Offshore Outsourcing Isn't Inevitable

The best companies are the ones that think globally, but act locally.

July 16, 2004

2 Min Read
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Boston Consulting Group, in a bullish report on industrial globalization, exhorts U.S. companies to move their R&D, production and other operations to "low-cost countries" without delay. "Successful companies ask themselves, 'What must I keep at home?' rather than 'What can I shift to LCCs?,'" the report states. "Their question is not 'Why outsource to LCCs?' but 'Why not?'"

Hold on a second. Although the crux of the Boston Consulting analysis is spot on--most U.S. companies must globalize to lower their costs, get direct access to burgeoning markets and create more operational flexibility and customization--shipping jobs offshore shouldn't be the default decision. Companies owe it to their employees and stockholders to consider when "close is better"--not because offshoring is unfair or unpatriotic, but because it's not always the best long-term option.

Boston Consulting does recognize that certain processes and services don't lend themselves to offshore sourcing, including projects that require nimble decision making and regular interaction with principals at the home base; processes for which intellectual property protection are critical; and processes heavily dependent on logistics.

Consider how many IT-related endeavors fall within those boundaries. Application-development projects sourced abroad, for instance, often require daily collaboration across multiple time zones and considerable knowledge transfer. Even "simple" app-dev outsourcing engagements fail because U.S. managers and their offshore programmers aren't on the same page. As the outsourced processes and projects get more complex, so does the task of managing them.

But even these substantial barriers to globalization will fall as management techniques and supply chains get more sophisticated and companies physically relocate worldwide. So are U.S. IT and other pros doomed?Hardly. But the degree to which service jobs move offshore depends largely on you--the professional under the microscope--and on the companies that employ you. You obviously can't compete with an LCCer on cost. But you can compete on technical skills, general business acuity, and specific company and industry knowledge. If you're just going through the motions, you have little chance of success. An intangible quality U.S. executives tell Boston Consulting they like in offshore workers is their hunger: They're thrilled to have the work and will do what it takes to advance. Are you that hungry?

The onus isn't just on you. U.S. employers must give their people a fighting chance to excel. The likes of FedEx, General Electric and IBM are investing heavily in their domestic work forces as they expand worldwide. The best companies are thinking globally but acting locally. It's not in their best interests to just transplant their work forces to the cheapest bidder.

Rob Preston is editor in chief of Network Computing. Write to him at [email protected].

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