According to a survey just out from consulting firm DiamondCluster International (Nasdaq: DTPI), several trends have begun to gain strength, merge, and push back at that famous 2004 election-year bugaboo: offshore outsourcing, or "offshoring." Collecting the results of interviews with more than 450 tech and outsourcing company executives, DiamondCluster's 2005 global IT outsourcing study arrives at some startling suggestions on where the offshoring trend may be heading.
For example, 51% of the executives reported recently terminating an outsourcing relationship. That's partly a result of last year's political climate and partly a response to angry U.S. employees who, unhappy at the prospect of losing their own jobs, are giving their management teams an earful. It's also a response to customer complaints about not being able to understand tech-support personnel from other countries.
But the decline in offshoring is also almost certainly linked to companies' growing unhappiness with their outsourcing partners. Firms reporting "satisfaction" with their partners declined from 79% to 62% over the past year. And for that drop, you have to place a lot of blame on the hype. Offshore promoters have been touting promises of incredible savings from outsourcing -- 50%, 60%, even 80%.
Well, it's also about the law of supply and demand. As more companies do offshoring the cost of offshoring rises while the domestic wages are down, reducing the wage gap.