Monday, June 25, 2007

Off-shoring gets more expensive

Interesting piece in the FT today about the increasing cost of outsourcing to India – Offshore call centre benefits challenged.  Seems companies are finding that call centres in India are getting more expensive, wages are rising. 


I have long help that this would happen, and as it does off-shoring becomes less attractive.  Even in India the supply of suitable call-centre staff is limited and over time their wages will rise.  This is good for everyone: the individuals get paid more, India gets more money and more jobs get retained in the source countries.


And if increasing cost were not enough it also seem the same call centres are less effective at dealing with complicated enquiries and less successful at selling additional products.  (Neither does this article mention the high staff turnover rates that call centres and other off-shore operations experience in India.)


I expect to see this trend repeated in the off-shore software development sector too. 


As I’ve said before, I’m not against outsourcing or off-shoring.  In fact I see good reasons to support off-shoring.  Just I do not believe it is a cure for all problems, and I think it can cost a lot more than people think.


Neither do I think it is right for early stage companies.  I think it works best when you know your product, your processes and what you are trying to do.  When any, or all, of these things are in flux you are better off having the operations were you can see them, control them, and keep feedback loops tight.