Outsourcing Growth Slows: Wall Street Journal

The bloom is off the outsourcing rose, according to a July 11th story in the Wall Street Journal: Some Outsourcing Might Ease Amid Errors, Disappointments (alas, subscription required).

A survey by DiamondCluster International, found 64% of the buyers of offshore outsourcing services plan to increase the services in the next 12 months. However, this number is down 13.5% from the year before.

Terminating offshore contracts, something in 2004 no survey respondents planned, was now cited by 8% of the survey respondents, up 60% from 2005.

"This waning enthusiasm partly reflects mistakes companies have made or unrealistic expectations they have had in earlier outsourcing efforts, says Tom Weakland, managing partner of global sourcing practice at DiamondCluster. Others feel they have outsourced as much as they could.

Some companies feel expected savings from outsourcing never materialized. "They're not getting the 40%, 50%, 60% cost reductions they thought they would get," Mr. Weakland says."

Of course, outsourcing's serious human impact does not come up among the reasons for the decline. One can only hope that the bottom-line benefits peter out before our engineering base has eroded beyond repair.

Technorati Tags: layoffs, outsourcing