I recently contributed to a discussion on LinkedIn, I wanted to share what has been said.
Q: Is the efficiency offered by the outsourcing company not comparable to efficiency of the in-house teams?
A: It is not, I have had hands on experience with this and have noted the following:
* Outsourcing usually creates disconnect in application of statutory laws and compliance. The US industrial community faces heavier regulation now more than ever. As awareness of non-compliance with the law increases, the public will cry out for more oversight and intervention.
* Language barrier often creates misunderstandings and inordinate amount of time spent communicating and confirming the same message. This takes time away from more value added activities and increases perceived staff inefficiencies.
* Cultural differences often cause disconnects in outsourcing arrangements whether systemic from holidays, religious practices or simply male to female roles. These can often turn litigious and represent significant liabilities to an organization. Our society is already sue happy, what other excuses can be provided to those looking for free money from lawsuits?
* Cost of compliance can increase significantly, more recently external audit firms now or will soon focus on outsourced providers and insist on traveling to local sites to conduct reviews. This creates larger scope engagements and introduces significant deficiencies where none had previously existed. External audit firms are the last group of people to understand or even care about the needs of the business. Industry has created more problems than they have solved with the outsourced model in terms of compliance and negotiating those troubled waters.
The US economy is now facing serious financial dilemmas over the shift of local versus outsourced models. Specifically, the departure of labor, capital and equipment to overseas has impaired our economy more than anyone in a decision making position could have theorized. How much of the total capital wealth of the United States has departed in outsourcing? The answer can now be found by our sorely depleted financial ecology which inarguably is lower than we enjoyed in previous years.
Since the completion of WWII and the re-tooling of post war Japan this country has had to contend with low cost producers overseas and observe the impact of such investment. Our gov't continues to displace capital and support of domestic industry in favor of it's global partners/neighbors but doesn't support the infrastructure that funds those philanthropic ventures.
We as a nation face the inevitability of our decisions, the question is do we voice our collective disagreement to our gov't or let things continue as they are?
It is time to stop and invest internally.