Ill effects of outsourcing

by Thiyagarajan Maruthavanan (Rajan)

Ill’s of outsourcing. Ah ! people are finally seeing it.
I never have been a fan of outsourcing, have argued against it with so many on this subject, almost everyone seem to think that it is good to outsource ( atleast mundane tasks like call processing etc) . My argument has been that outsourcing creates massive holes in an organization capacity for innovation thus depriving it out long term value creation but simultaneously benefiting in the short term by cost reductions. This I think happens because our traditional way of accouting/measuring a business’s value does not factor human capital.
I believe it is still a nascent topic researched by prominent academicians and some industry people. Milken has been doing some terrific work in the subject of human capital.
Note: I am arguing that outsourcing is bad for a firm, not for a developing country like ours 🙂 where it has helped put india into the global league in the IT industry.