Saying 'no' to offshoring

Companies need to be even more selective in choosing what to outsource and what to keep in-house.

Fran Foo, ZDNet Australia
commentary A mate who's been a salesman all his life had his first taste of outsourcing recently.

With visions of the best database and the latest customer relationship management tools, he couldn't wait for his first day at work.

"All that information at the tip of my fingers ... I will kick ***," he thought to himself, smirking like Peter Costello as he walked through the plush office lobby.

It didn't take too long for his visions of high-tech nirvana to be shattered, though -- he was told it would take a good 10 days to set up a new e-mail account.

He baulked at the prospect of waiting 90 hours for something so simple yet crucial but had no choice. The most obvious question on his mind was why something so important to one's business would take that long.

According to his boss, that's the way things worked, since "the power lies with our IT outsourcer". And although Company A has an in-house IT team, it couldn't do much.

The help desk was only to be contacted "for serious emergencies" because those calls cost a 'bomb'. That can't be right, he thought to himself. Well, not a good idea to question your employer on Day 1.

He couldn't understand why such a successful and well-known entity like Company A would create unnecessary hurdles for its employees. After I explained how the outsourcing and offshoring models worked, it finally dawned upon him that this wasn't a technology or outsourcing problem per se. Rather, there was a breakdown between the human resources department and IT.

HR should know very well how long it takes to open an e-mail account and therefore make the necessary arrangements -- in an ideal world -- immediately after the offer letter is signed.

While the problem lay in the process, it was obvious there was little flexibility due to the nature of outsourced IT.

This brings to mind an interview ZDNet Australia's Steven Deare conducted with the Nine Network CIO Keith Roscarel, who has firm views that offshoring isn't that great an idea.

With 130 Windows Server 2003-based servers and a mix of 1,600 desktops and notebooks, Roscarel and his team of 40 manage sites in Sydney, Melbourne, Brisbane, Los Angeles and London for the country's leading commercial TV network.

He's reviewed offshoring on numerous occasions but was never really attracted to its so-called benefits. Cost can be contained in different ways ... Roscarel believes substantial savings can be gained if an in-house IT team is managed properly.

Some enterprise users swear by outsourcing and offshoring while some rubbish both models. Then you have the middle men, like services giant EDS, IBM Global Services, Satyam, Infosys, Tata and Wipro, which reap the rewards of such options.

At a conference in Sydney last month, EDS Australia managing director Chris Mitchell warned the nation's leading bankers a failure to offshore would be detrimental to their competitive edge.

"We're moving to a world where knowledge work can be delivered from anywhere. There's a whole range of capabilities that can be done from anywhere in the world.

"It's not about offshoring anymore. It's about the best location for the best work," Mitchell said.

Mitchell is right but only to a certain degree. The best location should be dependent upon the type of work in question; there shouldn't be a blanket offshoring or outsourcing rule which companies blindly agree to all because the cost-savings look enticing on paper.

Companies need to be even more selective in choosing what to outsource and what to keep in-house. Well, let's put it this way, if 10 days is an acceptable turnaround time to respond to a customer, then outsourcing could be for you.

Ten days for a new e-mail account is in Company A's SLA, by the way. Is this the norm in your business? Have you any good or bad outsourcing/offshoring experiences to share? E-mail us at or talkback below.

Fran Foo is ZDNet Australia managing editor.