Insourcing, Outsourcing, Offshoring, Onshoring...what makes sense for your company?
Cost reduction pressures can make outsourcing and, particularly, offshoring decisions seem simple when the determination is based solely on hourly rates. A lot of sourcing analysis services will rely almost exclusively on these apparent rate differences as the main driver of their recommendations. Disastrous results may follow long after that last sourcing analysis service invoice has been paid.
We make it a point to urge all our clients to be extremely careful when outsourcing roles that involve creativity, innovation, or business know-how. Talent isn't so easily replaced. Once it's lost you might end up having to pay dearly to get that capability back.
DevOps resources and software developers are often the most underestimated when it comes to the value of their talent, skill-levels, and productivity. One talented and experienced DevOps/developer - particularly one who already knows your business - can be up to twenty times more productive than an average developer resource.
There are other perils. Loss of intellectual property and business knowledge is very real but difficult to quantify. Inflational turnover rates among sourcing companies can be very disruptive and expensive due to interruptions when a resource quits and a new one has to be trained, respectively. Working hours of your outsourced resources can also be an issue. You may have to wait if you need something done and it's 3am where your new resources live...or off on a holiday specific to that country.
We aren't saying sourcing is always a bad idea. Identifying bureaucratic roles with repetitive tasks is a good place to start. Outsourcing, or better yet, automating these roles can dramatically reduce costs at little risk of decreasing the capability of your business.
There are some other options that might have a place in your sourcing strategy. Team sourcing can be an extremely productive alternative to traditional employment models. On-demand and resource sharing services allow you to take advantage of capabilities as needed without the overhead of a full-time role.