Software Sweatshop

There was an interesting post about outsourcing in the WSJ's Business Technology blog last week. It said that most outsourcing relationships are more expensive than originally thought.

This is no surprise to those in the business as the short-sighted 'lift and shift' mentality has been the main reason companies choose to outsource. It's sad because low cost is not a sustainable competitive advantage. And in an industry with growing salaries and corresponding attrition, the cost benefits that once existed are now slimmer and slimmer. Companies are realizing that outsourcing is now costing more than expected (factoring in missed deadlines caused by employee turnover, rework caused by poor communication, etc.) As outsourcing titans EDS, IBM, Accenture, Wipro, TATA, Infosys, and HCL will attest, good help is hard to find.

What's worse is that small and medium sized businesses enter the outsourcing arena, reliable vendors with skilled workers are increasingly rare. Your best bet as a startup or SMB is to find a company that matches your corporate culture and is fanatically committed to you. Since most offshore vendors smell money, it will be hard to find ones that will actually do what they say. Both you and your offshore partner need to be committed to investing a great deal of time and energy in your relationship, otherwise outsourcing is just not worth it.