Posted by Pete McBreen 16 Feb 2011 at 09:41
The LA Times is the latest to report on Boeing’s costly lesson on outsourcing. They have an interesting lead to the story
The biggest mistake people make when talking about the outsourcing of U.S. jobs by U.S. companies is to treat it as a moral issue.
Sure, it’s immoral to abandon your loyal American workers in search of cheap labor overseas. But the real problem with outsourcing, if you don’t think it through, is that it can wreck your business and cost you a bundle.
I don’t agree that many people thought of outsourcing as a “moral issue.” The conversation was more about the balance between short term economics and the long term implications of outsourcing. Short term the numbers can look better, but long term organizations lose the ability to do the work. The end result is that in the end the supplier becomes dominant, captures most of the available profit, and the outsourcer ends up being responsible for the downside risk.
See also Outsourcing too much part II