Of all the moving targets in corporate IT, offshore outsourcing inspires more emotional extremes than all the others combined. From fear and loathing in some corners to sustained cheering in others, this business of outsourcing (aka “your mess for less”) has a checkered history with CIOs.
With all the momentous IT change under way in business today–adopting consumer technologies, cloud, mobility and big data–IT organizations are under tremendous pressure to produce faster project turnarounds and increase speed to market. That’s tough to pull off when your developers work 10 time zones away.
So we’ve been asking CIOs how they’re meeting these escalating demands from the business. Who’s actually doing all that work? Naturally, we expected the answer to be “outsourcers” (and many times it was).
But as you’ll read in Stephanie Overby’s well-researched cover story (“Outsourcing Declines, Are IT Jobs Coming Back?“), we also got some unexpected replies about insourcing projects, rebuilding staff expertise and reclaiming lost technical competencies. We discovered a kind of rebalancing act under way, as organizations take another look at their sourcing strategies. Those dreams of big savings from overseas labor arbitrage have dissolved as wage inflation and overhead costs rise steadily around the world.
Consider some examples from our story: Offshoring pioneer GE, which has been sending work to India since the ’90s, is restoring some of the technical expertise it lost to outsourcing by hiring 1,300 IT and engineering pros in the next two years. Textron is shifting its offshoring work to its own captive IT operation in India to gain more control over its previously outsourced business intelligence projects. Western Union winnowed a dozen offshore outsourcers down to three. “I’m looking more at effectiveness and making sure that we have the right balance,” says former CIO John Dick.
Standard & Poor’s is pushing its vendors to provide offsite-but-local development options just a few hours away from Manhattan. “We’re seeing a real limit on the type of work we can offshore,” says CIO Joe Sniado.
At Toyota Financial Services, which is heavily outsourced and intends to stay that way, CIO Dan Priest is recalibrating his mix of outsourced and in-house talent. He’s taking a second look at positions that deal with integration, Web and mobile. “There really aren’t any standard practices or benchmarks for these kinds of [sourcing] decisions anymore,” says Priest. “You have to do what is right for the business.”
Maryfran Johnson is the editor in chief of CIO Magazine & Events. Email her at firstname.lastname@example.org.