Outsourcing does not save money! - Not Quite!

CIO magazine has just published the results of their outsourcing survey in a provocatively titled article Outsourcing Does Not Save Money.

Not quite!

If you look through the findings in detail, you find a lot of seemingly contradictory findings - Many outsourcing services buyers, especially small and medium sized buyers are not at all happy with outsourcing while very large customers are.

Both outsourcing and insourcing are on the rise with happy customers outsourcing more and unhappy ones insourcing what they outsourced. This is somewhat logical since very large projects that are offshored amortize the larger costs of travel, communication, missteps etc over a larger contract and so the cost savings are not affected that much. If it is a smaller contract, any deviation from the projected cost is going to affect the total cost that much.

Quality is still a big concern with a lot of buyers, especially with offshored efforts. And surprisingly, the onus of mismanagement seems to be falling on the project management side of the buyers!

Interesting findings. It’s all the more reason that you should look beyond cost savings and see what other benefits outsourcing provides you, whether you are a buyer or a seller of outsourcing services.

A project is complete when it starts working for you, rather than you working for it. - Scott Allen