Alternate Outsourcing Models Gain Popularity

While this model is not effective for small-scale operations, it is well suited when anticipated increases in demand provide the offshore unit with room to grow. It is also attractive for multinational corporations that have plans to establish or grow a marketing presence in the offshore location, and is a great way to absorb the business culture of that area.

As the cost savings generated by IT outsourcing and offshoring becomes less appealing, companies are looking for the next big thing. In a domain like IT where even basic day-to-day operations keep management awake at night, transformational change, such as moving from an outsourced to an insourced model or launching a captive offshore center, could result in permanent insomnia. With the continually evolving vendor landscape, changing global economics, and the cloudification that has begun to dominate the space, IT managers need to carefully balance the economic, operational and technical risks and rewards associated with a myriad of business options, including reducing the offshore labor component, selective multisourcing, insourcing and using captive offshore units.

About the Author
Rakesh Bhatia is a senior associate at management and operations consulting firm Pace Harmon.