Cost of Outsourcing

Okay - we have talked often enough about outsourcing, its trends and its effects. But it appears that after the discussion faded a bit into the background in the US probably due to the rebound in the economy, the discussion now started in Australia. We reported last week (June 23, 2004) that EDS is heading towards Malaysia, from Australia.

Now, the Australian News puts up some warning signs saying that the expected return on investments is not always there. We wouldn't disagree - companies need to look beyond cost savings to reap the benefits of outsourcing. They need to identify quality providers with solid business background - otherwise, bad work and project delays might be the result of outsourcing. This is no difference to anything a business does - looking for a new supplier, a new distribution chain and so forth. If one piece of the value chain breaks, well, costs run up quickly.