Information Week posted an insightful article on the maturation of global IT outsourcing.  The discussion leads off with a great quote:

“The concept of offshore outsourcing will continue to dissipate, and we’ll focus on globalization.”

As one might expect, the article reports that, while still important, price is no longer the only driver for offshore IT outsourcing.  Instead, companies are leveraging worldsourcing to support the globalization of their overall business.  In addition, companies are taking a more active role in collaborating with their vendors.  Some even go so far as to help with retention issues and trusting the vendor with mission critical work.  Of course, along with this closer relationship, clients are demanding that vendors accept a higher level of accountability for the success of the efforts.  The examples provided of how far some clients have gone to partner with their vendors are pretty compelling.

One interesting issue raised by the coverage is how companies will develop senior internal IT staff, if an offshore vendor performs significant portions of the actual work.  This apparent break in the IT career ladder is going to be a real challenge for future CIOs.

They even touch on one of my pet peeves with our industry:

“Many companies found they didn’t realize the promised savings once management time and rework costs were factored in for products that, while coded to specification, didn’t meet expectations.  That’s leading to outsourcing contracts based less on the input–number of engineer-hours worked–and more on the output, measured by the project’s success in terms of generating revenue from new products, meeting system uptime requirements in an IT infrastructure support agreement, or the number of customer policies processed in an insurance company BPO contract.”

I highly recommend this article both to companies considering their outsourcing strategy and to vendors interested in better understanding the reasons that their clients are outsourcing (Hint: Being “low cost” isn’t enough anymore).

While India is the focus of the article, at least in terms of the discussion, most of the assertions also apply directly to China.

Oh yeah, the comments are pretty funny, too.

Technorati Tags:  China, China Outsourcing, Offshore Outsourcing