Re: i5....continues...

["Smith, Dave" <DSmith@xxxxxxxxx>]

John, remarks inline ... Dave

 

>>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.

 

Agreed... it is always to lower costs.   I say to stay competitive and
in the long run survival.  Granted you could argue greed, in most cases
I would disagree.

  

>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!

 

 

You had bad contractors.  There are also bad employees.  Just like
employees, you need to find the good ones and build relationships that
are mutually beneficial.  Many contractors (including myself) are often
more committed to their customers than the customers own employees. 

   

 

>- 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.

 

This can also happen with employees, but it sounds like you had your
ducks in a row...sounds like the CIO got what he deserved.

 

>- 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.

 

Part of a contractor's job is to make that transition as easy as
possible through documentation and communication.  Again, this can also
be a problem with employees.

 

>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)

 

Agreed

 

>>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

 

You are obviously doing many things right to have that level of success
and holding on to your employees.   I hope your continued success.   I
also hope you reconsider your relationship with independent contractors.
Some of us are pretty damn good!

 

Dave