01 Jun 2004

Cyberposium: Pros and Cons of Outsourcing


The nuances of outsourcing — a swiftly growing phenomenon — are sometimes lost in a blizzard of headlines about IT jobs disappearing overseas. At the ninth annual Cyberposium conference, a panel of experts offered their perspective on a movement that is changing the way America does business.

Sheeroy Desai, EVP and COO for Sapient, noted that his company saves 30 to 40 percent by offshoring IT — but the move has involved a significant investment in training. “Most IT organizations tend to underestimate the costs of management overhead, costs related to communications overhead, and travel,” he said.

The outsourcing market is estimated at 11 percent of IT — or about $150 billion globally. India is acknowledged to be the largest offshore destination, but a great deal of IT business is outsourced to off-site domestic workers as well.

At GM, CTO Tony Scott noted that his department is 100 percent outsourced. “We are absolute converts,” he said, citing the benefits of cost reduction, quality, and flexibility. The end of a contract is always a new opportunity to make improvements, demand more, and reprice.

If IT workers were to transfer a project to the next time zone at the end of their shift, it would create a 24-hour knowledge factory, said MIT professor Amar Gupta. “When you came to work the next morning, the challenge would be to understand what others have done in the past sixteen hours. If you are able to achieve that from a technological, managerial, and organizational point of view, it will create a new paradigm,” said Gupta.

Radio frequency ID tags, Voice over Internet Protocol (VoIP), and online gaming were among the other topics covered. The conference, which drew over 500 attendees, was organized by a team of 75 student volunteers.

For a full report on this and other student conferences, visit the “HBS Conference Coverage” section of HBS Working Knowledge at www.workingknowledge.hbs.edu.


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