When Will Outsourcing Stop?

Tina Hedlund
Senior Consultant, Comtech Services, Inc.
www.comtech-serv.com

If a company doesn’t earn enough to make a profit, it either has to increase revenues or cut expenses. In these days of economic downturns and disintegrating markets, many companies have decided to cut expenses to stay afloat and survive. A very popular way to cut expenses has been to outsource IT and technical writing functions to areas of the world that charge much less for the same services.

Dell Computer has been a leader offshore outsourcing, having outsourced its customer support to India for the last three years. Recently Dell announced that it was pulling customer support back to the US for its Optiplex PCs and Latitude notebooks because of customer complaints1. The announcement is one of the first public signs that outsourcing may not be working as well as many companies first thought.

Research organizations are beginning to release data that shows that, in addition to affecting quality, outsourcing may not save companies the 40% or more that they anticipated. Gartner’s research shows that 18% of companies haven’t saved money with outsourcing and more than 9% actually spent more money2.

Why don’t companies save money in economies that charge much less for the same services? Comtech’s experience in the technical writing industry has indicated that many companies do not have the managed and repeatable processes necessary for managing an offshore writing effort.

Many organizations have a rather chaotic, weakly managed product-development lifecycle without functional specifications, quality checks, or project management that includes tracking hours against milestones and estimates to ensure on-time delivery. To succeed amid such chaos, many writing groups use perseverance and lots of overtime to complete projects.

Now move the writers in this chaotic development environment halfway around the world where the writers work while the developers are sleeping. Cultural differences make it difficult to communicate even when you are able to talk. The writers are not native English speakers so the content doesn’t flow as naturally and may contain grammar errors. Editing was never considered necessary in the old days, so no quality checks are in place to catch and fix mistakes. By the time the information products are completed, they may be rewritten by a native English speaker or sent out as-is in anticipation of the inevitable backlash from customers.

None of this, by the way, is the fault of the writers in India, or any other country where outsourcing is thriving. The problems are caused by a chaotic process. The irony is that a manager who implements mature processes in her department makes her department an attractive candidate for outsourcing.

Despite the fact that some organizations are not seeing cost reductions through outsourcing, the outsourcing trend will not end anytime soon. A 40% or greater cost reduction is still a very attractive enticement. Successful outsourcing, on the other hand, will still depend on a managed and repeatable process.

1 “Offshore ‘Hiccups In An Irreversible Trend’” by Paul McDougall, InformationWeek;http://www.informationweek.com/story/showArticle.jhtml?articleID=16400977

2 ibid