Out/Insourcing?

1. Out/Insourcing? Dave Packham

2. Disclaimer….

3. Its all about money? • The annual salary of a software developer in the U.S. is $94,000. In India, it is $14,000, and in the Philippines it is $7 • Cloud-based tracking software gives companies immediate insights into the productivity of the offshore workers that they contract with-and the ability to provide true “follow the sun” resources for projects and IT support. All of this has made offshore IT markets extremely attractive to U.S. companies.,521

4. Or not? • At the same time • There are U.S. companies that have or are making make countermoves toward insourcing.

5. Gov Motors… errr GM • One of them is General Motors, which announced in 2012 its plans to insource 90 percent of its IT jobs within three years. • The goals are higher productivity from onshore staff, • Reduced travel • Lower management burdens • Better cultural fits and most importantly • The ability to directly command technology expertise for new product innovation and speed to market that will drive revenues and to also give the company a competitive edge since technology expertise is now a major defining competitive factor in most industries.

6. Inbound • GM is not alone. Ford, Starbucks, Caterpillar, Google and GE all have made or are making insourcing moves. • Factors like bringing products to market quicker • Lower transportation and warehousing costs, better product and service quality, less rework, stronger intellectual property protection • Stronger “goodwill image” among Americans who are still struggling economically

7. Why? • “A major reason large companies are considering insourcing IT is out of fear that their in-house IT skills bases are eroding with outsourcing and that they no longer have the technology • “wherewithal” to support or to innovate with their own technology resources,” confided one IT industry consultant who works with a major corporation  who is  moving to insourcing.

8. Paul Craig Roberts, Assistant Secretary of the Treasury, Reagan Administration • “Fool’s gold for companies.”  • “Corporate America’s short-term mentality, stemming from bonuses tied to quarterly results, • Causing U.S. companies to lose not only their best employees–their human capital–but also the consumers who buy their products. • Employees displaced by foreigners and left unemployed or in lower paid work have a reduced presence in the consumer market.”

10. Higher ED • Public and Private colleges and universities are outsourcing the evaluation of written assignments to a external companies. • That primarily employs people in India, Singapore and Malaysia. • It's entirely a "virtual" program. 

11. Hmmmm • The most surprising thing about this practice is that it is happening on college campuses • -- some high-profile institutions -- • Where one would expect the core principles of English composition to be held in the highest esteem. • Instead, the evaluation of written assignments is being relegated to people in Asia

12. The reasoning…. • Based on the website of the company providing the outsourcing and direct quotes from educators, there are two reasons for this program's popularity:

13. Both are shocking indictments. • (1) many faculty members believe grading papers is a menial task that takes too much time they could be spending in more productive ways and • (2) many college instructors and their TAs are not well-grounded enough in grammar to do the job

15. Here's the rub! • We rely on our universities to be on the cutting edge of academic excellence, which includes helping students hone their written and verbal communication skills. • Yet, our educational institutions are outsourcing to people in foreign countries something as fundamental to education as grading term papers and final exams. • In a country so concerned about continuing to be an international leader and about unemployment, under employment, and quality education, it just doesn't make sense for our educational institutions to outsource this work.

16. What CAN/SHOULD we do…? • Outsourcing has its place.

17. WCSWD • It can be a cost effective method of supplementing in-house capabilities,

18. WCSWD • Provide additional expertise • Allowing an organization to concentrate its increasingly limited resources on those efforts which most greatly support its strategic mission.

19. WCSWD • Outsourcing is not necessarily an all-or-nothing decision.

20. Some… Which Some? • Outsourcing can best be viewed as a continuum, • moving from no outsourcing to full outsourcing, and an organization must decide not only • whether to outsource a function (telecommunications, food services, custodial services), but often • which specific tasks within that function to outsource.

22. Contrary to popular belief • Outsourcing does not negate the need to manage

23. When Technology Is Outsourced • Control is lost, at least to some degree. • Costs change, but don't necessarily decrease • Quality may suffer. • Institutional knowledge is lost for outsourced functions.

24. Why we shouldn't • University technology is not generic • Technology is not self-contained • It reaches every location, activity and constituent of the university • Technology is strategic to the institution, a fundamental, mission critical function of the university. • Outsourcers do not necessarily see it in this light.

25. Before you decide to what degree to outsource, you should consider the following issues:

26. What problem are you trying to solve? • Why do you want to outsource?

27. save money? • improve service? • fewer FTEs? • more service? • what else?

28. How important is control of technology to the institution?

29. How standard are the institution's technology implementation and infrastructure? Do they lend • themselves easily to outside management?

30. What does an outsourcer bring to the table that the institution does not already have in- house?

31. How strategically does your institution view technology management? • Are you “OUT” coming back in? • Are you “IN” thinking about going “OUT” • Why? Why Not?

32. Questions.. • Comments?