15 Dec Overseas Outsourcing Brews Backlash
Recent reports indicate a domestic backlash is brewing against firms who outsource IT services to foreign-based companies. Two recent examples took place in late November, when Indiana’s governor cancelled a $15.2 million contract with a company in India to upgrade the state’s unemployment claims processing system (subsequently granting it to an Indiana-based company). And Dell announced it would bring its phone-based tech support for business customers back to the United States.
Both Dell and the State of Indiana had to deal with backlash from customers and employees. Perhaps there will be many more companies who will want to avoid a consumer driven “black eye” by going to an over seas outsourcing approach, when they can work with American companies who compete on a better level of service.
“Outsourcing is an issue the federal government needs to look at,” said Bradford C. Brown, chairman of the National Center for Technology and Law at the George Mason University School of Law. “Companies have a responsibility to their shareholders to maximize profit. Yet outsourcing raises a host of public-policy issues that haven’t been addressed in that context, such as labor conditions, privacy, human rights, quality control, intellectual-property-rights enforcement, and national security. We may decide that outsourcing is fine, but before we do, we need more analysis and a broader public debate.”
Milwaukee-based CCI, a software services company providing outsourcing solutions for firms running SAP’s enterprise-resource planning software, claims it can match the its software outsourcing services dollar for dollar against foreign competitors. The company says it also offers its clients peace of mind. CCI says that their customers do not have to worry about critical aspects, such as security over two oceans, wars on foreign soils, inability to comprehend needs six time zones and two continents away, as well as cultural differences.
“I began this firm based on the premise that I am an American who wants to see American companies succeed while helping American workers get and keep employment opportunities,” said Christopher M. Carter, president and founder of CCI. “I choose to believe in the American worker, the American spirit, and in creating a better future for my customer and their future in their given market. I can have American workers doing the same work as an overseas firm. I pay a strong wage, treat employees well, and we work towards continued growth, right here in the great Midwest of America.”
Gartner research reveals that over 18% of companies that outsource overseas did not save money and 8% actually had cost’s rise.
“You need to have very strong quality-control and project-management capabilities in place before you should consider this, and a lot of firms lack that capability,” said John McCarthy, an analyst at Forrester Research, quoted in an Information Week article by Paul McDougall.
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Mark Retrac is a freelance writer based in Milwaukee, Wisconsin