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Concerns About Outsourcing

By Joe Danowsky
March 01, 2004

A popular managerial concept for over two decades, outsourcing now holds even greater appeal as large numbers of lesser-paid, skilled workers become accessible through improved telecommunications and workflow management techniques. As convincingly depicted in Lisa R. Smith's accompanying article, the direct cost advantages of outsourcing are stronger than ever, and at least some outsourcers are providing high quality service even for security-sensitive functions previously kept in-house.

Earlier analyses of outsourcing framed the decision to outsource primarily as a weighing of predictable cost savings vs. the risk of selecting an unsatisfactory outsourcer. Accordingly they offered useful advice mainly on the question of how to select and effectively deal with a reliable outsourcer. (See “Selecting an Outsourcer”.)

During the current jobless recovery, however, outsourcing is rapidly turning into a political hot button. Its globalized variants, “job exporting” and “offshoring,” are already red hot. Although some political discussants appear self-interested and even demagogic, it's clear that widespread outsourcing is indeed associated with serious societal problems ' and probably not just in the short term. Outsourcing of functions too close to an organization's key processes may have perils for the organization itself. The organizational problems entail less soul searching than the societal problems, so let's start with them.

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