Industry Snapshot: The Contradictions of Outsourcing

Outsourcing is a strategic option that cannot be ignored in today’s world. The lower cost is compelling, but the trade-off is higher risk. To minimize that risk, put in place systems that will ensure high quality production. Here are some things to think about as you develop these systems:

• Prepare more thoroughly than you ever have within your own organization.
• Understand your own process first. What needs to be done—step by step?
• Communicate precisely. With distance, time, culture and language all working against you, you need to find a way to ensure that your message is understood.
• Create processes for communication and oversight.

However, putting this type of quality system in place has an interesting consequence that was recently pointed out by a client of ours, Dave Vogel of Intertech Engineering Associates, who is an expert on software quality. In an article on offshore software development, he and a colleague asserted that following strict quality practices, such as those described above, could actually enable an organization to achieve productivity improvements domestically that might exceed the cost benefit of going off shore. Their findings are an interesting reminder to all companies evaluating an outsourcing strategy. To learn more, read their entry in the Handbook of Business Strategy.