Re: i5....continues... -- MIDRANGE-L

David, remarks inline ... John

At 03:18 PM 4/28/2004, you wrote:

John,

Many companies consider outsourcing so they can survive in a very
competitive market.  Not because of a ""big desk" person overhears
"tongue in cheek" remarks".  They need to outsource or there won't be a
company left and then you are talking a lot more job loss than just an
IT department.

I haven't heard of corporate survival as a motive for outsourcing IT ... ever ... and I try to keep informed on the topic!

The motive is always to lower costs!!! The trigger can be as simple as a phone call from an overseas outsourcer to an executive right after a bad experience like I described earlier in this thread.

Quite frankly, the short-term (first year) costs for overseas oursourcing are greater than keeping it stateside. The economies are supposed to come in later years. That assumes a lot ... that might be true or not! I hear that the turnover rate in Bangalore for IT staff is over 20% so far this year.

"... just my $.02 ... from someone who doesn't even outsource to local
independent contractors."

That is ridiculous!  If you have a customer or potential customer that
needs something done and you don't have the staff to do it and you can
keep the customer happy while making a few bucks, why the hell would you
not "outsource" to local independent contractors?

20 years ago, we did. Three things happened since then that changed my opinions:

- We lost several important clients because the contractors that we assigned to the jobs totally botched them. They didn't have the same level of commitment to the success of the customer that our employees had. They just "swept it under the rug" and moved along to another assignment!

- We had a contractor walk out with our intellectual property ... and peddled it to a sales prospect of ours. That cost us a lot of grief and money ... and eventually the job for the CIO who knowingly bought our technology from this contractor.

- About 10 years ago, the IRS tightened the rules for whether someone was a contractor or an employee. Our remaining contractor became an employee at that time.

We value continuity greatly ... when a contractor leaves a project, the expertise and sense of history leaves with them. Our customers have paid a premium for maintaining that continuity.

IT is my company's core business ... outsourcing is generally a better strategy for non-core functions ... we outsource non-IT functions like:

- janitorial / landscaping / building maintenance
- tax accounting
- computer hardware maintenance (to IBM)

Someone also suffering from outsourcing but understands that sometimes
it needs to be done,

Hey, my company outsources IT functions FOR many companies. We have made a policy decision that we will manage our backlog and use only our own (USA-based) employees rather than purchase labor on the spot market and deal with the problems that causes.

Our customers generally appreciate this once they understand the entire value proposition. Value in IT is having someone who knows what has happened in the 10 years since a system was implemented. Our average programmer has been with our company for more than 10 years ... and has grown from a terminal-defined world through client/server to web-based applications.

John

David Smith

dsmith@xxxxxxxxxx

People wonder why companies consider outsourcing ... after a "big desk"
person overhears "tongue in cheek" remarks like those at the coffee pot
or
walking down the hall, it can trigger an impression that too often leads
to
considering an outsourcing decision that might otherwise have been

ignored. I have listened to many CEO's of companies describe their IT

staff as spoiled, mercenaries, and not in sync with corporate
direction.  Those are the sentiments that open the door to an
outsourcing
discussion ...

... just my $.02 ... from someone who doesn't even outsource to local

independent contractors.

John