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World View: Sourcing IT Globally

Companies that look at global sourcing of IT weigh four factors, says Atul Vashistha, CEO of offshore-consulting firm NeoIT Inc.: cost savings, quality, risk, and control.
Companies that look at global sourcing of IT weigh four factors, says Atul Vashistha, CEO of offshore-consulting firm NeoIT Inc.: cost savings, quality, risk, and control. Then, based on those criteria, they go one of three ways: keep the work with company employees, let outsiders do it on a company site, or give it to an outsider working off-site, usually offshore.

As companies get better at managing projects and business processes as outsourced services, and the vendors increase their skills in a given area, internal organizations find it increasingly difficult to compete. Companies decide the process isn't a core skill they need to keep internal, Vashistha says. "In all the circumstances, it's internal organizations competing with outsourcing organizations," Vashistha says.

In deciding between using their own employees or an outsourcing firm to go offshore, the biggest factors are whether sensitive intellectual property is at stake, the security of the data is highly sensitive, or the data or process is regulated, Vashistha says. All those factors weigh in favor of creating employee-run offshore offices, or "captive centers." Another reason to set up employee-run centers offshore is if the work is considered a core competency. Dell Computer, for example, does almost no business-technology outsourcing because it considers its innovation and efficiency in running that infrastructure one of its competitive advantages, but it has Dell employees in India to tap the lower-cost, high-talent labor pool.

But Vashistha says most companies find outsourcing firms have deeper talent in a skill or business-process area because they specialize in that task.

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