Michael E. Nemeth a VP at Cognizant has published an executive white paper, on outsourcing ....drawing parallel with Flying lessons and explaining how intution about these areas is not necessarily accurate.Below are some interesting notes/excerpts from the same, Get the full whitepaper here.

Offshore outsourcing programs have experienced disappointing financial results - as unlikely as the sun rising in the west, given the disparity in offshore labor costs, the source of the poor performance may be management by intuition.

1. Intuition: The purpose of outsourcing is to replace expensive people with inexpensive people and save money as a result. - Counterintuitive thinking: The purpose of outsourcing is to improve IT capability to achieve strategic objectives and save money as a result.

2. Intuition: The lowest rates will produce the largest cost savings.- Counterintuitive thinking: Rates reflect supplier cost but do not represent or guarantee actual costs for the buyer. Rates are not prices. Prices require related estimates that may or may not be accurate.

3. Intuition: Non-core competencies can be outsourced, but core competencies cannot or should not be outsourced. - Counterintuitive thinking: Any IT task or work assignment that can better be accomplished by a business partner than by the internal team should be considered for outsourcing.

Prashanth Rai