On the surface, it never makes sense to U.S. workers why more jobs are migrating overseas and elsewhere. But perhaps if we consider giving this outsourcing idea some time to pan out, some amazing benefits could emerge — particularly for small businesses.
While there are some truly innovative and bleeding-edge small and medium-sized businesses (SMBs) that were early adopters of technology, for the most part, they have been few and far between. The little guys don’t carry the same amount of bling as their bigger counterparts and, therefore, have limited resources to invest in the tools that will help them grow their businesses. That is why a rising number of SMBs are warming up to the idea of outsourcing.
Sure, we’ve all heard about India’s role in outsourcing, and I’m pretty sure most of us have participated in some type of “outsourcing sucks” banter with family, friends and/or coworkers. On the surface, it never makes sense to U.S. workers why more jobs are migrating overseas and elsewhere. But perhaps if we consider giving this outsourcing idea some time to pan out, some amazing benefits may even emerge and people may see that jobs thought to be lost will eventually be more jobs gained. Less time and money devoted to systems maintenance means more time is freed up to encourage thoughts about growth opportunities.
Gartner estimates that about 90 percent of all new businesses created in the U.S. are in the SMB sector. It is a huge opportunity for outsourcers as these small firms begin to recognize that they can achieve the same benefits that large organizations enjoy when they hand over non-core IT functions to outside service providers. Look no further than Encharter Insurance of Lexington, Mass., as a great example of how an SMB fully embraced outsourcing as a means to get back on track. Further, according to Forrester, 49 percent of SMBs will consider a hosted option when making an IT purchase. Forrester also says demand for PC support will lead on the outsourcing front, followed by Web site hosting and application maintenance.
But it’s also interesting to note that nearly any part of your IT systems can be outsourced. Take a company such as UK-based Innocent Drinks, for instance. The rapidly growing company was on the prowl for a communications and e-mail solution that could support its unique marketing activity. Innocent opted for a Microsoft Hosted Exchange Service from Cobweb solutions to handle 24×7 management of e-mail, including spam and virus protection, archiving, backup and remote access capabilities linked back to Cobweb. Innocent’s IT systems manager says he’s regained valuable time that once was spent on blocking up to 20 viruses per day, per e-mail inbox.
But, as this ZDNet Asia article points out, outsourcing might not be it’s all cracked up to be. Outsourcing is hard work, and it takes a lot of preparation. It is also important to keep in mind that outsourcing shouldn’t be a cost-savings initiative, rather an effort that also can add business value at the strategic level.
What is you or your company’s take on outsourcing?
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A few years back, a company (intentionally left unnamed) in the Kalamazoo, MI, area decided to move their operations to Mexico. Rising medical and labor made the move seem like sense. Today, they have had to raise their prices almost 90% to achieve the same profit margin they had here in the US. Rejected materials get shipped to the old US address where they sit in boxes untouched. The labor force is extremely unskilled in assembly, parts are missed or installed incorrectly and the onsite reject rate is high. Parts that do get shipped are returned regularly.
Outsourcing the manufacture of parts that used to be made here in the US is difficult. They are twenty years behind the most routine manufacturing methods and the cost of stamped and injection molded parts is higher than what was seen here. Yet there are 100 people who lost their jobs because this seemed like a good idea at the time.
The people who made this decision are as guilty as any of the Enron participants, yet they would never admit they made a mistake to their stockholders and insist this was the right move to make.
Guess again. Actual experience with offshore outsourcing is frustrating and baffling — frustrating because work that used to be done domestically now takes five to seven times longer to accomplish, and communications are slow and laborious; baffling because I am skeptical why executives say what they do to justify offshore outsourcing. If they meant what they said, the same tasks previously performed by Americans would now take less time and would be of better quality by the subcontinentals. They get what they pay for. That they tolerate the decline in performance quality for cheap tells us the decision to offshore American jobs is merely a giveaway with a hidden agenda; namely, to hold the appearance to the corporate boards and Wall Street of making sharp cost-cutting decisions, and looking to outsiders like corporate heroes for their benevolence, while the ugly problems in performance and quality remain hidden from public view.