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Articles
 Six Myths of Outsourcing
Myth 1: Offshore outsourcing is unethical and costs local jobs.

A McKinsey Global Institute study has calculated that for every $1 USD spent on a business process that is outsourced to India, the U.S. economy gains at least $1.12 USD. It is a fact that countries like the US and the UK have lost jobs due to off shoring, however in the last ten years the US has added 35 million new jobs.
Myth 2: There's a stigma to offshore outsourcing.

It would be challenging to find a single top 500 US company that is not outsourcing a part of its daily business operations to offshore outsourcing firms.

Indian companies are employed writing software, designing chips, running computer systems, reading MRIs, processing mortgages, preparing tax forms and doing other essential work for U.S., European, Japanese and even Chinese companies. Intel, Cisco, Oracle, Philips and GE are among the multinationals.
Myth 3: The cost benefits of outsourcing are overstated.

With workers in offshore locations such as India and the Philippines commanding only 20% to 50% of the salaries that Australian workers earn there is no doubt that savings can be achieved purely from a head-count perspective.

However, the greater benefit of outsourcing is the migration from a fixed-cost environment to a variable pricing model.
Myth 4: There are huge cultural barriers.

To answer this myth involves comparing potential offshore countries. It's no coincidence that 260 of US top 1,000 companies have selected India as their nation of choice for outsourcing. Indians tend to have excellent English-language skills and a highly trained technical workforce due to the first-class education system.
The second course of action is to ensure that the outsourcing firm you select has in place relationship managers who can engage both you and the offshore resources. A good project manager will facilitate communication and help define and track goals and objectives.
Myth 5: Risks of outsourcing?

Expense of initial migration - The best method of mitigating the concern of high upfront expenses is through a transparent, closely aligned partnership. The two parties can work together to construct a business case that satisfies both sides; for example, initial expenses can be minimized in exchange for a multiyear commitment that enables the outsourcer to make the necessary investments on behalf of its client.

Fear of losing control - Loss of control is best tackled in a similar manner with internal departments. Strict policies and procedures can be implemented to ensure satisfactory compliance. Another way of looking at it is that the separation of duties through an outsourcing partner allows for increased, rather than diminished, control.

Intellectual property protection - In cases where intellectual property is a concern, specific clauses can be written into the contract to ensure protection. Clearly defined audit procedures that adhere to compliance can be set up prior to the outsourced relationship commencing. Other legal resources include nondisclosure and noncompete agreements, patents and copyrights.
Myth 6: The ROI of outsourcing hasn't been proved.

The ROI component of outsourcing has been shown time and time again. Beyond reducing head count and employee overhead, additional benefits such as faster time to market and improved quality can achieve an ROI of over 400% in some cases.

 
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