| A recent PricewaterhouseCoopers study indicates that outsourcing has made a comeback during the past six months and is rapidly growing. This sudden acceleration is being fuelled by the same factors that caused it to take off when it first originated. Offshoring is being used with captive business units with low labour costs, as well as with third-party companies. The outsourcing wave is also spreading to countries like India, Romania, China, the Phillipines, and Costa Rica.
Charles Aird, managing director for shared services practices at PWC, says that while cost is still the major factor, “people are also looking for greater efficiency, better quality and access to talent.”
Not only is the outsourcing industry growing, the list of what is being outsourced is growing as well. PWC has a long list including accounting, finance, application, infrastructure support, human resources, and legal research. A large part of the recent growth is due to competitors attempting to catch up with market leaders that negatively influenced their costs in the past.
There are some things, however, that cannot be outsourced effectively, such as customer computer services. Both Dell and Apple outsourced to India. While Dell eventually moved most of its customer service back to the United States, Apple kept its service in the country from which the calls are placed.
Some outsourced services have the potential to eventually bring damage to the company. Aird says that the key is “to tie your sourcing strategy to your business strategy. Organizations that do it right get the most benefit. But if you cut too deeply and outsource things like knowledge, strategy and architecture, you can hurt a company. Then if you decide you want to bring it back in house, you've already gotten rid of the people who had the knowledge.”
India, the first large outsourcing center, is very much tied to the English speaking world. Other countries, such as Poland and China, are working to improve their outsourcing skills training to benefit non-English speaking countries.
by Kate Barber
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