and China. Examples of disasters from offshore outsourcing are hard to find because companies don’t like to air their mistakes. Kharif calls these disasters “dirty little secrets.”

Even if the quality of the work were comparable, there are many other costs associated with offshoring. Because of the time differences between the United States and India or China, companies that have outsourced find lots of late night work is generated in trying to communicate with the outsourcers, not to mention communication problems due to language and cultural differences.

A whole new industry is developing, designed to facilitate offshoring, from consulting companies who help find good offshore vendors to firms that help facilitate communication, to software venders who fix bad software developed offshore. I wonder if any technical writing vendors are making money fixing bad documentation done offshore?

Kharif ends with a thought about the real reason for outsourcing. Large American companies, pressured by low-cost competitors and their own stockholders, can get instantaneous savings by moving development and writing services offshore. The real costs of outsourcing will show up a year or years from now. But in the meantime, executives will show a profit this quarter.

 

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