Friday, June 8, 2012

Outsourcing? Problem or Symptom or neither?

Reading Andrew Nusca's Blog post Tech industry outsourcing: problem, symptom, or neither? I think we need to look at things from many sides.  For example, does Walmart help or hurt a small town?  A Walmart brings jobs, and lower cost goods so that those small town people get more for their money.  Some would argue that the smaller stores cannot compete and they may lose jobs, or go out of business because of Walmart.  The answer there is that competition is part of business and people go to buy where they get the most value.  The smaller stores can choose to compete on price or value, and many small towns have chosen to turn their main street into a boutique mall of specialty shops and restaurants which draws people in and essentially doesn't compete with Walmart for the commodities.

It is no different with Tech industries.  As Andrew points out, a large number of companies like Apple, Inc, IBM, Cisco, etc. have large over seas operations, partly out of cost savings, but also to provide a footprint in emerging economies for their products and services.  Many of these companies and smaller companies go with Outsourcing companies such as the large BPO industry in the Philippines and India, for a number of reasons.  Is that Bad?  Certainly the Philippine citizens that have jobs don't think so, and the companies that leverage those cost savings to be competitive in the other markets in the world don't think so. 

While big companies of all types outsource just about anything like Walmart, Apple, IBM, etc.  There are ALSO a very large number of boutique companies doing VERY well that outsource almost nothing.  Like the small towns that turn their mainstreet into something special so too do these tech companies and even today most tech startups are in the US.

Internet companies that sell services over the web, may be seen as outsourcing companies, and the negative connotation that sometimes carries, is unfounded because there is little difference in my view between a Software as a Service company offering low cost high value software on the web, and the local phone company, power company or water company offering a service to their customers.  Who knows or even cares where they are headquartered, managed, operate or do development?

1 comment:

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