This question came up on Linked In today, and I thought I would post my response to it here for those that don’t belong (and if you don’t and you are reading this blog, you probably should):

I read the question as one about outsourcing, and I see many responses about off-shoring. I’ll give my 2 cents on both, and you can owe me a nickle including tip.

Outsourcing is a way to mitigate risk for mission critical goals. The mitigation is in two forms. The first is, outsourcing to experts provides the perceived safety that the job will get done correctly. The perception is right about half the time (in my experience).

The other form of risk mitigation is the ability to place the blame for any failure on the vendor. As a vendor, I know that the likelihood of this being the reason for outsourcing increases with the number of people involved in the decision.

Off-shoring is a mixed bag. There are some companies that are really good, and some that are not. There are individuals within companies that are really good, and many that are not. In other words, on one level there is no difference between offshore and outsourcing.

On another level, there is the communication gap that is unavoidable due to both cultural and temporal differences. There are some companies that try to offset the temporal differences by having teams that work hours that coincide with US business hours. Anyone who has ever used 24 hour services knows that the best and brightest rarely work in the wee hours, and those that do are still not at the top of their game.

Off shoring works great for both parties far more often if the requirements are crystal clear and fairly static. Otherwise, your mileage will vary. Since the successes are a huge boost to ROI, they are well publicized and very motivating. The much more frequent failures are kept low key to protect careers.

And, as Dennis Miller often said: “But that’s just my opinion…I could be wrong”