Are you at risk from outsourcing?

Harlan brought up an interesting point in the last post about IT/IS stuff getting outsourced.

I don’t see this outsourcing as any kind of a risk to my business, but I havent yet worked out if it offers any significant opportunity either.

I sit between end users and IT/IS building systems that users don’t have the technical knowledge to build, and IT/IS don’t have the business knowledge to build. Outsourcing isn’t going to fix either of those structural weaknesses in a business so I think people doing a similar role to me are safe.

Outsourcing probably offers good opportunities as the business, needing something developed will go to their new (different company) IT department. Whatever they want is unlikely to be covered by the general os agreement so it will be chargeable and governed by SLAs. In that situation many smart business folks realise they can get a better service at a better rate with more control by going direct (or nearly direct) to a developer and bringing them into their team temporarily.

I’ve had a few of these IT reject projects, and its pretty easy to shine when you can knock a zero of their quote and still deliver.

If my inbox were a little bit fuller with work requests (rather than silly pay to present nonsense) then I’d be more sure that outsourcing is a good thing for independent devs.

What do you think? which ever side of the permie/indie fence you sit on.

cheers

Simon

[ps we’ve had a power cut all morning, which has kept me off all my cloud based resources (apps and data) – luckily that is none! (excluding SOS of course), I’ve been happily clicking away on my lapdog, on batteries.]

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4 Responses to “Are you at risk from outsourcing?”

  1. Biggus Dickus Says:

    Outsourcing is death for independent devs. Why ?

    1. Because once the OS deal is cut, the outsourcer will get first right of refusal on every new project – and they will NEVER refuse.
    2. They will never (unlike Harlan’s comments) pull us in to help – even if it’s just to suck the knowledge out of your skulls. We simply won’t fit their cost model and they will consider us “over-qualified” (I had that said to me recently ;-))…

    The independent software guru simply doesn’t fit the business model of the Outsourcer.

    The old days of building relationships within the IT or User community is over – until these corporations find that this new agreement is working against their business interests. The problem is that the legal agreements made with the outsourcers are probably going to lock them in.

    There is ironically one positive thing for Excel developers in all this. Last week I met with the Risk management team of my major client who is outsourcing everything to HP. They indicated they want to do as much in Excel as possible BECAUSE it would NOT involve IT (if done right). …….

    So we may go back to that world where we all have to fly under the radar until IT figures out what we are doing to survive like it was for so many years. Back to being parasites rather than partners with our clients.

    Dick

  2. Marcus Says:

    I saw a documentary a while ago which showed patients being x-rayed in the USA, but the diagnosis was performed by a doctor in India. The moral it proclaimed: anything that can be digitised can be outsourced. I disagree as there are always outliers, exceptions to the case.

    Similar to you Simon, I also work in between the business and IT where domain knowledge is just as important as technical. I’ve also worked on many project which the business insisted using MSO technology as they wanted to avoid any technologies which would involve the IT dept.

    Biggus, I agree in theory with the argument that the outsourcer will never refuse work. However in practice, I have seen this happen. One IT consulting firm I worked with declined work below a minimum dollar threshold (or bumped up the quote enough to make the client baulk). But you’re right, they are a bums on seats, margins business – they wont be doing you any favours ‘leveraging’ your skills or experience on any project they secure.

    I don’t believe that the days of building relationships are over (yet) but the days are numbered. Not because the capacity to leverage relationships isn’t there (it is). But because the number of new entrants into this arena is diminishing rapidly. (you can add to this the movement to .Net (IT dept controlled) will reduce the opportunity for under the radar development.

    Cheers – Marcus

  3. Dennis Wallentin Says:

    Being a subcontractor to corporates that get the outsourcing contracts mean:

    Less payment because:
    a) they always tries to be cheaper then all previously contractors.
    b) all of the sudden an overhead cost exists.

    More work because:
    a) all of the sudden you sit with two requirements, the client’s and the contracting corporate’s.
    b) all commuication goes via the contracting corporate who tries to “interpretate’ the client’s needs.

    And you all dislike the IT-departments?

    One approach that may save the present contracts is to add to the written agreements a condition if IT will be outsourced. In that way we can be better of.

    Kind regards,
    Dennis

  4. Bob Phillips Says:

    My experience of outsourcing is that it is led by the MS department, not the business, and the MS department maitain the business contact. So typically, the MS department will work with the business in the early stages, will determine the development load over the next year/3 years/5 years, and will sometimes even do the high-level design. But they will have also committed a certain amount of work to the outsourcing company over a period of n years, and also to offer anything over and above that to the outsourcing company.

    Problem with this of course is that the business see themselves dealing with the same old faces, the ones they never had any confidence in in the first place (they only get to see the real developers later in the process if at all, and anyway, they will still be doing the work, just working for the outsourcing company). So this means that over time, the business will start moving to tactical solutions, using innovative ways to get what they need … circa the late 80s.

    It is all cyclical.

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