Seven Myths About Outsourcing

No. 1: 'We can have it all'

By Phanish Puranam and Kannan Srikanth

The Wallstreet Journal Online, June 16, 2007

In recent years, there's been a seemingly endless boom in offshore outsourcing. But companies that think handing off an operation to an overseas provider is easy can get a rude awakening.

The transition often proves to be much more costly and complicated than expected. And companies often find that their high hopes about cost savings and greater efficiency don't pan out.

To get a better understanding of the problems and solutions, we conducted a survey of senior executives at 62 of the 100 largest financial-services firms in the U.S. and Europe. Arguably, this industry is the deepest repository of leading-edge practices in outsourcing and offshoring. We also conducted approximately 100 interviews with outsourcing clients and vendors from financial services as well as other sectors such as pharmaceuticals and the media.

We found seven common myths that vendors and clients cling to about offshore outsourcing -- false assumptions about how the process should work. They range from unrealistic expectations to poor ideas about how to structure contracts to mistaken views of risk. These ideas can prove deadly to the success of outsourcing projects and even to an organization's overall services-sourcing strategy.

Here's a look at those destructive myths, and how to overcome them.

Read More ...