As the debate over the impact that outsourcing has on national and local job markets rages on, there is a growing belief that outsourcing really doesn't streamline much of anything; that after all is said and done, not much money is saved due to a myriad of communication breakdowns and customer service snafus generated by third-party providers.

Either way, new research says outsourcing, in all of its controversial forms, is still a hot commodity because it's a buyer's market.

Application Development Trends has hit upon recent research from Morrison & Foerster's Global Sourcing Group that "sheds new light on the state of global outsourcing in 2007." Among the observations:

Outsourcing remains a buyer's market thanks to increased competition from service providers at all levels. Customers are now able to pick from a variety of suppliers, allowing them to pick "best of breed" providers that match their needs. In fact, customers are increasingly using multiple sources instead of awarding all their work to a single outsourcer. Such an approach increases the governance burden, but customers seem willing to pay the price (estimated at 8 to 15 percent of their project's cost).

Indeed, this is an interesting contrast to "the one view of demand" ideal that most manufacturers are clamoring for in their day-to-day supply chain operations that has virtually wiped out best of breed solution vendors. Another telling revelation from the research is the fact that finance and accounting projects are the next outsourcing candidates for this year. While the ADT article points out that CFOs have regulatory compliance issues (such as Sarbanes-Oxley) under control, we ask just how much can you trust outsourcing anything to anyone in this area, especially in these sensitive, post-Enron days?

Dark Reading also highlights another surprising area of outsourcing: security. Finance and security? The Dark Reading article highlights research from The Computing Technology Industry Association, which suggests security has become one of the key drivers in the managed services market:

According to the study, firewall (60 percent) and security (40 percent) services are the two top managed services currently employed by user organizations, and security services (33 percent) are tied with storage and backup services (33 percent) as the top managed services scheduled to be added or upgraded in the coming year.

"While there's still some skepticism out there — security was also cited as one of the top three factors keeping companies from engaging a managed service provider — there are some providers that have reached a kind of 'trusted advisor' status, and they are being engaged more and more frequently to deliver security services," says Richard Rysiewicz, vice president of services at CompTIA.

To wit, security guru Bruce Schneier, CTO of BT Counterpane had this to say:

Eventually, I think all enterprises are going to reach a point where they give up and hand a lot of this stuff off to a third party. It's not a choice between doing it in-house and doing it out-of-house. It's a choice between doing it out-of-house or not getting it done at all. Most companies who are trying to do security in-house are not getting it done.

Fair enough. Nonetheless, yikes.

While recent research makes a compelling argument on the pros of outsourcing, a recent BusinessWeek article drags the most loathsome attributes of outsourcing out of the darkness and into the spotlight. Here's a taste:

Amid the debate over whether outsourcing is good or bad for the U.S., an important point has been largely ignored: Outsourcing is as much a regional issue as it is a national concern. Certain cities and areas are hit hard, while others remain largely unscathed … At the top of the ranking are San Francisco; San Jose, Calif.; Boulder, Colo.; Lowell, Mass.; and Stamford, Conn. The five cities are expected to lose between 3.1 percent and 4.3 percent of their jobs to outsourcing between 2004 and 2015.

The next tier of metro areas — including Boston, Dallas, Denver, Minneapolis, Seattle and Washington — is forecast to lose 2.6 percent to 3.0 percent of their jobs.

"There had been almost no work done on which metropolitan areas would be most affected," says Howard Wial, an economist with Washington-based think tank Brookings. "We wanted to address that."

How comfortable are you with outsourcing finance and security?

Earlier:

Lessons Learned from Early Offshoring Efforts

Priority Shipping Overseas: Offshoring Highly Skilled Jobs
(The Offshore Outsourcing Debate)