Part 2: Insourcing and outsourcing: two sides to the same coin?
In my previous blog, we looked at some of the viewpoints on Insourcing, especially as portrayed in the business/technology media. The recent chatter in the blogsphere [eg: Argolon, Curious Cat, James McGovern, Apu ...] began with Riya’s blog about the company’s insourcing experience.
The story generated enough online buzz to culminate in a front-page story on the Wall Street Journal [Some in Silicon Valley Begin to Sour on India: A Few Bring Jobs Back As Pay of Top Engineers In Bangalore Skyrockets]. The story focused around how a few like the Silicon Valley startup Riya Inc setup captive Offshore Development Centers (ODCs), only to discover that the overheads were unmanageable. Result: “In April, Mr. Shah shut down the Bangalore office and offered half of its engineers a chance to move to San Mateo, Calif., with work visas.” What the article, and bloggers didn’t focus is on how a few small/mid-size companies also occasionally insource some outsourced work for internal/strategic reasons. I witnessed one such instance with a client of ours recently.
The client, a player in the insurance sector, began a relationship with Infosys over six years ago, starting with sourcing a small development projects and maintenance of IT systems and went on to engaging with us on higher-end services including working with my team on enterprise architecture and roadmapping exercises. In parallel, client was also working with another vendor to farm out work between us in a multivendor scenario. A year ago, the client bought out an Insurance service provider and began the process of integrating the systems. About that time, the company also underwent a reorganization of senior management, which led to a shift in the staffing mix and strategy.
They began hiring technology managers, specialists and architects in local market and gradually started Insourcing some of the work that they had been farming to vendors. The process was gradual and not abrupt and probably had a basis in their strategic shift. As trusted advisors and technology partners, our teams – and that of the other vendor -- continued to enable the new-hires, aided in knowledge transition and facilitated this process. And where this ‘case’ is different from the one in the WSJ story is that we continue to do business with the client, which sends work offshore. The only difference is in the mix of work being offshored and the scale of operations.
For technology vendors, instances of business/strategic shift, leading to change in direction is a way of life. Now, will this ‘case study’ make news headlines? Probably not, unless a local journalist puts on her detective hat and adds a dramatic headline like ‘XYZ corp Insources previously Offshored work.’ Now, this is the kind of fodder that the media and bloggers live for… but for sourcing professionals; well, just another side of the coin.
Comments
Very well said, what happened with Riya will soon happen to other startups because i feel that in India, Challenges do not fascinates IT people, what fascinates indians in willingness to earn more and more money. That's why they move jobs so often.
Posted by: Ashish Jha | September 25, 2007 09:31 AM
Ashish, I don't really agree with your argument that “Challenges do not fascinate IT people, what fascinates Indians in willingness to earn more and more money.” I'm not sure if your assertion is based on any specific study. Research has shown that software professionals have an allegiance to their profession wherever they are located in the globe, and Indians are no different.
You say “That's why they move jobs so often.” Wonder if the rate of attrition is higher among a sub-set or is it across the board?
Posted by: Mohan | September 27, 2007 10:34 AM