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-------------------------------------------------------------- This story was printed from ZDNet Australia. --------------------------------------------------------------
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Gartner reinforces 'overhyped' claim on overseas outsourcing By Patrick Gray, 0 July 30, 2003 URL: http://www.zdnet.com.au/news/business/soa/Gartner-reinforces-overhyped-claim-on-overseas-outsourcing/0,139023166,120276665,00.htm
The impact of overseas outsourcing is over-hyped, according to global research company Gartner. Speaking to reporters at the Gartner technology summit, the company's vice president of research for IT services in the Asia Pacific region, Rolf Jester, said less than 2 percent of Australia's US$2.4 billion development and integration spend is going to India. "There's a lot of talk and not a lot of actual action," he said. "Despite the hype the reality is a lot different". Eager to dispel the myth of the "Indian sweatshop" operation, Jester says the only sweating going on in the average Indian IT outsourcing shop is in the company Jacuzzi. "In purchasing parity terms these so-called sweatshops are not sweatshops at all," he said. From what Gartner's India based vice president and research director, business process outsourcing, Sujay Chohan, had to say, arguments at this stage are merely academic. "Off-shoring is a new trend and it's inevitable," he told reporters. "There is a significant opportunity to be had by using services from these companies". However enticing the opportunities, cutting costs shouldn't be the only motivation behind sourcing decisions, says Linda Cohen, the company's managing vice president of the strategic sourcing group. "If you outsource to save money, you are on a death spiral," she said. She says current market conditions are similar to those of the early 90's -- companies were eager to slash costs however they could. Quite often companies will "outsource a problem" instead of trying to accomplish a set of strategic goals, a common pitfall encountered when executive leaders aren't on the same page. One of the core issues is governance, she says. If outsourcing isn't properly managed and controlled, the results can be terrible. Surprisingly, Cohen says the onus is largely on the vendors to make sure they stop gobbling up any business that comes their way, and move towards a standard set of offerings that will allow them to achieve economies of scale, thus passing on savings to their clients.
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