In the Absence of Outsourcing…

All of us might have come across the American glossary term ‘Outsourcing’ and a majority of them already know the benefits as well.
Nov. 2, 2015 - PRLog -- It is ostensibly believed to be one of the most cost effective strategies to be adopted by an organization, especially those in the technological sectors. It gained wide popularity during the time of recession and some Asian & European countries turned out to be the development hubs for many multinational companies based out of Europe and the American continent. On the way to balance short-term benefits and long-term efficacy, sometimes the reliance on outsourcing, gets questioned. It is well noted that during the time of recession (2008-2009) 57% of the IT organizations increased outsourcing, 34% restructured and it was only 9% that terminated the existing agreements. It is estimated that, by 2016 the number of jobs based in North America and Europe which could not be offshored, will go up from 3.4 million in 2014 to 3.5 million.

The Absence.

Have we ever thought of a fiscal without outsourcing? What would have been the IT industrial scenario, especially in the North America and Europe?There are many terms familiar to the IT industry that would have gained more popularity in the absence of outsourcing like, reshoring insourcing, offshoring, nearshoring, onshoring, captives and so on. But then, these utmost synonymic terms wouldn’t have been enough, to lay the foundation of the IT industrial structure. Many popular IT companies wouldn’t have been the way, you see them today. A large % might have turned bankrupt, much earlier.  IT industry is always interdependent and business occurs on a cross border mode. Hence without outsourcing;

1)      The world wouldn’t have been a global market, where talents around the globe could be accessed.

2)      As per the market, it would have discouraged the start-ups, as the cost involved would have been high, encouraging an Insourcing model, feasible only for the already established.

3)      Multi-focusing different in-house functions, might have led to diverge the essential focus required for the core business.

4)      Long term commitments and cost involved in developing the expertise would have been high

5)      Above all our minds would have been this broader.

Some popular doubts and replies about Outsourcing

1)      The top outsourced countries are getting wealthier and hence the outsourcing rates have gone up. Is it still beneficial to outsource to these countries from a European/American perspective?

Ans: Yes, it is true that these countries are getting wealthier. India tops the outsourcing destinations with an enviable figure of 7.1 billion in 2014. When the ratio between the quality delivered and cost effectiveness is taken into account, it is still far more feasible for the American & Europe markets.

2)      What is the guarantee that the source code is secure with the outsourced team?

Ans: In fact it is really a risk factor and sometimes need to be handled legally. So it is always safe to collaborate with an offshore organization which is legally bound with the respective country or at least have a continental presence. Eg: If an organization in US is outsourcing their IT requirements, just double check if they have a presence in the mainland, though the development occurs somewhere else.

3)      Does the cultural differences and the communication gap affects adversely?

Ans: Yes, this has been one of the major concerns of the IT firms who outsource. The perfect solution is to rely on an organization which carries out the project developments, the agile way. The client can continuously be involved, by whichthe communication gets smoother and the delivery perfect.

4)      Does the infrastructure of the outsourced organization matters?

Ans: Earlier it was not much of a big concern, but then gradually when the connectivity got deprived, it resulted in miscommunications and poor delivery. Ensuring the quality of the infrastructure beforehand through effective communication can solve the issue to a greater extent.

5)      Which is better inshoring or offshoring, when it comes to IT?

Ans: Both have pros and cons in their own way, but when an IT sector is considered in particular, the later seems to be relied upon especially when the quality and cost effectiveness is taken into account. The former requires building an entire team in-house which would be expensive and time consuming.

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