U.S. beats India for IT outsourcing innovation and understanding

By Stephanie Overby , CIO |  IT Management, outsourcing

Traditional U.S.-based providers may have an advantage; while they have invested heavily offshore, they have retained onshore personnel. "Some of them are sensing an opportunity to win back work from Indian providers," says Fersht. Many Indian providers, on the other hand, are reluctant to build up a robust presence in the local markets they serve.

Their U.S.-based operations have largely been driven by specific client engagements. "They're not internationalizing enough. They still want to run everything out of India," says Fersht. "And when they are running projects locally, they still want their Indian staff to run them."

In part, it is a "control issue" for some Indian providers, says Fersht. In addition, hiring American workers is a more expensive proposition. "What U.S. enterprises should be telling Indian vendors is, 'We want you to train us to manage you,'" says Fersht. "But that's deemed too expensive and too time consuming [by the provider]."

Fersht decided to compare the attitudes toward and experiences with U.S.-based and offshore outsourcing because onshore outsourcing had become the biggest topic of interest among his clients in recent years. "This survey is come ten years or so on into the offshore outsourcing phenomenon," says Fersht. "Customers are saying we might have save 30% in costs but we also might have lost 30% in terms of the ability of our IT staff to understand the business."

The Politics of Outsourcing That offshore outsourcing has been a political hot potato in this presidential election year may have had some role in the responses, says Fersht. "Some of this may be related to political movement," he says. "Companies are aware that it looks bad to be seen to move jobs offshore."

[ Related: Sourcing IT Best Practices in the Wake of Digital Disruption ]

But while IT leaders may show an increased interest in sourcing work closer to home, it's unlikely that offshore outsourcing will necessarily decrease or that enterprise IT will bring everything back in-house.

"The most mature buyers have invested years building new capabilities at managing offshore resource [and] turning the clock back means greater risk that managing their current situation," says Fersht. "Most large companies cannot operate their own systems now. They are still mixed and complex and they need help." Fersht predicts that much of the lower-level work that has been offshored in recent years-help desk support, testing, systems maintenance-will remain abroad. But the higher-level work that offshore providers have said they wanted to assume-software development closely aligned to the business, for example-is more likely to be sourced domestically, whether to third parties or in-house.

Originally published on CIO |  Click here to read the original story.
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