Offshoring: Pathway to a Competitive Disadvantage

Companies that have over-embraced offshoring will take back many critical business functions or eventually lose their competitive advantage. By Frank Wander

Corporate IT remains a source of great dissatisfaction in many companies. After enduring high project failure rates for more than 50 years, companies should already know that highly competent, tight knit teams are a source of competitive advantage and project success. Companies should know that knowledge workers, and successful teams, are corporate assets, not expenses. Moreover, companies should know that talented professionals are not an interchangeable commodity. Unfortunately, workers don’t count, so everyone just soldiers on.

When I examine how traditional IT operates, the book Extraordinary Popular Delusions and the Madness of Crowds immediately comes to mind. In it, Charles Mackay recounts how otherwise intelligent people get caught up in manias, like the Dutch tulip craze in the 1600s, where, at the height of the fad, a single tulip bulb sold for 10 times the annual salary of a craftsman. It is part of human social psychology that once a herd mentality takes root, most everyone goes along, afraid to speak out, even if they know the situation makes no sense. That is where we have ended up in IT. Many people in the industry quietly say the offshore model is a source of enduring failure, yet it remains a staple of IT.

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