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The Naked CIO: Offshore - or off their trolley?
Resist the outsourcing orthodoxy…

By Naked CIO

Published: Monday 10 March 2008

Pressure is building up behind a move to managed services at the Naked CIO's company. Is our embattled hero right to take a stand on the issue or should he meekly submit?

The outsourcing and offshoring debate rages on. It's like affiliation to a political party. Plenty of passion but not much evidence to back up the conviction.

I've found myself caught up in the middle of that debate at work. I can't call myself a neutral. My own affiliation has long been clear to me.

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I am investigating an interesting follow-the-sun development method. It's the spark that has rekindled the offshore argument in my organisation.

The idea of 24-hour programming efforts to improve delivery speed has plunged me back into that familiar debate of strong opinions and scanty evidence.

Certainly, I know of one company that successfully develops using this method, which technically could increase development speed by up to 300 per cent.

Yet I believe passionately that outsourcing and offshoring can neither save money nor improve efficiency. I freely admit I have little evidence to support that view and persuade those around me.

I just believe it to be true and view a move towards any type of managed service to be against the best interests of my company.

Do we outsource and offshore because our friends are doing it - does it create a sense of comfort that we now form part of a collective orthodoxy?

But what is it about managed services and offshoring that make me so opinionated? Is it that I relinquish control, or perhaps that my experience in the logistics, culture and effectiveness of offshore teams has been less than ideal?

Perhaps my experiences are unusual and I should not be so categorical. In other areas I have persisted despite poor experiences so why do I have so little confidence in offshoring?

Regardless of your stance on the issue, if you are like any of the IT colleagues I spend time with there is no doubt that you have one, there are some things you need to consider.

1. Never outsource a problem - it does little to solve efficiency.
2. Understand the logistical challenges of working in different time zones, with communications and the overhead needed to manage the project.
3. Make sure you understand the cost properly - there are always elements of residual cost left over and additional cost related to oversight, standards, SLAs and management that are often omitted in the cost-benefit analysis.
4. Always look at the objective of the department not of the outsourcing initiative - can the business goals be met?
5. Beware of innovation and succession issues - managed services often have a direct impact on innovation and talent development.
6. Beware of organisational growth - organisations often look at managed services as cost containment, which means they will continue to try and reduce overall costs related to this initiative. Growth and cost reduction of key resources is a recipe for disaster.

I will try to be more open to the general idea of outsourcing aspects of my operation but I still have a genuine phobia about it for many reasons.

I do hope we - all of us - can identify key standards and factors for success in this heated debate. I also hope the arguments from those in favour or against can be more focused on concrete benefits and challenges - and I include myself in that criticism.