Offshoring is finally dead. !
Well, according to Gartner (Predict 2013) and my own experience by talking to business people returning from a bad offshoring experience; there are strong indications that offshoring is struggling if not definitely coming to an end.
The reasons given and the feedback I have are:
- Quality of the delivery has been and remains poor. I said that in 2009 via my article “Please keep sending IT work offshore… I need a new car”
- Lack of innovation – The offshoring companies and their professionals, do not add value and do not create improvements to processes, businesses and software – this may or may not be the fault of the offshoring. It may well be attributed to restrictions in the contracting arrangements
- Political – The USA government and others are seriously encouraging the return of professional services as an inshore activity.
The EU is specifically targeting a 20% reduction in offshoring by 2016.
Nothing from the Australian government! Give Australian IT jobs away seems to be their policy!
- Proximity – Customers have been discouraged by the lack of proximity i.e. having people at the other end of the world at different time zones with different culture and languages.
- Total Cost of Ownership is increasing… salaries in some emerging economies are increasing and the cost of managing the projects; rework, delays, etc are making them unaffordable.
- Security – National security is increasingly at risk. Ref “Chinese Whispers”
So, in 2013, I formally declare IT offshoring dead.
Long live in-shoring, where;
- work can be done within standards of quality as expected by customers,
- where legal recourse is available,
- where salaries paid and work conditions are not bordering on slavery,
- where time frames are controlled and managed,
- where the costs of projects are also transparent and subject to normal business scrutiny,
- where insurances are available and can be claimed as compensation for failed projects.
Offshoring… RIP !