I’ve started reading through the textbook for my Multinational Corporate Environment Book and the first Point/Counterpoint is on the subject of whether offshoring is good strategy.
The “yes” side of the argument starts off with the point that if it succeeds in reducing costs, it’s good. They make the statement that it isn’t much different than other means of employment changes, such as technology improvements or recessions. Much of the remainder of the argument in favor of offshoring revolves around this central theme. They wrap up by concluding that these are less skilled jobs and that their departure leads to an high-value jobs here at home.
On the “no” side, they start by stating that cost of goods never seem to go down, even when the cost of production does. They make the argument that the displaced workers find it hard to recover from the even, and even if their is higher value jobs, they likely won’t go to the people being displaced by outsourcing. Probably the only point that I felt was beneficial in either argument was the following on the no side:
Outsourcing merely diverts companies’ attention from taking steps to find innovative means of more efficient production
Personally, I think that both sides of these arguments are off base. I am a firm believer in the The Three Rules:
- Better Before Cheaper
- Revenue Before Costs
- There are no other rules
If your outsourcing strategy complements the Three Rules, then great. For much of what I have seen over the course of my career, these types of moves have always been centered around cost savings, not anything that would add value to the product or service we are offering. We look for cheap labor, but don’t realize what we end up missing; a sense of ownership.
One of the things that I love about working with the teams here in Austin are the sense of ownership that everybody feels for the products that we ship and support. When something doesn’t work the way it is supposed to, everybody is on it until it is solved. There is no kicking it over the wall because the developer is in Ireland or the QA resource is in India. People are here and hold each other accountable. They can walk up and discuss problems immediately. There is no time zone difference to deal with.
Personally, I’m not against offshoring. I think that it has a place, as long as its sole reason is not cost savings. That only gets you cheap.