Outsourcing in a Troubled Economy

In some of my posts and questions here and on www.linkedin.com I am finding some interesting comments about the demerits of outsourcing to another country when the US economy is in shambles and a record number of US worker are unemployed. (Although look specifically at computer and high-tech jobs at an all time high in the US, which debunks the myth that outsourcing was destroying US job opportunities. This needs to be investigated to truely understand the numbers.)

I completely understand US employees concerns about job loss and why should companies outsource more jobs when so many are unemployed, right?

One thing that seems to get missed, and as a former business owner, I recognize.

Companies choose vendors / partners with skills and resources that fit their budget and constraints. Not all companies are looking to cut their US labor force and replace them with overseas contractors. Some companies, also concerned about their own survival in this economy, dont want to take on new employees when they can hire a contracting partner which can be "downsized" with a lot less pain.

So they choose to hire a contractor. Most Americans wouldn't argue that contractors are another form of outsourcing. Now, when the contractor is in another country, then some people get upset. I understand. I've been there. I used to work in IT outsourcing in the US and was easily replaced by eager Indians who were willing to work for half my salary and twice the hours. How do you compete with that?

What I'm saying is that some companies want to expand, cant afford the risks and costs of US labor and choose to accept a partner in another country. when the project is up, the company simply tells the vendor, "good job, thanks, and maybe we will see you again."

No firing, no downsizing with severance. Trust me, business owners DO WANT TO CREATE JOBS. This is a source of pleasure. But closing the business due to non-profitability, and firing people is a source of pain for business owners and it wouldnt do anyone any good, especially the workers who get laid off because the company closes its doors.

Does this make sense?

Mexico for IT Outsourcing And Team Augmentation

Mexico is an Excellent location for IT Outsourcing and Team Augmentation

Have you heard this yet? Is that news to you? It was to me just 6 months ago and I was part of the IT industry. (See my profile on Linkedin.com)

Mexico has been a on the offshoring / outsourcing radar for at least 4-5 years now. Many have written about it. It seems to make a lot of sense - close cultural ties, close proximity, similar time zone. See what others say:

Accelerance is an Outsourcing Consulting company. they help companies decide who amongst the many should be your partner.
http://www.accelerance.com/outsourcing/mexico.htm

CIO.com has several articles about the topic.
http://www.cio.com/article/151704/Outsourcing_Vendor_Genpact_Makes_Mexico_a_Passage_to_India

Some say US companies are choosing Mexico over India.
http://www.bnamericas.com/news/technology/Praxis_CEO:_India_facing_increased_competition_for_IT_outsourcing

Computerworld spoke of the trend in 2003.
http://www.computerworld.com/managementtopics/outsourcing/story/0,10801,84829,00.html

SourcingMag obviously has opinions.
http://www.sourcingmag.com/blog/archive/outsourcing_to_mexico_a_frank_appraisal.html

Offshore Experts posts several options
http://www.offshorexperts.com/index.cfm/fa/map.outsourcing_mexico

Again, the major players in outsourcing are easy to find
http://www.businessweek.com/magazine/content/06_05/b3969412.htm

Here you can find a list of Gartner events, specifically those around outsourcing summits
http://www.gartner.com/2_events/attributes/attr_58627_519.pdf

Gartner's Criteria are as follows:

1. Language
2. Government support
3. Labor pool
4. Infrastructure
5. Educational system
6. Cost
7. Political and economic environment
8. Cultural compatibility
9. Global and legal maturity
10. Data and IP security

This CIO article quotes Gartner:
"The seven countries from the Americas are becoming or already are attractive destinations for U.S. companies, but a lack of government support is restricting offshore development. Only Mexico rated "very good" in this area, followed by Canada and Uruguay."
http://searchcio.techtarget.com/news/article/0,289142,sid182_gci1286775,00.html

Here's the original Gartner press release
http://www.gartner.com/it/page.jsp?id=565107

Indeed, TechBA is supported by the Mexican Ministry of Economy and suports the export of IT services from Mexico to the US.
http://techbasv.com/joomlamain/index.php?option=com_content&task=view&id=41&Itemid=72

Stephanie Moore of Forrester has a good article about Mexico and nearshore development, although it is primarily god posture for Softtek, another large company.
http://www.forrester.com/Research/Document/Excerpt/0,7211,40995,00.html

Whole article here:
http://www.dataskill.com/no-shore/pdf/Forrester.pdf

More About Gartner's Summit
http://www.psia.org.ph/LinkClick.aspx?fileticket=VHcscQa9cFo%3D&tabid=56&mid=424

This blog goes into great details about the outsourcing considerations.
http://pragmaticoutsourcing.com/2008/10/24/pragmatic-outsourcing-vs-gartner/

Another good article from a product marketing company
http://www.phaseforward.net/news/Mexico%20Outsourcing%20Article.pdf