« Best of Horses '08... the funny ones | Main | January 5th: time to shake off the gloom »

Jan 03, 2009


Feed You can follow this conversation by subscribing to the comment feed for this post.

I agree with the need for the distinction between 'true outsourcing' and 'effort-based contracting' outlined in the reply here.

I am a new reader of this blog, and would like the opinion of the experts here - conventional wisdom would suggest that 'labor arbitrage'-based outsourcing (or offshoring, or global delivery...) should increase during periods of economic stress and low growth, so companies should attempt to replace higher-cost labor in the US with lower-cost labor offshore as part of a cost-cutting exercise. However, in my personal experience working with offshore programs of significant sizes, I think the periods of greatest growth in offshoring has been during periods when ‘on-shore’ headcount has also grown – e,g, mid-90s and mid-00s. Companies may be readier to increase their offshore usage when they don’t have to ‘replace’ a US worker with a foreign worker, but only augment their resources at a lower rate offshore when they are growing.

I would love to see some empirical evidence that either proves or disproves this observation.

Thanks – and a Happy 2009 to all!

Dana and Phil ... seeing as how that article formed a conclusion based on data published almost three months ago, and covering one Quarter in the year, one might have hoped for a bit more journalistic thoroughness.

Yes, Q3's contract awards were the softest in quite some time. Dramatically soft.

But, Q4 picked up quite nicely. Like most Q4's tend to do. In fact, while the numbers aren't completely tallied, I am estimating that 2008's full-year record of TCV awarded will surpass that of 2007. (To wit: while Q3 yielded only around $14B in TCV, the month of October alone surpassed $15B!)

Many of us have tried for some time to differentiate between "true outsourcing" (mine: defined services, delivered at defined prices, at defined levels of service quality) and "effort-based contracting" or similar forms of wage-arbitrage staff augmentation. Alas, the broader market is still confused between these two.

I think that 2009 will see continued expansion in the use of "true outsourcing" while the appetite for arbitrage-driven staffing models will suffer. This latter slice of the market is what gave rise to much of the India-based provider community.

Some will have the wherewithal to taste the lemonade, while many others might just find themselves sucking on the lemons of a rapidly changing market.

Bring on 2009!


Dana and Phil:

Kudos to you both for raising this issue. I also saw these articles and was concerned by their failure to capture the real picture of global services. The broader community needs to have a different image - and comprehension - of what "outsourcing" really is in today's global environment.

Happy New Year,

Stephen Cohen

The comments to this entry are closed.

Your email address:

Powered by FeedBlitz

Follow me on Twitter

    follow me on Twitter


    My Photo