Why Outsourcing IT may be a Bad Idea

This article from Businessweek gives some examples of IT outsourcing that didn't work so well.

Keith Franklin, president of Empowered Software Solutions in Burr Ridge, Ill., loves offshore outsourcing. It means more work for his 40-person company. Just last year, ESS, which specializes in developing applications for Microsoft's .Net platform for Web services, earned $500,000 in revenues from fixing buggy software written in India. It took ESS five months to repair a glitch-filled application for a Web portal. Most pages on the site weren't connected, turning updating into a nightmare. Some code was missing.

The shoddy work didn't come cheap, either: The Indian outsourcer went $1 million overbudget. Franklin says he could have done the project for less than $900,000 — right here in the U.S.

Indeed, offshoring — sending work overseas — isn't always all it's made out to be. Particularly with information technology, which can be a lot more complicated than moving traditional manufacturing operations overseas. IT quality is much more difficult to gauge, says Atul Vashistha, chairman and CEO of info-tech offshoring consultancy neoIT in San Ramon, Calif. And since IT is an integral part of every business process, it requires more communication and management.

Programmers in other countries may be cheap, but if they aren't as productive as U.S. programmers then you may not save any money. Like I have said before, Americans are some of the smartest, most productive people on the planet. If you can't be competitive using American workers, maybe there is something wrong with the way you run your business.