Offshoring Success Stories - An Oxymoron?

Just read this article at TechDirt which tells how an Indian technology firm is now offshoring to Mexico.

I've talked to a number of friends about offshoring and am still waiting to hear a success story.

I'm willing to bet that the majority of I.T. offshoring decisions are made by CFOs not CIOs. While the $$$ savings are extremely appealing, the move is fraught with hidden costs. And it's not one that's easily reversible. Once you've dumped your entire I.T. department, you're now relying entirely on a vendor to deliver.

And what is your recourse if they don't? Sue the vendor? Cancel the contract? Hire another vendor? Rebuild your I.T. department from the ground up?

And in the case mentioned in the article, how do you defend against your vendor sub-contacting all the work out?

Answer: You don't.

For me, outsourcing strategic work on a large scale is a risk not worth taking - unless of course, I.T. is not seen as strategic at your company.

Linda Dillman, CIO at WalMart, (arguably one of the best cost control companies in the world) once said that she would not consider outsourcing. Their applications are simply too strategic and their monitoring and measurement systems too rigorous to be considered for such a strategy.

I tend to agree.

In a past life, while working as a Director of Marketing, I decided to move our catalog film production offshore. A Singapore based company (with a local rep) said they would create film for half the cost of my local supplier.

The challenges in working halfway around the world? Language, timing, errors and error correction. Every page had to be done twice. In the end, we never saved any money and we spent more time managing the process.

After all the hassle of getting the film produced correctly, an active volcano caused a disruption in air traffic from Singapore and we almost missed a printing deadline as a result! (Okay, I can't blame the vendor for that one.)

The following year, we were back with our former supplier.

After that experience, I can't imagine having the courage to let staff go and jump into bed with an offshore vendor.

So it has me wondering; Is "Offshoring Success" an oxymoron?