Based on interviews with tech executives at the top 11 companies in this year's edition of the annual InformationWeek 500, there is little doubt of the tremendous impact that offshore outsourcing is having on their businesses.
Most of the execs view offshoring as a way to improve their capabilities rather than just a cost-cutting measure.
Jacquelyn Barretta, CIO of Con-way, says her company has enjoyed "great success" offshoring application support, which allows in-house staff to devote time to development efforts. Barretta also recommends using offshore resources to handle short-term projects, which keeps staff focused on longer-term strategic initiatives.
One of the top initiatives for Kimberly-Clark CIO Ramon Baez is transitioning to a new insource/outsource model that involves 700 folks each from internal and external staffs and, more important, to "deploy the new model with disrupting the business." Baez stresses the importance of being "selective in the scope of work, as well as the partners you choose."
Like Baez, Washington Mutual CIO Deb Horvath has an IT team pretty evenly split between internal and external resources, with 2,541 employees in-house and another 2,021 offshore. She calls offshoring "a variable cost model that provides highly skilled resources and services at a lower cost," which in turn allows WaMu to devote more funds to new programs. The time zone difference also provides a key business benefit, Horvath says.
While not knocking offshoring's lowering of labor costs, Bob Lento, Convergys' president of Information Management, says he expects an even bigger benefits from "broader participation in innovation and knowledge creation" as well as "access to otherwise limited skill pools."
Of the 11 folks featured inthese short profiles, only Vanguard Group CIO Paul Heller has not employed offshoring, preferring to rely instead on an internal team that he calls "extraordinarily capable" and that "understands and is highly connected to our business." (Bruce Livingstone, a tech exec at Getty Images, doesn't address offshoring in his profile.)