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  • #2183568

    Good vs Bad Outsourcing

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    by ruinit2 ·

    The company I work for is planning to outsource at least a part of the whole IT department, full scope undecided. Workforce blissfully kept in the dark as much as possible. Frustration running high and expecting to see the rats abandon ship.

    What are the different experiences with outsourcing? The good, the bad and the ugly? Have you seen a lemon, good experiences everything is interesting. Just wanted to know!

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    • #3101179

      My take

      by jamesrl ·

      In reply to Good vs Bad Outsourcing

      One of the places I worked had done some limited outsourcing and struggled for years with the idea of doing something far more broad. I left that firm but some of my collegues became involved with the management of the outsourcers contract for the company.

      Never outsource anything you don’t thoroughly understand and have very well documented. You need to really nail a good service level agreement(s) to ensure that the outsourcing company does not take you to the cleaners, and I think its inevitable that they will try.

      I’ve rarely seen a company come to the end of an outsourcing contract in a happy state. Either they dump the company (find another outsourcer or bring it back in house) or make radical changes in the contract to try and rebalance it.

      James

      • #3100675

        I agree, but…

        by boviwan ·

        In reply to My take

        First, I want to note that the company I work for did outsource a significant part of our IT organization (the service center, IMAC, break/fix, and a large part of the server environment) to two different service providers. I am in the strategic vendor partnerships group that manages those relationships.

        I agree with your statement that you should not outsource what you don’t understand. There is no way for you to build a proper statement of work with appropriate SLAs when you don’t fully comprehend the pieces you’re outsourcing. And you’re correct…documentation is key.

        You also said that you ?rarely seen a company come to the end of an outsourcing contract in a happy state?. That?s probably true, but I?m not sure it?s the vendor?s fault. In my experience, if an seasoned service provider fails at a company, it is the company?s fault, not the vendor. And remember, I?m saying this as a IT worker at a company that has outsourced a lot of its IT department.

        I also respectfully disagree with one other statement that you made.

        You said that outsourcers try to take their customers to the cleaners; I think the actual fact goes back to your earlier statement about knowing what you’re outsourcing. I think that too many companies agree to SOWs that do not meet all their needs specifically because they don’t know their needs. When something comes up that isn’t covered under the SOW, they expect the outsourcer to “just do it” like your own employees would. When the vendor states that something is out of scope and would cost more money, they’re not trying to gouge you; they’re conducting business according to the SOW you agreed to. They have budgets and SLAs to meet, so if you?re company?s changing needs require more from them then they agreed to in the SOW, that can affect their SLAs and budgets. Bottom line is – I believe most companies that outsource get pissed at vendors not because the vendors are gouging them, but because they didn?t have a clear enough picture of their processes and business needs to include everything in the SOW.

        I know all the downsides to outsourcing, and there are things I dislike about the engagements. I don?t like current employees losing their jobs to an outsourcer. I don?t like the chaos that ensues during transitions. I don?t like suffering through the learning curve. However, depending on what your business is, many parts of IT may not fall into your company?s core competencies. Service vendors make sense in many cases?from a strategic, tactical, and financial perspective. It just depends on your business and your business IT needs.

        The most important thing I want to get across here is this: the vendor is there to help your company succeed?as well as help THEIR company succeed. So if you want an outsource engagement to work?Help Them Help You. Help make them successful in the engagement, and that in turn will help your company be successful. Too many people try to sabotage these relationships because they don?t like the same things I mentioned above. Don?t sabotage your vendor?HELP THEM HELP YOU. That?s how it can come out positive in the end.

        • #3100662

          Core Competency?

          by mswanberg ·

          In reply to I agree, but…

          There have been a few posts mentioning this little tidbit. Basically, the point is that some companies might not be able to afford in-house IT/IS and hence outsource. Or, to this point, perhaps a company doesn’t have the wherewithal to develop what they need.

          But I am not seeing the need for outsourcing here.

          If the need is core to the company, then said company NEEDS to get some expertise in-house. After all, that’s what your business is! If I have a bunch of accountants on staff, I am not going to try to become a winery. And if I do, then I am going to hire some people that know the business.

          And the small business not being able to afford in-house talent is a valid point. But then why are they outsourcing? If it’s a minor, but necessary, part of their business, like payroll or resource management, wouldn’t a company be better served getting a canned package? Or perhaps partnering with a service firm (which may be deemed as outsourcing, granted)?

          All in all, what I’m saying is, if a company cannot afford to be in the business they’re in, perhaps their problems are far greater and they’ve bitten off more than they can chew.

          Just my $0.02, albeit probably misguided.

          -Mike

        • #3100922

          Core Competency

          by danthebestman ·

          In reply to Core Competency?

          Exactly! IT is a Core Competency. If a company doesn’t have it and is not willing to develop it, they will not survive. In the world ahead, a company’s information is its business. It is very bad policy to outsource data to people with no real stake in the company.

        • #3102183

          OK…let’s test that theory…

          by boviwan ·

          In reply to Core Competency

          But first, let’s look at the definition of core competency:

          “a defined level of expertise that is essential or fundamental to a particular job; the primary area of expertise; specialty; the expertise that allows an organization or individual to beat its competitors?

          Is McDonald’s core competency IT? No, it?s fast food. They don?t develop the ordering systems or maintain them, the outsource most of that work.

          Is the Wal-Mart?s core competency IT? No, it?s moving product. Granted, they have an incredible product supply chain system, but they didn?t develop it. They maybe have some people on hand that help maintain parts of it, but their ?core competency? is not IT.

          Here?s a good one?is Toshiba?s core competency IT? Or is it technology research, development and sales? Do you know who repairs Toshiba laptops when they break under warranty? UPS. Why? Because UPS could get the product, ship it, repair it at their own facility, and return it back to the customer quicker than Toshiba could! Toshiba trained UPS workers on how to repair their systems, then turned it over to UPS. Crazy, huh?

          Is UPS?s core competency IT? No. It?s providing shipping and supply chain solutions. But they have one hell of a tracking system that they manage, but I don?t believe they developed or implemented it on their own.

          Look, all I?m saying is that outsourcing CAN work if there is a commitment from employees to make it work. This isn?t personal, it?s a business decision. The outsource teams can be just like employees?if you treat them that way. The great thing about outsourcing to an IT service vendor is that they spend money on development and research into technology, and process, and support – – – all things that most companies don?t have the money to invest in. You can leverage that vendor?s experience and training, and even their experiences gained at other customer engagements, to your advantage. No, not all service vendors are great, but that?s also your company?s job: to weed out the providers that are inadequate for your needs.

          I?m not trying to be insensitive to those impacted by this business practice. It?s not fun. But I don?t know anyone that complained about the low price of their Dell computer, or their deals they get at Wal-Mart. These are all companies that outsource. If people are truly against outsourcing, they should never work for or buy anything from companies that engage in the practice. The only problem with that is: you would be shrinking your shopping or service options down to less than 20% of all companies in the US.

        • #3272455

          the expertise that allows an organization to beat its competitors

          by danthebestman ·

          In reply to OK…let’s test that theory…

          Toshiba??? Have you ever tried to get a Toshiba laptop fixed? Proves my point. I know of at least one company that won’t buy any more Toshiba laptops just because of this issue.

          I know lots of people that won’t buy Dell computers either. They don’t complain about the low price because they don’t buy them.

          My point is that while outsourcing may appear to be successful for the short haul, in the long run it will be a failed strategy.

        • #3273726

          No one wants to face the real problem

          by raelayne ·

          In reply to the expertise that allows an organization to beat its competitors

          American companies can’t compete because they have a workforce (including managers) that costs more than people are willing to pay for the goods and services they produce.

          We can argue all day about whether it’s “fair” (if we want to sound like teenagers), whether companies are “loyal” (huh? Did you confuse your employer with your Grandpa?), whether WE are better than THEY are. But it doesn’t matter — we cost more than people (including you and I) are willing to pay. So they go somewhere else and complain (maybe) about the service or the goods, but they still go.

          So get off your bottoms and develop some skills for which people are willing to pay a premium, or get used to being a serf. Become so good at what you do that you are a bargain. Or tell us and everyone else how to reduce the cost and improve the quality of service so our companies CAN compete.

        • #3086811

          Does the USA need to become a third-world slum

          by too old for it ·

          In reply to the expertise that allows an organization to beat its competitors

          … before US emplooyers will consider hiring locally again?

          raelayne appears to posit the belief that the US has to match every third world nation slum-for-slum and starving-child-for-starving-child or else our “betters” in the executive suite will never hire us again.

        • #3272447

          ????

          by jkaras ·

          In reply to OK…let’s test that theory…

          First off, good points I get where you are going, but your examples are a bit off. Mc Donalds doesnt deal in information, just food. Their equipment is easily replacable, there is no troubleshooting. If the equipment fails they replace it with a spare.

          Walmart has their own IT support internally with HQ support like almost every retailer. There is too much liability concerning data and sales information. They too replace parts when something goes down.

          Toshiba and UPS? I’ve never heard of that. I worked for UPS for 5 1/2 years. I only stopped working for them 3 years ago and we didnt have anything like that service. I am also a shareholder of their class A stock and I never saw anything in the proxy reports. Where did you get that information. It sounds interesting.

          Like I said I get your over gist but this person from what I gather is talking about a white collar business having no internal support, outsourcing tech support, not implementing technology to run the business like Mc Donalds ordering system, or UPS tracking system. If a computer or application goes down then business goes to hell in a hand basket having an employee crack open the pc or try to determine if the employee is operating the system properly vs hardware failure. Nothing replaces hands on care. The overhead may be more expensive but down time of workforce is far more costly.

        • #3272312

          Answer to your ????

          by boviwan ·

          In reply to ????

          I’d be willing to bet the McDonalds has some need for IT internally, probably in a corporate or supply fulfillment capacity.

          To the best of my knowledge, which may be flawed, Wal-Mart does outsource some of its IT pieces, but not all of it.

          And to be clear, I don?t believe any of my previous comments said or implied that companies should outsource their WHOLE IT department. When IT services are critical to business deliver, it should be clear to that business that many IT functions cannot be outsourced without risking an impact to their product or service. But it?s possible in some areas where you can leverage the vendor’s experience, it may make sense to outsource things like development, or service center functions, or maybe even WAN management. We still have an IT department at the company I work for, but we did outsource several areas, and so far it seems our engagement is more successful than the average company. When any company outsources any IT components in their business, they still need internal IT resources that can manage the vendor?and those people need to be IT employees who understand the systems and processes that are being outsourced.

          And to your final question about Toshiba and UPS, here is a Forbes article that went over the general parameters: http://www.forbes.com/personaltech/2004/04/27/cx_ah_0427ups.html.

        • #3272197

          I read the article you cited

          by danthebestman ·

          In reply to OK…let’s test that theory…

          about Toshiba and UPS and I think it makes my point again. Toshiba is having problems. Do they fix the problems? No, they hand it off to another company (see my original post which quoted Bob Lewis). That way Toshiba Execs don’t have to get their hands dirty and if it doesn’t work out, it’s all UPS fault.

          Lets test your theory with a little thought experiment. Let us suppose that, over the short term, this arrangement between UPS and Toshiba works out great. So great that Dell also makes a deal with UPS to repair its laptops. Now, suppose that a shortage of qualified techs develops (after all, techs are leaving the field because they can’t make a living any more). What can UPS do? They are probably locked into contracts and can’t raise their rates to compete for the few qualified techs available and still make a profit so they have to lower service standards.
          Are they going to:
          1) Lower standards for Dell and keep Toshiba happy
          2) Lower standards for Toshiba and keep Dell happy
          3) Lower standards for both Toshiba and Dell and make both unhappy
          I bet they will opt for #2. What do you think and why?

          My point is that in the end, UPS will do what it perceives as best for UPS and Toshiba will end up having to live with that. I think Toshiba would be much better off to look to fixing the problem with its organization and delivering superior service to its customers.

        • #3273598

          My Point Exactly

          by mswanberg ·

          In reply to OK…let’s test that theory…

          I think you’re making my point for me.

          What I was saying is that if a company has to outsource its core competency, then it’s in the wrong business.

          What you cited was examples of companies outsourcing things OTHER than their core competency. Overall, this CAN be a good thing. But it can also be a bad thing if the outsourced elements are key to the company’s success.

        • #3273835

          Maybe I didn’t state it clearly…

          by boviwan ·

          In reply to My Point Exactly

          Don’t know where or if my statements veered off course, but businesses SHOULD concentrate on their core competency, and possibly outsource the areas that are NOT within their core competency.

          Look – I know what you are all saying about the path of outsourcing IT. I was, am, and will continue to be a tech?regardless of my current position. I understand the value of internal, competent IT techs that grow in knowledge and experience within a company. I am not saying that outsourcing is the answer to all cost issues. I do have a prediction about the near future of outsourcing?and it?s not very bright.

          On a parallel note: get ready to pay more for your products and services, especially American made products.

          The pendulum is swinging in the opposite direction now. For a while, we?ve (the consumers) have wanted more for less. That is why these cost saving practices are so hot right now. But now it?s going to swing the other way and have better product and services?but for more money. Soon the American consumer will demand better quality in its consumables. I am one that is all for that because I?ve had a microwave and dish washing machine go bad in the last six months, and neither was more than 3 years old. My parents had most of their appliances for DECADES. So in order to compensate for internal specialists, companies are going to raise prices. A $700 dish washer will cost you $1000. A $300 microwave will cost $450. And tech support on our PCs will actually cost money. Eventually the pendulum will swing back the other way and the public will want more affordable products again, and they?ll probably be able to get them from a new focus for our dissatisfaction: foreign companies.

        • #3087985

          You didn’t state it clearly

          by danthebestman ·

          In reply to OK…let’s test that theory…

          because you are not thinking clearly.

          “Look, all I?m saying is that outsourcing CAN work if there is a commitment from employees to make it work.”

          And all I am saying is NO it CAN’T. You CAN say, IF pigs had wings, they COULD fly but you still can’t make a pig fly. Outsourcing IT cannot work simply because it flys in the face of basic human psychology. Work is not just an economic activity. There are social and cultural elements to work that outsourcing can NEVER serve. These elements will doom any attempt to outsource “CRUCIAL” IT processes (and IT is crucial).

          How many of the responses in this discussion are about actual successful outsourcing attempts?

        • #3087893

          Well, you’re wrong…

          by boviwan ·

          In reply to You didn’t state it clearly

          First of all, my company’s implementation of outsourcing did NOT include our “crucial” IT resources, and no where in my previous comments did I say you should outsource crucial people. We outsourced areas where we could leverage a vendor’s expertise and improve the service value. And guess what…it’s working pretty well. Yes, it was a culture change that the employees had to adapt to, but we have matured the relationship with the vendors to the point where we have significant, measurable improvements in those areas. On top of leveraging their experience, their reporting has helped us to perform root cause analysis to fix many of the problems that had been plaguing us for years before we brought them in.

          In your expert opinion, all IT is crucial. So to you, a help desk person who resets passwords and unlocks user accounts is a task that can only be handled by an internal employee? And a break/fix A+ certified tech can only bring value to a company if he’s an employee versus a contractor?

          I completely disagree.

          And to your statement about the ?social and cultural elements? that vendors can?t replace?well, you?d better look around you, because the world is changing and you apparently aren?t paying attention. There are successful implementations; otherwise it would be a growing practice. The reason you see more people here talking about the failures of outsourcing is because people will go 10 times the length to complain about something as the will to praise it. You hear some people complain about how horrible an experience it is to go to Wal-Mart, yet millions and millions of people still go their stores every day, and they keep coming back. Why? Answer: for the lower prices. They don?t write to the paper or comments in a discussion boards saying ?I had a good experience at Wal-Mart today? because it doesn?t accomplish anything for them. But if they have a bad experience, they vent their frustrations in discussion boards like this. THAT is why you hear more disapproving comments than encouraging.

          And THAT is the point I?m making. Our company has had a GOOD EXPERIENCE. I am speaking up saying it CAN work. We did it by adopting one philosophy: help them (the vendor) help you (the company). We found the right vendor that fit our needs, we thoroughly documented what we needed, then turned it over to them and helped guide them through the transition. Did we get it all right on the first try? No, not completely. But since both sides looked at the relationship as a partnership, then everyone was open to make adjustments where we needed them, and in most cases, without any additional costs.

        • #3105813

          You missed the point.

          by davidkeithjones ·

          In reply to OK…let’s test that theory…

          Wal-Mart has an IT department at their head offices or at least at the one I worked at. Wal-Mart’s business is to sell goods however every company needs IT people to make systems run smoothly.

        • #3100486

          In the end

          by danthebestman ·

          In reply to I agree, but…

          the vendor will do what is good for them. Words of wisdom:

          You cannot serve two masters.

        • #3100450

          Both Sides

          by industrial controller ·

          In reply to In the end

          I have been on both sides of this equation. As a part of a team working for a very honest vendor, our customers seldom knew what they wanted and seldom appreciated what they got. A few customers just wanted to rip us off for our time and expertise and then not pay. On the other side, we have had great success outsourcing our servers to a hosting company (because they are a fantastic company), mixed results outsourcing software development, and lousy results outsourcing email hosting.

        • #3100927

          By the way…

          by boviwan ·

          In reply to I agree, but…

          The companies we outsourced with use only US employees here in the states, so we did not go overseas to get a cheaper deal. We outsourced the things we understood but didn’t necessarily have a wide knowledge base or the best tools to execute…but the vendor did.

          Oh, and part of our contract included the vendor taking on many of our key IT employees so that the knowledge and experience they had would not be lost. It actually turned out better for those employees because they have more opportunity for career and earnings growth within the vendor’s IT-based company that with our non-IT-based company.

        • #3271838

          Good Reply but with reservation

          by robbie12 ·

          In reply to I agree, but…

          Very succinct and detailed philosophy and indeed the criteria you listed shows great foresight with the basic tenet of ‘Help them help you’. I have been with a company that went to outsourcing and indeed the problem was indeed a badly negotiated contract with too many holes that were intangible in understanding the KPI and SLA requirements.

          I believe that too many outsourcers sales people do a very poor job of getting the sale of the contract. This is inherent where expectations are set by sales people who are focused on commissions and play no part in service delivery. I believe this to be where the who;e process falls down and begins the cycle of dissatisfaction with outsourcing. Most companies are sold the outsourcing service thinking it will be cheaper and less of a headache as most IT departments are generally classed as a necessary evil and not a core resource for making money for the company. Models to exist than should and can work in a partnership approach as you stated.

          Outsourcers have done an extremely poor job of selling their solutions and remain the biggest negative factor in any relationship building. SO in essence I agree with your comments and merely add the observation of experience.

        • #3271783

          And if pigs had wings

          by danthebestman ·

          In reply to Good Reply but with reservation

          they COULD fly. Sales is just one more reason why outsourcing does not and cannot work as a long term strategy. I.T. IS CORE!!!! How many people have to lose their jobs before management “Gets it”?

        • #3271685

          Not all IT is core

          by geekdoctor ·

          In reply to And if pigs had wings

          Tell me exactly why I have to pay for benefits and training and salary for someone to run my exchange servers? I just want mail to flow and SPAM to be blocked, and I want some guaranteed measure of availability.

          You’re confusing “core” with “crucial”. Email is crucial, but to a widget-maker, it’s not a core aspect of their business.

        • #3271647

          Excuse me….

          by danthebestman ·

          In reply to Not all IT is core

          Why would anybody give a piece of their business that is “CRUCIAL” to somebody else? Short term thinking. Good for managers that want to look good before they bail, but not good for the company or its employees.

          I don’t care if you call it “CORE” or “CRUCIAL” it is bad policy.

        • #3273243

          Reply To: Good vs Bad Outsourcing

          by tags66 ·

          In reply to Not all IT is core

          The problem is management see short term outlooks of core and crucial IT apps as a non-protit making expense. In the long term they add vaule to the company, though the staff and apps they look after and update.
          Outsourcing is only here to make money, the long term view to them it’s not necessary to support in-house apps if the sales team can prise the money off the company for some off the shelf application and support from a third party.

      • #3100451

        I disagree

        by techiemikee ·

        In reply to My take

        The stuff you don’t understand is the stuff you should be outsourcing. If I’m planning to have my house remodeled or custom built, as knowledgable as I may be about tools and materials, I personally feel better about hiring a General Contractor that knows the business inside and out. If he has significant experience in his trade he will know potential pitfalls, scheduling requirements but more importantly he knows the lingo and when a sub is blowing smoke up his arse. As intelligent as I am I know I don’t know everything and its never a bad idea to bring someone in who will perform the duties better than me. As an IT person you are not going to wind up with the same results trying manage a plumber, an electrician, a landscaper, etc as what a person in the trade would and vice versa.

        For the business owner who would rather focus on the strategies of their core business it usually makes more sense for them to outsource IT. Some chose to Outsource only segments, others use the outsourcing company to simply get the ball rolling and take over when the contract is up.

        Each company has it’s own unique business goals and there is no one size fits all answer. Most small and medium businesses find it easier to budget a fixed amount. If an employee walks off his contract or job it is the Outsourcing Company’s responsibility to replace them not yours, and if the most suitable replacement costs 10K more a year its on them, not you, plus they generally have the resources to get the replacement faster or to shift them from other projects.

    • #3102620

      Phase it in, if you must

      by cactus pete ·

      In reply to Good vs Bad Outsourcing

      I don’t like outsourcing. I don’t mind hiring consultants with limited scope, but giving away the keys to my domain doesn’t make me feel good.

      Anything that needs FAST turnaround, don’t get rid of it. The outsourcing company makes more money if they don’t have to deal with you much. (So I’d use them for monitoring, at most.)

      If you can live with outages of up to X hours without anyone even getting to your systems, or the users, then go ahead. But for people who really care about your business, they need a stake in it.

      • #3101482

        Bad move !

        by i1-14174 ·

        In reply to Phase it in, if you must

        I agree with JamesRL…I’ve been part of a big outsourcing and became part of the newborn service company, without changing workplace/desk nor job, but my former firm suffered from gradual lessening quality of service and continual litigation about contract.
        On my side, I’ve changed 4 times firm name and ownership, everytime losing part of my responsibility toward my ex-colleagues and lessening ability to support them. Now they are thinking to dump us in the waste and radically change the whole SW base.

        Good luck ! (grin…)

    • #3101483

      Bad Outsourcing.

      by shinho62 ·

      In reply to Good vs Bad Outsourcing

      I had a bad experience of IT outsourcing form the inside i and the rest of my team were kept in the dark, until the news of the pending outsource was leaked, when questioned, we were given a brief explanation, but then a few days later it was confirmed, it was the worse six months of my life, before this happened we were not appreciated or praised for work completed, so you guessed right morale was not low it was rock bottom.

      The outsourcing went well (not), processes were missed and a lot of work not taken seriously, to the point we had to do twice as much work after the outsource fixings things, as we did getting it ready to be outsourced.

      The good news however, is the new company i moved over too, appreciated my work and rewarded me well, they do listen to thier teams and praise and help where they can, but a word to the wise, ousourcing is not all its cracked up to be, for companies thinking of doing it, think about it and think about your staff.

      • #3100528

        You bring up an important factor –

        by wojnar ·

        In reply to Bad Outsourcing.

        planning is critical. I have been part of a successful outsourcing and seen a lot of unsuccessful ones. Alot depends on the nature of the outsourcing and how critical the business impact. Past experience in the banking industry showed a major problem with the inability to respond immediately to problems. One client did an offshore outsourcing which turned ugly when the outsource partner didn’t understand the need for staffing for emergencies. They assured the client 24 – 7 coverage but lost hours of productivity at shift changes. Customer service outsourcing also presents problems when the outsourcer doesn’t understand the company values (worse when cultural differences are obvious – like the heavily accented Pakistani who says ‘My name is Larry, how can I be of assistance ?’).

        Outsourcing can work but it usually takes a large amount of management to do it effectively.

    • #3101479

      Inevitable?

      by philip_jones2003 ·

      In reply to Good vs Bad Outsourcing

      That outsourcing is here to stay until the bath runs dry is something I guess we have to accept. I dont doubt though that the flow will start in the opposite direction eventually.

      Company handling can go a long way to retaining a measure of goodwill.

      My former employer made no secret of its outsourcing plans but said nothing of its scope. It engaged in a major ERP project and shipped a lot of its international IT staff to a location in Europe for two years. We worked like demons during that time. twelve hour days were the norm and fining people asleep under their desks in the morning, common.

      Why did we do it? The promise that all project staff would be garanteed a job if we saw the project out and completed on time.

      We delivered.

      A lot of us got sent home early to face the news that we hadnt stayed until the projected completion date and so the company was under no obligation to keep its promise.

      The payoff was generous but at 50, finding work was very difficult. The company ‘lost’ a large number of IT people and flooded the local market.

      I get the impression that IT departments dont just get ‘dropped’ (It would be a bad thing to do anyway) but they are slowly bled to death. A few people here and a few people there. No big news and no shareholders worried about the loss of kowlegable staff.

      My immediate manager, to his eternal credit saw a lot of this coming and insisted on a six month notice period for staff lost to outsourcing.

      There is no way in the world that an IT professional in Europe/USA is going to compete finantially with the same in Asia. I believe we have to accept that. These guys are every bit as good as us and can deliver.

      • #3100969

        Not necessarily

        by dr dij ·

        In reply to Inevitable?

        they are cheaper but not always as good. many have good technical skills but not the business accumen that helps projects succeed. this apparently isn’t enuf to prevent offshoring.

        btw, approx 10% of chinese IT school grads are of quality where they would be immediately ready to work for an international corp. 25% of Indian grads are similarly prepared. source: foreignpolicy magazine.

      • #3272402

        So, now that …

        by too old for it ·

        In reply to Inevitable?

        … there is no manufacturing in the US, and IT is outsourced overseas, what is left for the American middle class?

        Living in slums, our children only growing up to worship their superiors in the executive suites?

      • #3271592

        Gee Phil, If only they spoke English

        by x-marcap ·

        In reply to Inevitable?

        Maybe they speak it but they don’t usually comprehend it, Payrolls are coming back from overseas this year in the Fortune 500 included 3 of the 4 local Fortune 500. It is now back in-house at all shops after the Tsunami…

        If it affects the Brass’s paycheck it comes home…

      • #3084977

        So should we wait till second comin?

        by kovachevg ·

        In reply to Inevitable?

        I posted some ideas about outsourcing that describe situations where it is a viable alternative. You are welcome to read them and give me some feedback.

        But I wonder after reading your comment, what do you think we should do? Should we go and work for McDonalds? Should we try to start our own business and try to become CEOs ourselves? Should we go and teach in a high school? A dead end job if you ask me. What’s your take? Esp. for a guy who’s fifty, this must be a bad time to be in IT.

    • #3101477

      An external perspective

      by andym56 ·

      In reply to Good vs Bad Outsourcing

      We (Axyva) provide advice on outsourcing offshore and in doing so I have undertaken assignments in many different organisations [no this isn’t a sales pitch!]. The negative reactions are entirely understandable and the perception that an external supplier will feel less responsible is sometimes true. However, in reality it is no different from buying any other type of service that can have a huge impact on your business. Be clear on what you expect to gain and don’t view it as a magic effort-free cure for all your problems.

    • #3101460

      the Good, the Bad and the Ulgy

      by tags66 ·

      In reply to Good vs Bad Outsourcing

      I been out source twice, and both times I seen the good highly trained staff leave within the first year. I lasted 2 years at both companies. After that you left with just management type?s restructing the way you answer the phone!

      The Good, the Bad:
      I have seen the MIS dept turn from a highly motivated proactive set of team players turn into disgruntled indivuals within 6 months! The Management structure turn into a top-heavy system that out number the original out-source staff.
      It def turned the dept into us and them. Un-outsource staff seem to battling with the new outsource management to get the same level of service. Everything had a cost, and no work could be done without a service request been signed. For Joe Bloggs wanting a software install this turned a 5 minute job into 3 days of paper chasing if was outside the scope of the agreed SLA?s. Where it just fitted into works loads as soon as possible before.
      In company one base in outer London the mainframe was moved to a purpose build data centre in Manchester. Yes this increase the uptime and allowed maintenance to be carried out during the day etc, but we lost all experience data techies as their where given their cards.
      Yes, there was more pooled resources in the out-source company. But buggered if you allowed too use any when you need them.
      Both companies insisted the NOS moved from Novell to Microsoft against the wishes of the companies employing them! This resulted in one of companies cancelling the desktop services out-source contract in year 3 of seven year contract.
      Training was base on work requirement; this didn?t mean you get any training as staff on other sites would have to cover for lack of knowledge on your site over the phone and emails. And only visited after management agreed cross-charging arrangements.
      The Ugly:
      Management where concern with targets more and more, and least and least on staff well-being. SLA?s became a joke as staff left the company. Basic work loads became a fire firing exercise, stress levels became too much for some and long time sickness was norm.
      Both Outsourcing companies are major names, so don?t trust the name. Research the companies that have been outsource before, talk to there staff, check the skill levels and most of all check with staff that have the outsource unit in their mist.

      • #2484873

        Hah, I know who ONE of them was…..

        by gerberb58 ·

        In reply to the Good, the Bad and the Ulgy

        IBM GS………………I just read my job for the past 2 nightmare yrs….I got fired, It was the happy-ist day in my life since they took over.

    • #3101457

      Outsourcing is not generally a good idea

      by danthebestman ·

      In reply to Good vs Bad Outsourcing

      “Too many executives share this mindset — some unconsciously, some overtly: “If it weren’t for all these lazy, hard-to-manage, ignorant employees we’d have a great company.” It’s why employee surveys are often nothing more than window-dressing, designed to convince those lazy, hard-to-manage, ignorant employees that they really love working for the executives who treat them with such respect. It also might explain why outsourcing is such a popular strategy: Entrusting the success of your business to some other company’s lazy, hard-to-manage, ignorant employees is a much safer bet than entrusting it to your own.” Bob Lewis (Keep the Joint Running)

      My favorite quote on outsourcing. In my opinion outsourcing is a management attempt to coverup its own failings.

    • #3100744

      Outsourcing is generally a good idea

      by pablo.emanuel ·

      In reply to Good vs Bad Outsourcing

      The key point of outsourcing isn’t cost (although in countries with hugely overrated workforce like the US it may be a significant driver). It’s about focusing on the core business and having well-defined SLAs. Although the unions and the laws have in general been a great help to avoid workforce exploitation, it somehow distorted the employer-employee market away from the natural market rules. Ideally, that relationship should be ruled by performance scorecards (i.e. a contract, in the abstract definition used e.g. in Hobbes and in programming-by-contract): if the contractor provides such-and-such, and the service provider delivers such-and-such, the contractor pays that much. That’s exactly the kind of value that the outsorcing model delivers, the whole model is performance-driven, if the SLAs are well defined, everybody’s vectors will be pointing in the same direction.

      Naturally there are bad implementations of any model, but, from an abstract model standpoint, the outsorcing model is far superior than the in-house model in almost any aspect I can think of (which means that a well-implemented outsorcing will always be better than a well-implemented in-house alternative).

      • #3100739

        Perhaps… but…

        by mswanberg ·

        In reply to Outsourcing is generally a good idea

        My experience with outsourcing has always been sadly negative. A quality product is NEVER delivered on the first run. And the back-and-forth that it takes to correct the problems takes more time and effort than delivering the product in-house in the first place would have.

        I have also noted that, most likely due to cultural differences, the contractors tend to deliver exactly what is asked for, no more, no less. Error-checking? Not unless asked for and specifically spelled out.

        In the end, I think we, as a nation (if I can be America-centric for a bit), need to address this notion of “overrated workforce” and realize that one GOOD programmer can do the work of 3 average programmers. But you have to PAY HIM, instead of lumping him in the “average” category and paying him accordingly.

        Let’s face it. Good product requires commitment and caring about the end goal of said product. Sending the development overseas takes away both the commitment and the caring, and it shows in the result.

        So, in the end, I may agree with Pablo, that outsourcing can be good if treated properly. But my point is that, to treat it properly, the outsourcer must provide documentation so extensive that the product could have been created in-house with the same or less effort.

        -Mike

        • #3100734

          Outsourcing in the “Abstract”

          by valerie.pressley ·

          In reply to Perhaps… but…

          Mike,
          I must agree with you. Software development is not something you want to outsource. Didn’t anybody read 1984? Knowledge is power. If management wants to send its intellectual activities to someone else (because 1) they don’t understand that software development is not something that a few monkeys with hammers can do and 2) foreign labor is cheaper), we will eventually become dependent on those other people as they become smarter and we become dumber. Once we are dependent on outsourcing, the price won’t stay so cheap. But hourly rates aside, there are hidden costs to oursourcing that far outweigh the savings achieved with cheaper labor. As someone else astutely noted, cultural differences often mean foreign workers do not document or error check their code. This means the final product is generally of poor quality and the time difference makes it difficult to contact anyone about any problems with the code. And, I’m sorry, but when you can reach them, you sometimes can’t understand what they’re saying. In the abstract, outsourcing may seem like a good idea, but in reality it is a nightmare. I’ve been through it several times and it’s not worth the pain and hassle. The only time when American develoers might have justifiably earned the overrated title would be during the dot com boom when anybody who could spell their name (maybe) tried to get into the software industry to take advantage of the astronomical salaries. Those fake developers have long since dropped out and the true techies remain. Those (typically) non-technical managers don’t understand that and are today under some misconception that, due to object-oriented programming, somewhere there’s this cache of reusable objects that developers can just dip into, write three or four lines of code, and poof! they’re done. That’s not the way it works. Outsourcing is a dumb idea conjured up by people who don’t understand technology. After people have been through enough pain and failed projects, just maybe the light bulb will come on.

        • #3271588

          From your mouth to God’s ear

          by x-marcap ·

          In reply to Outsourcing in the “Abstract”

          You are bang on!

        • #3273522

          A personal experience as a customer

          by dckmusic ·

          In reply to Perhaps… but…

          My first experience with outsourcing was actually as a customer. I bought a Xerox fax machine (a really good one) for our home-based business. Much to my surprise a few years later when I needed to buy cartridges for it, they weren’t available. I called Xerox directly to find out where I could get my hands on them. They told me matter-of-factly that my model was made by another company and Xerox just put their label on it, but that company was now out of business so they don’t support the product anymore. It was like it wasn’t their problem – they blamed it on the other company. I told them I didn’t buy a fax machine from another company, I bought a Xerox, so regardless, Xerox should support it. After talking to a few higher up people, they said they would give me $200 towards another machine if I packed it up and sent it to them at MY cost (which was about $65). Plus, I had to buy directly from them (which are inflated anyway compared to Office Depot/Staples or whatever). I told them if that was the best I could do, I would never buy another product from them again and they seemed fine with that, knowing I was a small business who may only spend another $2000-3000 on fax machines ever again.

          Other companies may handle this better, but this really turned me off the outsourcing stuff. In fairness, though, it was Xerox’s reaction (that it wasn’t their fault) that bothered me the most. If they would have taken responsibility and at least offered to pay the shipping for the old one, it might have been different.

        • #3271589

          Less effort.

          by x-marcap ·

          In reply to Perhaps… but…

          I have been insourced several times, but the issue for the company is always money. They want you to work 100 hr/week and pay you for 25 hours/week. They pay for 40, but would always rather pay less.

          Out Sourcing tends to be tramatic for the long term employee. Quite often it ends up with some key employees coming back in house, and many people just being let drift away.

      • #3100704

        Re: Outsourcing is generally a good idea if..

        by itengineerguy ·

        In reply to Outsourcing is generally a good idea

        Bla, Bla, Bla

        Don’t know what planet your from but cost is usually always the guiding factor. How many consulting firms start off a sales pitch with the statement, “I can save you money”. I worked for a consulting firm for several years. We were considered some of the best within our region. We helped Microsoft and CISCO fix problems.

        We new going in that a potential customer never wants to hear your IT services will cost you an extra ten grand a year by using our services.

        The comment about US workers are hugely overated shows a lack of intelligence. Where do most of the people come to earn a degree? The U.S.!!

        Outsourcing is good if you are a small company that cannot afford a full time IT staff or when you need special services that can’t be supplied in house.

      • #3101062

        Yes, but…

        by johngaz ·

        In reply to Outsourcing is generally a good idea

        You can have as many SLA’s as you want. What you would do when your vendor files for bankruptcy and they are no longer in business?

      • #3102120

        The devil is in the details!!!

        by kovachevg ·

        In reply to Outsourcing is generally a good idea

        You have probably heard the title of this reply many times. That is why, it is not a good idea to speak about outsourcing in general.
        You can consider which business processes or which business functions to outsource, but you may not approach the issue with the general attitude that it is good. You outsource some of your core compentecies, then you lose control, of your operations because you can’t pursue changes in your business model aggresively – they already controled by an SLA – and your competitiveness is gone. Best case scenario – you will get bought for a nickel.

        That’s with the genral thoughts. I leave, the details of failure to you, although they will be of little value to the busted company.

      • #3272400

        Pablo, you would make a good US Executive

        by too old for it ·

        In reply to Outsourcing is generally a good idea

        The goal is to destroy the American middle class, and make them realize that they have zero value compared to their superiors in the executive suites. Only when there is nothing left except corporate CEOs and those who live in tar-paper slums will these execs be truly satisfied.

        Good luck!!

    • #3100738

      Outsourcing vs InHouse

      by les.kirk ·

      In reply to Good vs Bad Outsourcing

      There have been many negative comments posted here concerning outsourcing, and granted, some of these may be valid; however, looking at the situation from a business perspective, the cost savings are the key. The initial investment to setup the outsourced area may be high, but the long term cost savings well justify the expense.

      Dont get me wrong, I am a firm believer that jobs should stay in this country, but lets be realistic. We (IT People) have basically priced ourselves out of a job. Why should I pay you 50 to 100 dollars per hour when I can outsource the same position and get 4 people for what I pay for one? And the skills that these outsource people have are every bit as good and in many cases better than yours.

      Welcome to reality people. This IS a global economy and not only are you competing with the guy next door for a job, but you are also competing with people from all over the world for that SAME job.

      The best move I personally think for anyone in the IT field at this point is to consider employment with one of those outsourcing companies. Just remember though, that bigger, may not always be better. These outsourcing companies will keep onshore staff to supervise offshore resources and work efforts. Try it, you may like it, at least you’ll have a job.

      • #3100736

        Worth Their Weight in Gold

        by mswanberg ·

        In reply to Outsourcing vs InHouse

        A good programmer is worth their weight in gold. After all, the product they create is what drives most companies. Their website. Their processes. Their products. That’s the face of their organization. And it’s what customers see.

        Instead of looking at the average American/European programmer and saying, “you cost too much and you don’t deliver, so ALL of your colleagues must be the same,” I think it’s time to set standards, weed out the chaff, and start making sure that the programmers are worth what they’re paid.

        I believe that I am worth every penny I earn and more. But I also recognize that the “average” programmer is what sets my salary standards. In the end, human nature takes over and I perform to my apparent worth, instead of the other way around.

        And I have NEVER seen offshore product come back with any amount of quality, regardless of how many bodies they throw at the process.

        So, how about that? Managers, set high standards, get rid of the bottom 25%, redistribute a portion of their salaries to the remainder of the team (or use it to hire more high-quality folks), and watch productivity and quality skyrocket! Savings for you. More money for the programmers who are truly worth it. Better products. Money’s kept in the country. Everyone wins.

        -Mike

        • #3100732

          Amen!

          by valerie.pressley ·

          In reply to Worth Their Weight in Gold

          I, too, am worth every penny I earn. Software development is an art as well as a science. Just because you have a certification does not mean you can write good, reusable code. Laziness has led us to seek the simplest solution (on paper, that is). Logistically, outsourcing is a poor substitute for a real answer to good software development.

        • #3100716

          Further…

          by mswanberg ·

          In reply to Amen!

          And indeed, outsourcing (whether overseas or not) tends to create non-reusable code. After all, if you can get people to pay you later to fix the stuff you messed up today, wouldn’t you?

          To me, there is nothing more satisfying than being a part of the development process, growing your baby, nurturing it, getting it to a stable, error-free state, and then watch it flourish. I am more than happy to take responsibility for my systems, just so long as I have the authority to make it work the way I think it should.

          I’ve been on the evil side of the fence for several months now, consulting for a company whose product I believe in. But I have to say, I have little zeal to make my clients’ products perfect. After all, I’ll be gone in a matter of weeks, on to the next client site.

          So, I have elected to get back to running my own ship. It’s where I feel much more appreciated and self-actualized.

          -Mike

        • #3100812

          The good old days

          by raelayne ·

          In reply to Further…

          Well, Mike, I’m worried for you. Of course you like building your own baby and supporting it. I did, too, in the halcyon days of programming. And didn’t we all love building those little database applications — it’s so easy, and our customers were so appreciative becaue it was all visual.

          Have you been watching where the software business is going? Don’t you see that all of the one-man projects are disappearing, and it’s now about integration of off-the-shelf parts? That the only things that make any money are the really big hard things? Yeah, you can build widgets, but people are giving those away, right?

          The good thing is this: the very same stuff that’s disappearing is the stuff that’s easiest to outsource. Woohoo. But the trick will always be to stay on the front side of the wave, right?

          IMHO, of course.

        • #3100719

          Hammer meets nail…

          by rodney_scul ·

          In reply to Worth Their Weight in Gold

          This poster has his head on straight!!!

        • #3102129

          Have you considered the quality of managers

          by kovachevg ·

          In reply to Worth Their Weight in Gold

          Let’s face it – outsourcing happens when things are not going well. And bad things always start with management – they did not detect a crucial swing in the market, or relied on a customer who has been in the red for year, or did not khow to manage build processes or environments and got the project way behind schedule, or … you name it.

          So what you are suggesting is only one side of the story. Yes, ther is bound to be a bad apple somewhere but it is not necessarily a bad apple per se. If there were a competent manager to direct and require from a mediocre developer and bring him closer to the team to facilitate transfer of knowledge, then that developer would improve his standing dramatiacally.
          The alternative is to fire these guys, as you suggest, spend more money, effort, and time on recruiting – a art of its own that I am intimately familiar with and know can often fail – and hope the new people are the dream team you always wanted to have. Well, guess what – teams are built – with hard work, dedication, and mutual understanding and so on – not bought. So don’t count on just standards to fix the situation. There is a lot more to it – mentoring, coding standards, purposeful code reviews (something I’ve rarely seen), and a management team that direct the business with both vision and well-established practices.

        • #3273596

          Yes, I have

          by mswanberg ·

          In reply to Have you considered the quality of managers

          It’s funny how you state “it’s not just standards” and then go on to list several things that are, indeed, standards.

          I agree, you can’t run out and buy a dream team. But you can have a policy of getting rid of those that don’t meet the standards of the organization. Writing and maintaining a computer system is a skill and an art; it’s not a commodity. Three IT folks are not necessarily 3-times better than one.

          In my years in the trenches, one of the biggest complaints has always been how downsizing never reduces demanded throughput. Do the math, that means the remaining workers have to work harder. Has anyone ever heard of a company redistributing the salaries of laid-off workers to the remaining people? I never have. And that’s the biggest complaint: “my company laid people off, gave me a larger workload because of it, and didn’t so much as give me a pat on the back for not telling them to shove it.”

          I like to liken this to the NFL. Sure, we’d all love the fame and money of being a star quarterback, but there’s a real simple reason why we’re not all running out and applying for the job. Standards! You have to BE a good quarterback first. And the recruiting is extensive.

          Now, imagine if some NFL team said, “hey, let’s fire our star quarterback and bring in 4 cheaper quarterbacks… and we’ll let someone else decide which 4 we get.” I would bet that team would have a very rough season ahead of them.

          In the end, yes, I agree, the managers should be better-qualified to manage the people beneath them. But they can’t always do that, because most good IT people don’t want to be in management (myself especially).

          In the end, it seems to me that the best solution is to split the managerial duties. Have one manager that manages the people (vacations, whining, HR issues, pay, etc.) and one that’s the manager’s right-hand-man (er, person) that handles all the technical details… a Technical Lead or something. They could make hiring and firing decisions together. The TL would lead projects and act as liaison to the business. He/she would have to have STRONG communication skills, STRONG leadership qualities, but also have STRONG technical skills. He/she should spend 25-40% of their time coding, to stay fresh and in-touch with the product.

          Just my opinion…

          -Mike

      • #3100733

        Real-World Experience

        by valerie.pressley ·

        In reply to Outsourcing vs InHouse

        Have you actually worked on a project with outsourced resources?

      • #3100718

        Ironic…

        by rodney_scul ·

        In reply to Outsourcing vs InHouse

        that a post so out of touch with reality would refer to it.

      • #3100709

        IHBT

        by jimgon ·

        In reply to Outsourcing vs InHouse

        Either you are serious and never worked with offshore, or you are trolling. Can’t tell which. If you haven’t worked with offshore before these kids are inexperienced and fresh out of college. The produce what you would expect a new programmer to produce. Unfortunately they typically replace an experienced developer. They produce what a new programmer would produce, but unfortunately they really should be producing what a seasoned developer produces. Net effect is a down grade in quality and run overs on deliverable time and estimate cost.

        If you’re trolling. You get what you pay for. If you want to pay you’re developer what a burget flipper at McD’s makes, so be it. It’s your company not mine. Just expect cheese on you’re mainframe.

      • #3100895

        Business wants to pay less for IT ??

        by scott.e.case ·

        In reply to Outsourcing vs InHouse

        SPEAKING FOR ME ONLY, not my company or previous employers:
        As a old-timer of being in IT for over 25 years I remember dredging the bottom of pay pools while engineers, managers, secretaries, and janitors were making more than many of us in the field. Then overnight IT became the new “Car mechanics” and Supply vs demand kicked in, which led to pay raises.
        I was also involved with Gartner group in the early 90’s reviewing the Outsourcing of IT and the speculation was by 2001 the trend would lead to Insourcing due to companies want $$ when they lease was up and the companies were stuck with others actually taking away from the bottom-line and thus the Outsourcing cost savings for 5-10 were lost as the company scrambled to gear up IT (Seasoned help is not cheap unless there is a Recession) —
        I have looked at the outsourcing companies and while they charge the corporations a pretty penny the reality is the pay is up to 66% less than a In-house person who has a truer reason to making sure processes work. Outsourced people will just be re-assigned to next available post and the benefits usually are not there unless you get into the management portion.
        Outsource IT ? Why not Outsource Enginners and better yet: Management if you want to truly cut cost…
        Personally I am looking at leaving IT for a new career, one which I will not have to worry about constant changes and allows me to enjoy using a pc like I use to.

      • #3271584

        Mangement hacks united in their view.

        by x-marcap ·

        In reply to Outsourcing vs InHouse

        Yes, the education of our people is peerless.
        That is why 10 percent of the Chinese graduates are adequate was in a previous post.

        The real issue is that most management looks at IT as an overhead and not a resource. Ther previous poster also looks at IT as a burden with no value.

        The problem is that we save the companies that we work for money that they’d normally spend, they don’t put that additional money into the IT budget as something you earned. They put it to Management bonuses as you did it for them…

        • #3273036

          Business-side “strategic thinking”

          by too old for it ·

          In reply to Mangement hacks united in their view.

          Most “strategic thinking” from the business side extends no further than this coming Friday’s corporate guidance that is disseminated to stock market analysts.

    • #3100696

      Out Sourcing not so bad

      by netadmin109 ·

      In reply to Good vs Bad Outsourcing

      I am an outsourced IT person and while I wasnt here during the transition I am here now and it seems to be very smooth.

    • #3100685

      Outsourcing bad bad bad

      by azson ·

      In reply to Good vs Bad Outsourcing

      Over the past 20 years I’ve watched probably about 300 jobs from our plant head down to Mexico.
      The more jobs that have gone done there the worse the quality has gotten. Put on top of that our company put S.A.P.in to full operation which bsicaly almost shut us down and now we are millions of dollars behind and what product we do manage to get in and move we usually have to re-work Mexicos’ mistakes before we can ship it.

    • #3100665

      Never Seen Good Outsourcing

      by thefrown ·

      In reply to Good vs Bad Outsourcing

      Because it’s always driven by the bean counters; never by the staff with the technical nous. Staff are always considered the most expensive commodity; you have to pay for accomodation, leave, personal development amongst other things. My previous employer calculated that it cost them 2.5 times my salary to employ me.

      In my experience, when you have your infrastructure running well, then it always looks as though we’re doing nothing. Management then think those lazy, overpaid IT guys are superfluous to requiements. On the other hand, if you’re all running round with your tails on fire, then the Management believe you’re incompetent and that someone else can do it better (even if their poor business decisions to buy 2nd rate hardware and systems is the cause of you sweating buckets).

      I’ve personally seen three outsource projects and every time the service was brought back in-house within five years (twice at an astronomical cost) because service levels dropped to an all-time low.

      What architects of the outsourcing failed to appreciate was the outsourced staff were loyal to their company, not ours. The outsource companies very rarely appreciated our business requirements, didn’t want to learn them and were never prepared to go the extra mile. If there wasn’t a written process to cover an issue, then it was swept under the carpet and forgotten. I actually saw a helpdesk call to replace a faulty PC take 3 months to complete; the building it was in was a Token Ring house and all the desktop support staff only had experience with Ethernet (I’m not kidding!)

      And it looks as though I’m going through it again; though nobody will admit it openly.

      If it wasn’t for the fact my current post really suits my lifestyle outside of work, then I would have left ages ago.

    • #3100643

      Seen it all

      by silentknight ·

      In reply to Good vs Bad Outsourcing

      I’ve seen the good, bad and ugly sides of outsourcing. From an employee perspective, you will generally have the opportunity to go to work for the outsourcer. If you want to be an IT person, then working for the outsourcer can be great for your career. Most employers create some type of severance package for employees that the outsourcer doesn’t want to take. In general, it will be stressful and people will bail before they know the final disposition of the matter. Unless you’re in a really tight job market (or you don’t have the skills to compete) it won’t hurt to wait around for a while. The outsourcing might not happen. Just find things to do that will demonstrate your value to the organization until the decision is made.

      From a business perspective, outsourcing can be a positive experience if they follow a few rules:
      1) Only outsource non-strategic commodity tasks (e.g. infrastructure management – the monitoring of the infrastructure and possibly some amount of the maintenance) and you keep the functions that give the business a competitive advantage (e.g. application development and support). If the network (or something else) is strategic to the success of the business, you should keep all aspects of it.
      2) Put strong service level agreements in place.
      3) Understand your fully burdened costs for each IT service you provide and your current service levels before you start looking at outsourcing. This will allow you to force an apples to apples comparison with the costs of the outsourcer.

      Businesses that violate those rules often find themselves frustrated with the outsourcer and taking IT back from them because it costs more than they planned.

      Good luck!

      • #3100889

        Some things to keep in mind

        by rzimmerman ·

        In reply to Seen it all

        From the employee perspective, you need to know what your current employer has negotiated on your behalf. Some employers go out of their way to protect employee interests and others could care less. If you have any input, you need to let your employer know you want to protect seniority rights, severance policy, health care, vacation time, work at home provisions, protection from layoff, right to an office, bonus provisions, salary increases, and job classification. If these are not in the outsourcing contract, you will be at the mercy of your new employer, and that is not a good thing.

    • #3100635

      they don’t care

      by ladyreader ·

      In reply to Good vs Bad Outsourcing

      An old employer of mine outsourced some CRM code development just around the time I joined the development team as a full-time employee. When the contract workers (all of whom were from India and young professionals just starting out) left, we found they’d:
      1) left no documentation
      2) ignored our naming standards
      3) written bad code; bad being defined as inefficient, hard-to-trace and sometimes just non-working.

      And, of course, we had to live with it. We spent a lot of hours tracing it, modifying it and fixing it. It was very frustrating.

      Outsourcing might be a good move if you know who you are getting and the company which places these temporary employees are within easy legal sueing distance.

    • #3100630

      Outsourcing – a need of time

      by dilipj ·

      In reply to Good vs Bad Outsourcing

      Outsourcing is incresingly going to be there. you can not blame the management for their decisions coming out of experience.

      It saves money and I bet it delivers very very good quality material as always there is a fear of rejection, loosing a good amount of business.

      THe guys at other end are equally or many times more skilled, capable. I have seen many in-house IT work.. It’s simply shit. but it goes on as it is in-house. I have seen the puppies working with terrible in-house applications/products, at once becomes bulldog on outsourced material. Even if they miss a simple validation..

      Communication is improved you can have video conferancing just as talking across the table. In such cases there is no question of ambiguity and the produce by third party is really fantastic.

      So if company is earning more profits from outsourcing. It had better chances of survival and expansion. This benifits the country again. So it’s like ‘live and let live’ in today’s Global villege.

      Hope u agree to this.

      • #3102223

        Reply To: Good vs Bad Outsourcing

        by valerie.pressley ·

        In reply to Outsourcing – a need of time

        The problem is, management doesn’t make these decisions out of experience. They generally do it because a directive came from above, typically based on some non-technical bean counter’s projection of how much money the company is going to save.

        You say you “bet it delivers very very good quality material.” How much would you be willing to bet? Have you every actually worked on a project where the IT was outsourced? Communism was supposedly a great idea, too — in theory. But look what happened in practice. The system collapsed.

        Yes, communication has improved. You can have video conferencing all you want. But when everyone goes in their separate directions, you don’t know what is happening until you recive some deliverables. Believe me, what you get typically does not resemble what you discussed in that high-tech video conference. Rework is the most costly part of outsourcing. No one going in realizes what a logistical nightmare outsourcing is until they get into it. Even when you do have plans and SLAs, you simply cannot control people who are half a world away. And when people are far away, they have less of a stake in the outcome of the project, therefore they are less likely to produce a quality product in a timely fashion. Also, since the outsourced resources are never in front of a client, the outsourcing company can use any rookie developer that they wouldn’t dare put in front of a client. That’s speaking from experience, not “betting” based on something I read in an article somewhere or heard from someone.

      • #3271572

        This man smokes something pow – ow – owerful

        by x-marcap ·

        In reply to Outsourcing – a need of time

        Obviously, if there isn’t a necessary validation, or if it didn’t work it isn’t your fault. It would be the problem with the specifications. That is the attitude that everyone has to watch for, and avoid.

        With In-House services the fix is added and no major scope damage. With this character I know that he’ll blame the sun and moon before he fixes the problem…

        Outsourcing is cheaper, because you will get what exactly you pay for.

    • #3100617

      We need to be careful here….

      by sql_joe ·

      In reply to Good vs Bad Outsourcing

      First, lets not confuse outsourcing with offshoring, though in many cases they are one and the same.

      Outsourcing can be a useful tool when used appropriatly. In our company, we keep 2 programmers occupied full time working on our ERP system – chaging reports, streamling processes, etc. It would be silly for us to outsource that. But, for companie that only need customization work infrequently, outsourcing gives them ready access to a programmer when they need it withough having to pay a full time salary to have it available.

      Many times outsroucing is a choice between cost and availability. Currently, my company pays for a full time DBA (me). With that they get many benefits such as instant SQL access, instant problem solving, support for the programmers, special attention to detail on the databases, etc. They could outsource the DBA function, and they would save money, becuase an outsrouced DBA is responsable for many companies databases, so my compnay only has to pay for a fraction of a DBA, of course for that savings, they lose some of the benefits mentioned above. So, they make a decision based on the trade offs.

      So, in many cases, outsourcing can be the right thing to do – as long as the decision involves more than a fincancial angle. If we look at only the bottom line, we would always choose to outsource.

      Offshoring – yes, offshore labor is cheaper, as I said in another post somewhere else, how can an American Worker compete with someone making 50 cents an hour with no benefits. Of course, when we say the American should accept lower salary’s, we forget that the American has to pay a lot more for many products than his foreign counterpart. Perhaps if we were to compare salries based on cost of living we Americans would still be overpaid – but until a truly global economy is achieved where products cost the same EVERYWHERE, there will always be some that need to make more than others because it costs more to live there! Here’s the rub – do we really think Big Business is going to let things improve in those foreign countries? Not if they can help it – this would cost them their cheap labor pool, and even if conditions do improve, how long do you think it will take Big Business to move operations somewhere else? Its not Mexico, India, the Czeck Republic, or anywhere else, they are interested in, its CHEAP LABOR! and they will go wherever its the cheapest, period.

      So, we either need to open all the borders and go truly global, and when I say we, I mean EVERYONE, not just the USA…OR we need to start protecting our own – because in the long term, no country can sustain an economy where there are no jobs (and sorry, a service economy can’t survive long if there is no “production” occuring as a foundation) – the playing field needs to be leveled one way or another. Of course, this will never happen because Big Business loses (or so it thinks). Of course, does Big Business care? No, if the US, UK, EU, or whomever economy fails, Big Business will already be long gone having moved to wherever the ecomomy is stable. Then…well, then they’ll do it all over again. I guess ultimatly, it will go full circle, and the jobs will come back to the USA (or whoever), when, after a failed economy, are now the cheapest labor pool.

      Okay, enough ranting.

      George

      • #3100522

        I Agree

        by wojnar ·

        In reply to We need to be careful here….

        One important point – in outsourcing, you almost never have exclusive access to a single support person. This means that Joe DBA may have the exact same qualifications and work experience as Sally DBA but Sally has never had to work with ABC company (who Joe has supported exclusively for 3 years). Sally cannot just walk into a crisis situation without an extended orientation period. That is the danger of outsourcing – the person you deal with in a crisis may not be the person you ‘normally’ contact with issues.

    • #3100514

      Run as fast as you can

      by rzimmerman ·

      In reply to Good vs Bad Outsourcing

      Our entire IT Division of over 350 employees was outsourced in 1997, based on an CEO decsion that IT was not a core competency of the organization, & that there would be savings from economies of scales, access to better technical talent, etc. A five year contract was signed and employees were given the option to go with the outsourcer or take a package. About 80% went with the outsourcer & the rest took the package. At first the move went well. The outsourcer did have some best practices in help desk and data center operation which benefited the client. And the outsourcer had good bonus, salary, & benefits programs for the employees. Also there was a three year protection clause for the employees where they could not be laid off. Unfortunately, the honeymoon period did not last long. The primary difficulty was in the development arena where the client started complaining about project costs and delays. The client was not used to paying $ 100.00-$150.00 an hour for programming support. Nor were they used to signing change orders for every change to specifications. Nor did they like the new bureacracy set up between the real clients, the new IT intermediaries left behind to manage the outsourcing contract, and the outsourced employees whom they were used to going to directly. Also the outsourced employees began to notice that education opportunities were less than promised, and pressure began to build for more and more unpaid overtime. Compounding the problem, the outsourcer was purchased by another organization which sold them off to an even bigger outsourcer that had much sharper business practices that irritated the client even more. The employees found that their salaries were frozen and they were put on very onerous up or out performance plans, and hideous project schedules. Service levels started to decline and the client started hiring IT personnel to create a parallel IT group in addition to the outsourcing company. Costs of course skyrocketed, as did employee and outsourcer headcount. The most talented employees left and the less talented started getting laid off especially after 9/11. In retrospect, the outsourcing business model was based on a five year life cycle which hopefully would lock the client into being dependent on the outsourcer. The outsourcer would lose money in the beginning of the deal but at the end would end up with significant profits. For the employee, going with an outsourcer is a very bad proposition. The work environment is bad, salaries are non-competitive, and the management is very autocratic.

      • #3102190

        I’ll back that

        by pkr9 ·

        In reply to Run as fast as you can

        When talks about outsourcing starts, you start looking for another job.

        People are not commodities that can be sold off in an outsourcing deal. They have for many reasons selected to work for a specific companym, and if they would like to work for the oursopurcing company that has been asked/forced/reluctantly accepted to take the staff the didn’t want to hire in the first place. You will always be a half-member of the company. A poor kid somebody brought along for the party.

        I was sold off during an outsourcing – even to an IT company owned by the same group. It was awful. It was OK for the first couple of months, after that it became clearer and clearet that their way of doing bussiness and their entire culture was very different to the company where I still did my daily work. It was very strange that I couldn’t do work for my former(?) workmates in the same way as usual, but had to go through a major paper routine every time. I spent half an hour every day reporting what I had done, and the hours that were not debitable was reduced hour by hour in my overtime. I left within a year.

      • #2484907

        Thats it, and if anyone thinks different…….

        by gerberb58 ·

        In reply to Run as fast as you can

        I too was working for a fortune 500 world company for 8 yrs and became part of and IT outsource deal. GET OUT FAST. It may or may not be a total disaster for the outsourcing company (mostly it is, read on) but it is for any “cross-hired employee. I liked my job with XXX company, I did not want to be an employee of YYY co. But at the time, I thought my 8 years of complete and total knowledege of XXX IT systems would set me apart. NOT! I did not matter what I had done, what I could do, and what dedication I had………….BOTTOM LINE $$$$. I was fired. Along with 90% of my U.S. peers. Yep, India. YYY still can’t make a profit, all of the XXX people are gone and now the US IT systems are a complete disaster. XXX called me last week (I had not been there for a yr) to come back aboard, they were firing the outsourcer. I promptly told them, “Sorry about your luck!” CLICK….

    • #3100512

      Outsourcing

      by codebubba ·

      In reply to Good vs Bad Outsourcing

      Ahh yes … hire a company in India to do for “less” money than what your local people get paid. Yeah, RIGHT.

      We did that about 2 years ago. We were developing a new version of our product and this genius working here comes up with the idea that we can get an offshore outfit to develop the new code for the product. Should be great! Will really make our application fly – and we’ll get it cheaper.

      To keep a long story short – the outfit did the work and we came up on the deadline. Guess what? The offshore group did not have any real idea what we were doing! Imagine that! We don’t do a good job of writing specs for ourselves – so we hire people that don’t have ANY idea how our business model and application works and turn over one of the key elements of the program to them. Yeah … brilliant.

      We spent the next year rewriting just about everything they did. I don’t know if our company sued the outfit or not – but I would not hire one of those cheap developers to cut my lawn let alone write code. I could write better code my first year in school (30 years ago) than these monkeys put into a production product. It was absolutely disgusting.

      -CB

      • #3271571

        Bubba

        by x-marcap ·

        In reply to Outsourcing

        You speak Texan? I can relate.

    • #3100506

      I’m a former unfortunate outsourced guy

      by jmhalloy ·

      In reply to Good vs Bad Outsourcing

      In July 2001, when I was working in Brussels Belgium as system engineer and operations supervisor for one of the biggest american pharmaceutical company, a corporate decision to outsource all but the developpers staff jobs to one of the biggest mainframes manufacturer, I was very happy at that very momment.
      I just changed my hat’s logo doing excactly the same job for my new company in my former office, with a bigger salary.

      About six months later, just the time needed to transfer my knowledge to my new company, I had to move to that company’s offices with… nothing to do from 08H00 AM to 04H00 PM despite the fact I had the same job to perform for my former employer.
      I had no possibility to remote-connect to my former company’s mainframe … until being back at home, doing my job until about 12H00 PM.

      After about one year of such a pleasant regime, I exploded in face of my manager and … was fired in a few weeks.

      I had to follow a strict psychiatric treatment along four years before finding a new I.T. job in a federal administration.

      The cost for my former employer tripled and the pharmaceutical company closed the Brussels manufacturing plan.

      No more comments…

    • #3100501

      Outsourcing is bad for both the employee and the company

      by jpepitone2001 ·

      In reply to Good vs Bad Outsourcing

      I was outsourced 3 years ago. I worked for a Major Financial Bank and they were approached by IBM Global Services. They were promised lower costs and higher efficiency and after 2 years realized higher per user costs and lower efficiency and low customer satisfaction. I hear they got rid of IBM and went to another 3rd party hoping it will be better. My take on it after being in the IT field for 20 years, is it is best to keep it inhouse with motivated employees. Most US IT workers respect a company and go the extra effort to support their companies Business lines with technology needs. I am a staunch supporter of keeping the jobs in AMERICA. I now work for another Major US Bank that believes in their employees. Perhaps you heard of them they are Bank of America- Higher Standards.

      • #3100476

        High Cost Hurdle

        by rzimmerman ·

        In reply to Outsourcing is bad for both the employee and the company

        One of the dirty little secrets of outsourcing is that they have to be a minimum of 35% more cost efficient just to break even on costs charged back to their client. That is a huge cost hurdle to overcome which is why at the end of the contract the client is wondering why they did the deal in the first place.

    • #3100499

      Outsourcing actualy not the right term now days.

      by azson ·

      In reply to Good vs Bad Outsourcing

      Corportate dosent call it outsourcing, they like to call it “globalization”, to make sound impressive. And my question is, when you start out sourceing when does it stop? Whos to say the company you out sourced to, out sources part of it to another company? I dont care if it’s domestic or off shore, you always run the risk of loosing quality.

    • #3100484

      Outsourcing good for restructuring!

      by lemonnado ·

      In reply to Good vs Bad Outsourcing

      I have my experience with completely incapable internal IT departments. The only way out for the corp is to define the SLA’s they CAN define and get rid of the dead wood. After the contracted outsourcing period, or even during that period, the new alternative can be implemented. All the mentioned dissadvantages like low morale, loss of good employees, are included as a calculated risk just to save the long term perspective.

      However, one of the main problems I observed is the fact that there is nothing more likely to make the outsourcing contract negotiations fail than strickt SLA’s with penalties for functions like Backups and other essential services. Outsourcing companies tend to love your money but responsibility and associated penalties seem to be pure poison.

      In any case, nothing worse than an illiterate management being pushed into the believe that outsourcing will save their day when that is not the case. That ends in the usual hackfest repeated so many times in this thread.

      The best experience I made was with ‘cosourcing’. A form of resource sharing. It’s beefing up your departement with a long term consulting services contract which as applied on a part time and ‘need be’ bassis. Low fixed cost and fixed hourly rates. So you can utilize specialized knowledge but you’re not taken out by it.

    • #3100461

      If you’re competent, outsourcing is good

      by geekdoctor ·

      In reply to Good vs Bad Outsourcing

      First of all, let’s not confuse OUTSOURCING with OFFSHORING. Those are two different things, and sometimes overlap.

      I work for a prominent outsourcer. I’ve got senior-level and architect-level skills. I’ll never got back to being an admin at a single company, because that gig SUCKS. I have offshore staff in Europe and India to handle stupid tasks like changing passwords or creating print queues.

      I get to spend my days crafting new solutions that use new technology for my clients — and I don’t just play with one of them.

      Oh, and my clients love it, because they can go focus on creating their little widgets — which they were good at anyway while they sucked at IT — and they’ll pay my company to run IT for them. It’s all win-win. And, they never laid off anyone. In fact, they are now HIRING people to do more application work (which they retained inhouse) from the savings they got when they sent the data center work to us. As for our end, we’ve never laid off anyone when hiring UNIX people in Europe or India — those were additional hires fostered by growth.

      Outsourcing isn’t for everyone. Companies who want intimate control over their IT infrastructure will hate it and should not outsource. But if IT is just a tool, and they don’t care what color the tool is, then outsourcing is great.

      A great technologist buried at a widget-maker is better utilized at an outsourcer.

      • #3100808

        Dead wood eat dust!

        by raelayne ·

        In reply to If you’re competent, outsourcing is good

        I agree with you, geekdoctor, although I’ll be less diplomatic here. Of course there are folks who are good at their jobs and talented, just by nature insecure, and they worry about what the change means for them. But the biggest worriers — and they should be — are the folks who haven’t kept up with their peers in the profession, just show up each day and do what they’ve always done, and who feel they’re entitled to a job for life due to their long tenure. I’m a silver-back myself, and understand the “paid my dues in ways you can’t imagine” point of view, but it really is all about what you do now. Off your duffs, folks; it’ll keep you young.

        • #2484889

          You don’t get it

          by gerberb58 ·

          In reply to Dead wood eat dust!

          Yep, I am who you speak of. You’ve never been a part of an outsource deal I see. IT DOESNT MATTER IF YOU KEEP UP OR NOT…..I did, and was promply fired. I did make it much easier to get a new job thought…So you are 1/3 correct, 2/3’s incorrect.

      • #3088601

        Overcoming the Fear of Outsourcing

        by thomgordon ·

        In reply to If you’re competent, outsourcing is good

        As a consultant, I had two ‘full-time’ jobs where serious changes were needed. The impact for the staff in both cases was serious.

        In both cases, my recommendation to the other staffers was ‘dust off your resume…’ Even for the survivors, it never hurts your ego to create a list of your accomplishments (i.e resume). If you are not-so-competent, perhaps you can work on your fiction writing skills. Either way, you can boost your ego and develop writing skills.

        One company (Grain) desperately needed to SHOCK its IT department to eliminate turf wars (Oracle Forms vs Powerbuilder, if you can believe it). Unfortunately for them, the outsource firm started talking SAP (yikes! That’s a huge step, even for a medium sized company).

        The other company (Insurance) experimented with offshoring with reasonable success and then drifted mercilessly into downsizing in a pathetic knee-jerk reaction to high IT costs. What they really needed an infusion of new Technology that strategic outsourcing would have afforded them. Istead, they kept all the dead-wood. Last I heard they were still running IMS on mainframes. Glad I was cut because ‘Oracle rules!’ and they just didn’t get it…

        My recommendation to anyone worried about being cut due to any senior executive reaction to poor IT management:

        ‘No Fear!’ and ‘Update your Resume’

        If your manager finds your resume on your desk, encourage him or her to read it.

        Cheers

    • #3101104

      Been there….now starting again

      by bigjimslade99 ·

      In reply to Good vs Bad Outsourcing

      The sae thing is happening here as well. They are do a “study” (wink) and will let us know in the coming months if they deceide. I worked at Lucent as a contractor to IBM in their outsourcing endevaor. When the contract was up for renewal, Lucent wanted alot for free and IBM said no way. They bickered for months and the Lucent siad, thank but no thanks and now has taken the IT back in house.

    • #3101073

      Cheap – yes.. Quality of service – poor

      by doogal123 ·

      In reply to Good vs Bad Outsourcing

      The outsourcing/offshore costing initially looks attractive to upper management. (They don’t have to interact with the negatives everyday.)

      I can say that the service provided is as bad as the low price would indicate. You DO get what you pay for (or, don’t get what you don’t pay for).

      And those of you (who do remain) will spend MORE time wrangling with the offshore provider (who is less accountable) than you ever did with the in-house staff (directly accountable). And you will be less satisfied with the end result.

    • #3100964

      So here are some ideas!!!

      by kovachevg ·

      In reply to Good vs Bad Outsourcing

      Some advice:

      1. Outsourcing is Top Management’s favorite. Remember, these guys’ goal is to produce big dollar signs. After all, that’s what matters to stock holders because the company works for them. So if a manager can save several thousand dollars, it looks good on his record and resume. But many top managers do not understand outsourcing. And it can be summarized in a few short sentences:
      A. If the IT services your company needs are like commodities (like electricity), by all means, do outsource. But make sure that there are many companies you can oursource to – a good minimum is 4. IT commodities include: ISP services, user support (mostly live), e-mail, some web (if you have a website that only requires light maintenanace but heavy module-level modifications).

      B. If you need a one time service that requires advanced or proprietary knowledge, then outsource to a good consultant. Their people will come, do the analysis, build the system, and if you are smart, you will require detailed documentation from them as well. If the support after that is trivial – do outsource, if not – hire an in-house professional to do it. He will be worth his weight in gold and probably twice as much.

      C. If you need advanced, proprietary knowledge on a regular basis – DO NOT OUTSOURCE!!! You will lose. Keep the talent in-house, because they are your major asset. If your expenses are too high, try to lower them. There are different strategies to accomplish that. One is to turn your top developers into designers and outsource just the coding piece to another company. Of course, you will have to factor in the cost to manage the relationship and the cost of the risk of your new partner having access to the applications architecture models. In 2 years time they can strike on their own.

      Having said all that, here are some career tips:

      1. Jobs in IT are volatile, esp. entry-level and medium-grade ones. If you are in one of these categories, look for a large company that is hiring. Chances are that they will always need you, or will be slow to change. In both cases, you will see the writing on the wall much before they put the pink slip on your desk. Work on your skills and try to become a senior developer who is top-notch.
      Initial startups are also good – they have fresh cash kicking and you will likely have a job for at least two years. And they need talented and new blood for their innovative projects – the kind of guys who get out of college with good grades and a lot of steam to change the world and at the same time don’t cost a lot. Start polishing your resume after 18 months, particularly if things don’t shine. If the venture capitalists pull the plug, it will be sudden death – 2 weeks max.

      2. If you are a senior developer – they will probably make it worth your while to stay during the transition, or will offer you a management position. After all, who else can manage a SLA contract better than the person who built it? You know everything these new guys will have to support and most likely you will train them personally on how to do it. Use this tim to ask them to pay for a management course – your eagerness is key to get their approval.
      However, if you are not one of the big dogs, then try to sniff the bad news way in advance and from now on before you land another job, try to get the best severance package possible. Senior jobs are not always available, they don’t stay around very long, and thus you may be out of a job for a longer than the usual period of time or be forced to take something else that doesn’t match your qulifications. Either way, you will lose money. The severance package is your compensation. So, negotiate aggresively. It’s worth it. If the company is well off financially at the time they hire, they will be more likely to give you what you want.

      My final paragraph is about the brave hearts. People, you can’t be IT for the rest of your lives. You have to look to higher grounds. Take management courses, start your own businesses (always the best option for million-dollar salaries), change careers (teach in colleges if you have advanced degrees), and if you do none of the above, never forget to spend at least 3 hours per week, looking for a new job. It is such a relief when the roomers of outsourcing start and you are out the door much before the pink slips start pouring in. With this strategy, I never had the “pleasure” to get one.

      Good Night to ALL!!!

    • #3100932

      My experience with it wasn’t good

      by server queen ·

      In reply to Good vs Bad Outsourcing

      When I worked at Large Un-Named Aircraft Manufacturer in Seattle, they merged with Large Un-Named Aircraft Manufacturer in the Midwest. The second firm had outsourced their entire IT in the last couple of years, and did something really sleazy. The IT people were offered jobs at the outsource company (IBM Global Services) – basically, they were offered their own old jobs back – but they lost all their seniority, their benefits and salaries were cut, etc.

      We were trying to merge the information systems of the two companies – I was working on the Exchange merger part – and working both with the remaining staff members of Company #2 and the IGS folks who used to work for Company #2. They told me some real horror stories of the way they’d been treated in the outsourcing. I think it was just a way for Company #2 to make themselves more attractive to Company #1 so we’d buy them and make the stock go up. It was not fun working with folks who were that demoralized.

      The really stupid thing is that the senior-level managers all had really smarmy BS arguments like “outsourcing the work to a company whose primary focus is customer support.” Um, guys, ANY company whose primary focus isn’t customer support doesn’t last long. Admit all you wanted to do is cut salaries and benefits to make your stock go up and cut the crap.

    • #3100929

      It dosnt make sense

      by azson ·

      In reply to Good vs Bad Outsourcing

      How can a company do some thing at les-cost then doing it in house, they still have to pay for a building, they still have to pay a CEO, they still have to make a profit. The only way they can do it is have lower wages and cutting employees benafits. Our company tryed selling our board area, it ending up buy it back a year later.

    • #3100840

      the good, the bad, the rules of thumb

      by raelayne ·

      In reply to Good vs Bad Outsourcing

      OK, I’ve been through this a few times, and here’s my take on the whole thing:

      1 – Outsourcing your core competency is a sign of a business with serious fundamental problems. The best way to outsource your core business is to sell it to a competitor. Can’t think of anything else that will “fix” your business? Sell. Buy a Dairy Queen.

      2 – Outsourcing things that aren’t your core competency can help you focus your time, energy, and talents on what is. But be careful when you define your core competency. Banking, for example — is it really a data processing business? Maybe. Without data processing, isn’t a bank just a marketing enterprise?

      3 – But don’t think outsourcing will save you money. It may cost more. But it will be a predictable expense rather than a big sucking money pit you can’t forecast from quarter to quarter. And you can expect certain performance levels. Those are good things.

      4 – If it fails, it fails big. And it fails because you didn’t manage it properly. Your management probably thought “whew, now that headache is gone and I can do something else.” Wrong. It takes all of the things the various contributers to this discussion have talked about — SLAs, very clear understanding of expectations, performance-related pay, and a determination to make the partnership work. Someone really good has to be responsible for it, and it requires constant effort.

      5 – Employees hate the idea of being outsourced at first. Partly because of insecurity. Staff in organizations perceived as failing are beaten up and pushed down for a long time before someone at the top decides it’s hopeless, and starts looking for a silver bullet outside the company. So these folks assume they’re about to be on the street. Partly because they feel like they’re being put out of the family — I won’t be part of the team anymore. But in fact, employees almost always end up happier. It’s better (assuming you’re reasonably competent) to work for a company that knows what it’s doing. They’ll treat you better, they won’t blame you for problems outside your control, they’ll support you and train you.

      6. If management outsourced to save money and because they thought it would be easier, the outsourcing will fail, too, and they’ll end up bringing things back in house. And they’ll have to start over with recruiting, because those former employees aren’t coming back — they like it at IBM or wherever they went. If they do come back, it will be at a higher pay rate. How can they lose?

      7. Outsourcing is a good way to get rid of dead wood. It may be the only way to do it without lawsuits, and I think that’s the real motivation behind many corporate outsourcing initiatives. Are you “dead wood”? Well, that’s another issue, and something you should take responsibility for rectifying. Right now.

      8. And now, regarding the over-valued American we’ve been discussing — I want to ask why so many of the students in our best schools are from somewhere else, and why the people from outside the U.S. seem to know English and write better than we do. Do “foreign” programmers do only what they’re told to do? Maybe. That means communication is going to be a challenge if you outsource. Do American programmers spend half their time surfing and playing fantasy football? Maybe. That means we have a work ethic issue. And maybe we need to talk about all of this rather than walking around with ugly American chips on our shoulders.

    • #3102348

      it can be a good thing…

      by magicmike99 ·

      In reply to Good vs Bad Outsourcing

      The company I work for has out sourced software development to the Ukraine since I’ve been with them (over a year.). It has its ups and downs, but I have to say I’ve met some awesome developers. I’ve also met some that couldn’t get past the language barrier and that was very frustrating. All in all I have to say the hardest part was understanding the differemce in the way they think and how they view corporate structure. One thing I will say is that they always give me exactly what I ask for (I mean EXACTLY, that taught me how to ask for things clearly.). The big thing I learned is that they want you to speak simply, they don’t find it condecending and ask lots of questions. It may take longer to get things done, but it gets done,and often a lot cheaper than with American developers.

    • #3102207

      Interresting yet not too surprising

      by ruinit2 ·

      In reply to Good vs Bad Outsourcing

      I started this post to see what experiences people had with outsourcing, never expecting it to turn to a debate over the US vs the rest of the world.

      To be frank, I should have… Americans (read US citizens) have a healthy drive for being patriotic, which sometimes feels almost neurotic. Not all good things are American in origin! But yes America is successful in a lot of things.

      However it has been an interesting read all the way. As some have pointed out, there are benefits in outsourcing as well as drawbacks. But the one thing that is prevailing is the negative aspect of outsourcing. For one loosing control, and two all the what ifs…

      To pitch in my own view or two cents: The goal of every outsourcing is the need for the business to concentrate on it’s core competence and adding value to that. Most companies today face a tough marketplace where the prices for commodities are going up while earnings are dropping, so how do you compete? By concentrating your spending on sales and marketing. But do you really want to expose yourself to the risks that outsourcing brings along?

      I’m betting there are a lot of firms out there in different businesses who are struggling with bad decisions made when trying to save money. Some are bold enough to admit their mistakes and try and go back to the way it was before, loosing a lot of their best in the process.

      Time will tell what I’m going to do when the decision finally is made, stay onboard or follow the rats… Why be loyal to a firm that is not loyal to you?

    • #3272498

      One of the downsides….

      by bigjimslade99 ·

      In reply to Good vs Bad Outsourcing

      Since they are performing a “study” alot of people here are a little upset. Mainly the ones that have been with this company for 20yrs or more. They are a few years away from being able to retire (Rule of 80, age + yrs of service) and they are worried that if the outsourcing goes through they will loose their retirement or not have the same benefits they were so looking forward to a year ago. They claim its a cost savings when in reality its higher stock prices for the share holders. We get praise from our customer base (yes there are times they hate us) but for the most part they love us. When/if outsourced they will no longer have the personalized service that they have been accustomed to since we will now have to document everything we do no matter how insignificant it may seem.

    • #3272459

      Oxymoron

      by jkaras ·

      In reply to Good vs Bad Outsourcing

      good and outsourcing cannot be in the same sentance together. Hulk say OUTSOURCING BAD!!! enough said. lol.

    • #3272406

      You assume there is good outsourcing!

      by too old for it ·

      In reply to Good vs Bad Outsourcing

      Outsourcing, like “shareholder value” is little more than code-speak for C-level managment hatred for the middle class, and a theartfelt desire to see the USA a poverty stricken, slum-ridden third-world backwater. Only then will the working class will understand that industry executives are their “superiors”.

    • #3272372

      My experience with outsourcing

      by cgoeckel ·

      In reply to Good vs Bad Outsourcing

      Back in August of 2003 the company I worked for started the transition of moving 90% of their IT jobs to India. I was in the second wave to go.

      We had heard the rumors of it happening for a year prior but were told that they weren’t sending all the jobs over, just a small portion. The truth came out when one of the guys was sent over to train folks on the helpdesk and it was let slip that the entire IT would be shipped out.

      3 months after that happened is when it started. Of course I can look on it as a way to improve the financial case for the company but they didn’t do it up front with the folks they let go.

      Now its 3 years later and the company has started to send the jobs back to the states due to poor customer service and the fact that projects were running behind and costing them more money then they planned.

      Some of the folks that still work for the company but in other areas that I worked with told me horror stories. For every 10 calls to the helpdesk they had maybe 2 that resolved their issue without having to wait on hold or get sent to another person with an average call of 1 hour.

      The cost ratio went higher then when it was stateside. When the contract was completed they moved the jobs back to stateside at about 4x the rate.

    • #3273729

      Well!!! I have been a

      by zlitocook ·

      In reply to Good vs Bad Outsourcing

      Contractor with three companies that outsourced and it is never easy. Depending on what is outsourced and whom it effects is what matters.
      The last big company I was with completely outsourced the IT department. And they were told that they have been replaced and will need to find new employment. This would take two to three months so they could find other employment. But with all the down outsourcing most of the companies IT employees have gone into other job opportunities.
      This is our country problem, we keep giving to every one and forget the people here, we created the Internet and we created most of what you use on the Internet.
      We need to teach our children to use and improve the Internet.

    • #3273725

      Nothing good about it.

      by sarge62436 ·

      In reply to Good vs Bad Outsourcing

      The management that is directing the outsourcing rarely has any idea about what it takes to perform the jobs that are being outsourced. If I have to spend an inordinate amout of time documenting every aspect of a job and training an employee of the outsourcing company, then a fundamental problem exists; the outsourcing shoud not be taking place. Instead, management should spend time with their direct reports learning about the valuable in-house resources that they have access to.

      (That’s right…..managaers should know how to perform the job of each of their direct reports….a novel concept; to be sure.)

    • #3272033

      It’s Happened Already

      by djholmes824 ·

      In reply to Good vs Bad Outsourcing

      Being an IT Manager, I was part of an outsourcing intiative and let go as a result. The company that now manages IT for my former employer is charging “an arm and a leg” for various IT services and hardware that were provided as part of the former department’s portfolio. There are no checks and balances when providing solutions to ensure that spending on IT is not monopolized by this outsourcing company. The now outsourced IT department is in the business of making money. There must be an equitable solution for both parties, but the outsourcing company wants it all.

      • #3271671

        Reply To: Good vs Bad Outsourcing

        by meitemarken ·

        In reply to It’s Happened Already

        That’s always the story when you give somebody a finger… the arm is next. After reading the other posts, some are mentioning what you could outsource and what not to outsource. If you give away the whole IT-department to somebody … you have lost that little extra that brings your company the best solutions.
        I’m making solutions for an insurance company – and the job we’re doing could be outsourced – but then there is nobody left to think and develop solutions for the company. It’s not something that the claims personell could run on their own – nor anyone else in the company. That’s why we have an it department? To develop and implement the company ideas and needs you need somebody on the inside that knows the whole story.
        In my opinion, outsourcing could be done with hardware, network and some services (helpdesk, printing etc) – but the solutions that drives the company must be helt inhouse by people that have an interest and have the know-how. Outsourcing companies will always be profit-oriented and would never think a second about how you could develop your business…

        • #3271563

          Reply To: Good vs Bad Outsourcing

          by geekdoctor ·

          In reply to Reply To: Good vs Bad Outsourcing

          As someone who works for an outsourcer, I agree with you 100% when you say that the “solutions that drive the company must be held inhouse”.

          Outsourcers do NOT do that kind of core IT effectively. What they do effectively is the appliance work.

          I’ve seen hundreds of company environments. Not one of them really needs to be in the business of managing their own data center (meaning, the cables, the wiring, the space, the power, the racks, etc.) or managing email servers or managing DNS servers. Those can come to me.

          They can keep the application programming and application support, because most of the time, those are highly specialized and represent core strategic assets. And if you’re an employee of company-X, would you rather spend 20 hours a week doing app work and 20 hours a week managing an exchange server, or 40 hours a week doing app work?

        • #3271562

          Reply To: Good vs Bad Outsourcing

          by geekdoctor ·

          In reply to Reply To: Good vs Bad Outsourcing

          As someone who works for an outsourcer, I agree with you 100% when you say that the “solutions that drive the company must be held inhouse”.

          Outsourcers do NOT do that kind of core IT effectively. What they do effectively is the appliance work.

          I’ve seen hundreds of company environments. Not one of them really needs to be in the business of managing their own data center (meaning, the cables, the wiring, the space, the power, the racks, etc.) or managing email servers or managing DNS servers. Those can come to me.

          They can keep the application programming and application support, because most of the time, those are highly specialized and represent core strategic assets. And if you’re an employee of company-X, would you rather spend 20 hours a week doing app work and 20 hours a week managing an exchange server, or 40 hours a week doing app work?

    • #3271648

      Good vs Bad Outsourcing

      by miller-zauner ·

      In reply to Good vs Bad Outsourcing

      First hand experiences since 1967 to 2002 took my project management skills to a point that left my family with 27% of what was promised.
      So since 2002 until now we have lived off of one eighth of what we had as a salary and have very bad taste to this date.
      Funny part is all through school remember hearing … don’t believe anything you hear and only half of what you see with your own eyes …
      So for this alone never say die, never just sit; but, make sure all your elected know how you feel on all issues and do something from zero you like.
      We have choose farming and from zero to now have learned how to raise what we want and sell what we can makes a better life.

    • #3273282

      Outsourcing abroad = sweatshops

      by vionescu ·

      In reply to Good vs Bad Outsourcing

      I am a humble programmer from eastern Europe. Of course my company is the outsourcer for western companies. The truth: while the programmers in eastern Europe are not quite bad, the profit the companies make pushes them to hire unqualified programmers. Junior programmers receive a net salary of 200-300 USD a month. The skilled programmers on the other hand are not motivated, because the quality of their life is a total disaster. Without motivation, they move from employer to employer, not doing real work, and finally they emigrate in order to do something with their lifes. So, the software produced by these companies is at best of poor quality. The turnover is very high, but the slave-masters are happy because they make the buck so easy, they don’t even have to bother about human resources or management stuff. I think the real problem is a political one, but imho a professional is much better than an army of slaves.

    • #3273177

      End user Experiences

      by wgc007 ·

      In reply to Good vs Bad Outsourcing

      Not being in the IT field, I cannot comprehend what the IT people are going thru within their companies BUT from my dealing with the end user SERVICE end of this outsourcing is it’s hell.
      1. You get a tech with a heavy foreign accent that says his name is “Paul or Larry” and you cannot understand half of what he says.
      2. He starts asking a list of screen read questions that have nothing to do with your problem.
      3. First let me say, I’m not a total computer illiterate and pretty well know “MY” system backwards & fowards and most of it’s programs that I run.
      4. These guys never seem to listen to what you have to say, They can only go by what they read off their screen. If you try to tell them what you’ve already done to try to solve the problem, they want you to do it all over again.
      5. This proves only one thing to me and that is they know “Nothing of Trouble Shooting” a problem from the program standpoint.
      6. If it’s not on the screen then they’re lost.

    • #3273839

      Good Outsourcing?????

      by ritapdx ·

      In reply to Good vs Bad Outsourcing

      Outsourcing, offshoring; the latest in buzzwords brought to you by Global Megacorp Inc. Used to be that outsourcing was reserved for those times when a company needed a “hired gun” having talents that were needed but not accessible within the company’s ranks.

      However, now it has grown to become an effective way to rape the local workforce. Everybody wants to do it on the cheap. Why should a company pay a local IT professional $70000 a year when they can get the same (supposedly) talent for $15000 a year from Bozoz Inc. in Bangalore?

      It’s all a matter of numbers. Behind those numbers though lies a far more sinister intent. That intent is to rape all workers. When Bozoz Inc. gets too expensive, the effort will be moved to Shanghai Shyster Ltd. in the PRC; and so on and so on. The end result will be a global economy where the labor force (meaning everyone except the elite ownership of the global economy) will be forced to work for peanuts and no benefits.

      Each of us should be asking ourselves, “Am I doing better than my Father? Grandfather?”. In my case I have to say absolutely not. Retirement will never happen for me due to myriad circumstances beyond my control. Not any of us in the technical professions are “masters of our course” anymore.

      My advice, start shooting management until they get the hint that doing right by their laborers is far safer than worshipping the bottom line.

      • #3272950

        Reply To: Good vs Bad Outsourcing

        by geekdoctor ·

        In reply to Good Outsourcing?????

        So what additional value am I getting out of the $70K onshore MS Exchange admin that I can’t get out of the $15K India-based Exchange admin?

        Newsflash – A great deal of the India admins with whom I’ve worked are more technically proficient than the US-based ones. And they’re cheaper. And I don’t suffer in quality.

        So what’s my motivation to not outsource a function like Exchange administration?

        • #3272574

          Local Knowledge for One

          by tags66 ·

          In reply to Reply To: Good vs Bad Outsourcing

          Right you outsource your exchange Admin. Are you moving the server’s, I think not. So what happens when your links to India are cut? All support gone. The same applied the other way if your exchange server crashs.
          The guys in India may be as equal standard or better to USA base staff, but are you making work nights as well for their $15K? Or you letting SLA’s slip?
          I understand companies want cheaper solutions, but to take advanage of a poorer country citizens like this is a dam poor excuse.

        • #3087897

          Well, let me think now…

          by ritapdx ·

          In reply to Reply To: Good vs Bad Outsourcing

          Let’s see, hmmmmmm
          1. Someone with whom you can actually talk to face-to-face
          2. Someone who is culturally in tune with your needs
          3. Someone who speaks and thinks in your language
          4. Someone who doesn’t need for you to be at work at 9:00 PM so you can chat with him in his morning time
          5. Someone whose culture may, or may not, be quite as misogynistic as others (Yes, lots of offshore cultures hold women in even less regard than the good old US of A)
          6. Someone who will provide you with real-time feedback
          7. Often, though not always, someone who has actually spent a fair amount of time in the “trenches”

          Newsfalsh – A great many offshore resources with whom I’ve worked had really great credentials but not a whole hell of a lot of experience

          Newsflash – A great many offshore resources with whom I’ve worked in the past could barely barely communicate in English. Of course, this holds true for many Americans as well.

          Newsflash – Many with whom I’ve worked have been very talented and enthusiastic (both on-shore and off-shore)

          Newsflash – I’m a “hands-on” problem solver. Dealing with somebody 15 hours and a language away from where I sit makes the task a whole bunch harder.

          Newsflash – I’ve yet to work with any outsourced project where outsourcing provided one iota of technical advantage or made the process easier or providing a higher quality result.

        • #2484879

          Idiot!

          by gerberb58 ·

          In reply to Reply To: Good vs Bad Outsourcing

          Fine, So if I own the company you work for, and I can get your 90k job done in India, (and with your help, it soon will be) for 20k, I’ll do it. You seem to be totally clueless, until of course, YOUR JOB GOES.
          Then mr. smarty pants, you’ll finally figure it out.

      • #3105804

        What you should be asking yourself

        by sterling “chip” camden ·

        In reply to Good Outsourcing?????

        is “am I doing better at what I do, in order to be more valuable than the guy in India, even at a higher cost.”

        Business will eventually figure out what works best — if you’re not the answer, then you need to change to become the answer.

    • #3273018

      Just wait untill they

      by azson ·

      In reply to Good vs Bad Outsourcing

      Just wait untill they start outsourceing CEOs.
      I’ll bet it stops.

    • #3103472
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