Is outsourcing software development dangerous for companies?

IT services

Outsourcing, especially the variant in foreign countries ("offshoring"), enjoys a certain, albeit limited, popularity in Germany. The local market cannot keep up with the Anglo-Saxon-speaking area in terms of volume and maturity, but all regions have one thing in common: the mistakes that are made when outsourcing can be carried over. This has at least the advantage that German users do not have to step into the same faux pas as their fellow sufferers in Great Britain and the USA.

Scientists Phanish Puranam and Kannan Srikanth from the London Business School (website) asked high-level corporate managers in Europe and the USA about their experiences with outsourcing services. The focus was on the financial services industry. Compared to the "Wall Street Journal", the scientists have summarized their findings on outsourcing and offshoring in "seven myths" that can be dangerous for the success of outsourcing projects.

1. Everything will be fine

Success criteria for an outsourcing project are usually efficiency (costs), effectiveness (improvements) and flexibility (adaptability) - with the user company serving as a benchmark before and during the outsourcing. The problem here is that users often assume that they will benefit from all three areas within a project. In addition, the service providers do little to dissuade customers from this misconception. In fact, improvements in one area tend to compromise at least one other goal. The scientists therefore advise to prioritize the goals of the outsourcing in advance and also to announce the result within the organization. If the parties involved have different wishes, an outsourcing project is in great danger even before it begins.