March 31st, 2004


The Perils of Outsourcing

The tales of overly polite yet utterly unable to help with even the simplest problems Indian call center representatives are now becoming a reality.

Personally, I welcome this, as, being true to my ever-optimistic nature, I believe that this will lead to the demise of the pursuit of outsourcing quickly. To be sure, I think that the incompetence of Indian developers and the troubles of US and European architects and tech managers in trying to work through cultural, time-zone, and educational differences in the software development outsourcing arena would eventually lead to the same result, just at a much slower, and, thus, more painful, pace. The call center problems are identified much quicker (through angry and costly customer feedback), and are much easier for their "host" companies to acknowledge, without having to admit that the emperor has no cloths, since it requires much lower initial investment to start up and close down. In the software development space, on the other hand, the initial exuberance over dramatically reduced costs is only slowly seen to evaporate under increased risk, balooning/inflated timelines, and inferior products.

So, rejoice, as Dell has already cancelled their tech support for business clients contract with an Indian firm (home customers still have to suffer through it), and others seem to be following suit. Following are some choice quotes from a recent article about one of my former employers:

Capital One cancels Indian telemarketing contract: 25 March 2004 - US card issuer Capital One has terminated a telemarketing contract with Indian call centre operator Wipro Spectramind after an internal audit uncovered a campaign to deliberately mislead customers during sales calls.
Analyst house Gartner last week forecast a near-term slowdown in offshoring due to negative publicity and the first spate of failures among trend-setting companies. Nonetheless, Gartner projects that as many as one-in-four traditional IT jobs will have shifted from developed countries to low-cost offshore centres by 2010."

And the above-mentioned report One-in-four IT jobs to be offshored by 2010: "India stands to be the prime beneficary of the trend, with Russia and China also in line to reap the rewards. Other contenders include Malaysia, Poland, the Baltic States and the Czech Republic."