Forget the Surveys: Outsourcing Will Grow

August 11, 2006

I was glad to read this week on that I am not the only IT professional shaking my head at the latest round of studies predicting that outsourcing is on the decline. In the article “Outsourcing: What CIOs Need to Know,” Laton McCartney interviews Scott Holland, senior business advisor for The Hackett Group, who like me, every day sees strong growth in the BPO market.

Holland explains that outsourcing growth today is focused around commodity-based services. It seems many businesses must have heeded Gartner’s advice and focused on their core competencies in house and outsourced what are non-core functions.
And while Holland does forget to mention the rapid and tremendous growth of key Asian offshore markets (those outside of India and China), I especially agree with his final words of advice. At the end of the article, he discusses how businesses often forget the continuing need for service and quality in outsourcing solutions, which to me underscores the critical point that functions requiring heavy client interaction do not belong offshore. Here’s that final advice from Holland, but be sure and read the whole article. It’s worth linking to.

“…I think there’s still too much focus on cost reduction. People sometimes don’t take into account the impact on service or quality when outsourcing. If you’re sourcing something that’s a commodity, that’s not a concern. But when you start looking at “high-touch” models such as customer service, you need to ask: Am I going to impact my quality of service or my customer intimacy as the result of outsourcing? You can’t look at outsourcing as a pure cost play. Outsourcing should be viewed, yes, from a cost point of view, but also from a scalability point of view. You’ve got to look at this as something other than finding the cheapest provider.”