Offshoring is finally dead !

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:

  1. 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”
  2. 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
  3. 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!

  4. 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.
  5. 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.
  6. 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 !