The Facts and Statistics of outsourcing work

Companies expressed frustration with the quality of work being provided, according to a survey, but most businesses still said they chose the cheapest outsourcing option instead of the best quality. Nearly all businesses - ninety-four percent - admitted that the focus on cost was increasing the likelihood of their projects failing.

Indian IT companies have started adding thousands of employees after a year of relatively flat growth. But the same can't be said for U.S. companies. [...] Three of India's biggest IT services firms... have alone added a total of 16,700 employees in the last quarter. The U.S. IT work force... has a lot of lost ground to cover as a result of the recession. Industry group TechServe Alliance... counted 3.81 million IT workers at the end of September, marking a net gain of about 11,000 jobs to the end of last month.

Indeed, that gush slowed to a steady stream once American companies realized it's tough to set up shop in a country with bad roads and a patchy power grid. Lately, American consulting firms that once predicted runaway growth in outsourcing to India have been slashing their estimates by half or more. Now American companies are hanging on to the high-skilled work that requires face-to-face interaction, while everything that can be done "over the wire" gets shipped offshore

This research into the potential pitfalls of outsourcing work comes just a week after Jean-Marc Lazzari, head of Unisys operations in continental Europe, told us that he knew of up to 10 deals worth between 700m euros ($890m) and 1.5bn euros ($1.9bn) that were already back on the market despite having been signed less than two years ago. "These deals were based on the your mess for less principle, said Lazzari, and they are in danger as the supplier often did not get the volume of work expected from the client, and the client didnt get the expected cost savings.

The survey of 25 large organizations with a combined $50 billion in outsourcing contracts found that 70% have had negative experiences with outsourcing projects and are now taking a more cautious approach. One in four companies has brought outsourced functions back in-house and nearly half have failed to see the cost savings they anticipated as a result of outsourcing.

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