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The cost of outsourcing

 

I will provide a more indepth analysis later on what my company and I learn about outsourcing.  Right now, I will just tell you at a high level of how we feel.  

 

Big corporations in the US have been outsourcing their jobs to India and China for several years in the name of cost savings. Does it truly save more money by taking so many skilled U.S. jobs offshore? More and more companies are now realizing the hidden cost of offshore outsourcing. Our company is learning it the hard way. We are losing skilled workers and laying them off and outsourcing the work to India or China. Our initial thought was that when we are sleeping, they will be working. So the work never stops. In reality, the work stops right after we head home from work, as the offshore workers have little knowledge of our products and our business to understand if what they are programming is accurate. So when we wake up, we are left with where we left off but with more questions. The model works only when there is no question if we get someone who understands the business. In reality, we don't get offshore people who understand our business (even when they learn after being with us for a year, they get moved to another area and you will have to deal with someone totally new, with little experience).  A lot of time, we get bodies like assembly workers who know little of our business and our systems.  So when there are issues, we will lose at least two days getting back and forth each time due to the time difference.  What’s worse, we actually end up fixing more problems after the products are rolled out.  Lately, because of the mistakes made by the offshore workers, they are now being asked to camp inside their office and work overnight to make up the schedule.  Wouldn’t that create more issues down the road when they are now deprived of sleep?


Some companies have now given up on outsourcing. Our company is now seriously considering forgoing the offshore model. You will be shocked at the hidden cost of outsourcing. Don't be shortsighted. Cheap labor cost doesn't always reduce your total cost. It may actually cost you much more in the end.

 

Written by Elisa English

On 2/7/12

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