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| Current Replies for Exploding the outsourcing myth |
| Exploding the outsourcing myth (Guest (O)) Posted: 10:01:01 pm on 4/29/2007 Modified: Never |
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| Exploding the outsourcing myth 27 Apr 2007 | Management Issues News Europe's €4bn outsourcing industry is facing a mid-life crisis as organisations find that far from saving them money, IT and business processing outsourcing deals end up costing them far more than they would have done had the work been kept in-house. To make matters worse, research by Compass Management Consulting has also found that as many as two thirds of outsourcing contracts worth more than £20m start to fall apart before the end of their contract terms. And with a combination of high profile outsourcing deals being taken back in-house and dissatisfaction with the business impact of sourcing decisions – such as uncompetitive costs and the negative customer services impact of offshoring – it is hardly surprising that a new mood of mistrust is emerging in many outsourcing relationships. 'The costs to both parties of this level of failure are high and the legal and advisory costs can quickly escalate,' said Simon Scarrott, Head of Business Development and Marketing at Compass. 'However, the real cost impact arises as the issue becomes a business problem and constrains strategic freedom for the future as well as the negative effect on current operations.' The research, based on an analysis of 240 deals worth more than £20m, found that outsourcing providers were winning business by pricing contracts in such a way that they produced savings of up 18 per cent in the first year compared to the cost of doing the work in house. But costs quickly began to climb in subsequent years, reaching 36 per cent above comparable top quartile internal operations by year three. There can be sound strategic reasons for outsourcing but saving money over the long term is not one of them Compass also found that that most tier one outsourcing vendors are charging an average of 30 per cent – and sometimes as high as 45 per cent – above the comparable internal market rate in the final years of the contract. The reason for this is simple. Outsourcers have to be at least 20 per cent better than the in-house operation they replaced just to cover the costs of winning the business and break-even – and most are not. Additionally, outsourcers' requirements to generate profits plus allowances for risk and corporate overhead further uplift the cost of their service – typically by 20 per cent more than a well-performing in-house operation. 'With those figures, it is easy to see why the claim that all outsourcing will save money is a myth,' said Scarrott. 'Outsourcing providers are not that different from an in-house operation,' he added. 'Indeed, they often use the same people as the in-house operation after the deal is signed and outsourcers cannot perform alchemy on a business process and turn an operation into gold.' http://www.management-issues.com/2007/4/27/research/exploding-the-outsourcing-myth.asp |
| Re: Exploding the outsourcing myth (WorkEthicDropout) Posted: 8:43:51 am on 5/8/2007 Modified: Never |
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Good post on the fallacies of outsourcing. As a one-time entrepreneur once told me: you can't get rid of a cost of doing business by outsourcing. But with outsourcing, a business can lose control of its staff and organizational capabilities, force down the wages of workers below living wage levels, and increase its costs as the outsourcing contractor rapidly increases rates and fees. |
| The ultimate outsourcing (Lone Twister ) Posted: 1:41:25 pm on 5/8/2007 Modified: Never |
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| <H3>Super Bowl moving to foreign soil?</H3>
<H5>Posted: Sunday May 06, 2007 07:25AM ET</H5>
NFL commissioner Roger Goodell touched on the possibility of the Super Bowl being played outside the United States. "We have talked in-house about that," he said. "It is truly an international event. London, Toronto, and Mexico City have been discussed. Because of time-difference issues, those are the logical ones. Nothing could happen before 2012. It is truly an international event. Translation: If Hollywood can reduce its labor costs by shoooting overseas, well why not the NFL. All about shareholder value folks. And you thought it was about the fans.
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| So it goes. (Lone Twister ) Posted: 2:44:03 pm on 5/9/2007 Modified: Never |
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From the trenches http://www.salon.com/tech/feature/2007/05/09/outsourcing/index.html?source=email |
| Re: So it goes. (WorkEthicDropout) Posted: 8:20:08 am on 5/10/2007 Modified: Never |
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The salon.com article says loads about the hard realities and agonies of trying to run a small business, and one with principles at that. The author says his intent is to tell about America's small businesses in the global market and "the seeds of hope." There is much to contemplate here, but I searched in vain for the seeds of hope. |
| Re: So it goes. (Lone Twister ) Posted: 6:06:53 pm on 5/10/2007 Modified: Never |
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There is much to contemplate here, but I searched in vain for the seeds of hope. I think that the seeds of hope relate to this guy writing a book and cashing in on his sad experience big time. Once a salesman, always a salesman. Lots of luck to him..I'm thinking of writing a book called "How to profit from the coming market collapse". Any agents around? |
| Re: So it goes. (WorkEthicDropout) Posted: 9:14:58 pm on 5/10/2007 Modified: Never |
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You should do it. There is probably room for at least one more tome on "the coming collapse." http://search.barnesandnoble.com/booksearch/results.asp?WRD=coming+market+collapse&z=y&cds2Pid=9481 (Looks like the search link isn't coming through on the post. To try it, copy the entire link into the browser address bar.) |
| Hey, if the NFL can do it,, (Lone Twister ) Posted: 1:29:37 pm on 5/11/2007 Modified: Never |
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The future of News <H1>Local news reporting outsourced to India</H1>A news site hires two to cover Pasadena from afar. That helps a shoestring budget go further.
When is local journalism not really local? When it's about Pasadena and written by someone in India. James Macpherson, editor and publisher of the Pasadena Now website, hired two reporters last weekend to cover the Pasadena City Council. One lives in Mumbai and will be paid $12,000 a year. The other will work in Bangalore for $7,200. The council broadcasts its meetings on the Web. From nearly 9,000 miles away, the outsourced journalists plan to watch, then write their stories while their boss sleeps — India is 12.5 hours ahead of Pacific Standard Time. "A lot of the routine stuff we do can be done by really talented people in another time zone at much lower wages," said Macpherson, 51, who used to run a clothing business with manufacturing help from Vietnam and India. So, on the Indian version of Craigslist, he posted an ad that said in part, "We do not believe that geographic distance between California and India will present unsurmountable problems, and that working together with you will result in your development of a keen working knowledge of this city's affairs." Dozens replied. One of the two chosen had attended the UC Berkeley Graduate School of Journalism. Rob Gunnison, the director of school affairs there, is dismayed. "It just seems so fundamental to journalism to be there," Gunnison said. "I still can't quite believe it's not a hoax." It's not. Macpherson plans to run his first batch of outsourced stories Tuesday. The Pasadena native runs the website, which he said gets 45,000 visitors a month, on a shoestring budget from his condo with help from his wife, a data entry worker and two interns. Macpherson plans to hire half a dozen more Indian reporters. He'll add some local flavor by doing interviews, then e-mailing the recordings to India. "When you instant-message someone in Mumbai, it's like looking over her shoulder," he said. Larry Wilson, editor of the 30,000-circulation Pasadena Star-News newspaper, scoffed. "To pretend you can get the feel and the culture of a town as complicated and interesting as Pasadena by e-mailing and doing things over the Internet is nutty," he said. Ann Erdman, spokeswoman for the city of Pasadena, thinks the approach is a little odd. But "as long as they get their facts correct, I'm a happy camper," she said. <HR width="20%"> |
