January 31, 2007
Why Outsourcing Fails
By Priya Jestin, Staff Writer
The main reason most organizations outsource their operations is to cut costs. Organizations that outsource operations to offshore environments consistently save money by taking advantage of lower labor costs. However, new evidence suggests that most offshore initiatives could do much better at improving cost efficiency.
One of the main reasons for high costs is that most outsourced projects are often poorly planned, shoddily implemented and ineffectively managed. As a result, cost savings from these initiatives fall far short of their potential. Most organizations are known to be unwilling to invest time at the outset to adequately plan and execute a project. They also wrongly assume they have the internal capabilities to govern an offshore operation.
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