Friday, January 11, 2013

What reverse outsourcing? Offshoring is alive and well

During the past couple of weeks, there were a number of reports in the media on reverse-offshoring. Many of them took off from Reuters’ writeup “GM to open third U.S. tech center, hire 1,000 people”  The article described General Motors' plans to  open a third U.S. information technology center as "part of its plan to bring that work in-house and improve the automaker's efficiency and productivity."

A few writers took the story further. For example
Most of us who have been in the industry long enough, and have been a part of the growth engine in the past decade know intuitively that these are fascinating headlines but not an indicator of a “trend” by any means. To put it in context, the offshoring industry in India alone employs about 2.8 million techies. Add sourcing to other countries and near-shore and the scale is mind boggling.

GM reverse-sourcing a thousand jobs to centers in the US is certainly significant for the company and will provide much needed boost to communities and local economies where the jobs are coming to. The news is also significant since offshoring firms wrote their playbook based on learnings from early contracts at sourcing pioneers like GM and GE. Interestingly, In 1984, General Motors agreed to buy EDS for $2.5 billion. In 1996, GM spun off EDS again as an independent company, and then became one of its largest clients. (Wiki)
Just as industry watchers try to analyze the context of these media reports, comes earnings report by industry bell weather and my former employer, Infosys. As Forbes headline chimes “Infosys FY Q3 Top Estimates; Outsourcing Not Dead

Bottomline: Just as one swallow does not a summer make, General Motor’s decision on sourcing, while making an interesting headline is perhaps a drop in the backdrop of global offshoring ocean.