SOA reduces outsourcing: wishful thinking?

Another voice is heard in the SOA-reduces-outsourcing debate. In a ComputerWorld Q&A, LogicLibrary CEO Greg Coticchia says the potential cost savings from reuse -- the cornerstone of SOA -- may help enterprises avoid application-development outsourcing.      

"Despite the hourly cost-rate differential between a U.S.-based [developer] and an offshore developer, the ability to use and reuse software artifacts allows the overall cost to be very competitive. We are seeing people saying, 'This is another way we can compete effectively.' They are showing that 60% of a project has reusable assets contained in-house. They can locate and use those assets over and over again, [and] will be more effective even if the cost per developer is higher internally than outsourcing."

A few months back, I quoted Paul O'Connor, who also pointed out that SOA may mean less outsourcing. Services can now be developed, published, and consumed by entities anywhere across the globe, and the economies gained through leveraging standardized, reusable, and loosely coupled services will level the playing field between North American, European IT shops and those in emerging regions such as India and China. Why contract overseas for a huge new coding project when the necessary business functions you seek may already be available as published services (which may or may not have originated overseas)?

In response to this initial post, Loek Bakker pointed out, however, that the cost-saving gains from SOA-based development will only barely make a dent in the global competition to provide IT services. Plus, "the emerging regions will always be one step ahead, as they still have lower labor cost. They can also provide and deliver services that are highly reusable, loosely coupled etc. What makes us think that only Western countries can do this trick?"

I am inclined to believe that SOA can, and will, pare down many individual project costs to the point where less of it needs to be shipped out, en masse, to an outsourcer. But the volume of projects will steadily increase. At the same time, enterprises will increasingly access components and services from points throughout the globe, as well as their own internal functions. The net effect of SOA on outsourcing is that it will probably be a wash.