Deloitte Consulting LLP released a study on April 19 with some interesting results… most notably that 70% of participants “have had significant negative experiences with oursourcing projects.” Add to that 44% “did not see cost savings materializing as a result of outsourcing.”

My take is this study shows that just as with the Internet, companies rushed in to this new idea of doing business that was supposed to change everything… and it hasn’t. Just as with the Internet, there are core business principles that have been ignored, and just as with the Internet that resulted in some good ideas gone bad.

Should we not outsource? Of course not, but we should do it smarter, looking at the long-term issues and looking more closely at keeping those functions onshore. We think it’s a great idea for companies to focus on their core compentencies to be more competitive and just enjoy work more. At the same time, moving sensitive operations outside the organization requires a lot of planning from a 360-degree perspective. It’s not just an IT decision to move the help desk overseas. That decision affects customer satisfaction and marketing, which affects stockholder confidence, and sales, etc, etc…

The Deloitte study also notes that 25% of the respondents have cutback on their outsourcing strategies because of - get this - cost and complexity. It doesn’t have to be that way, but maybe this is a good reality check for people drinking the offshoring Kool-Aid. The same work can be done stateside and while the first year costs may not be as cheap, the long-term stability and organizational impact should be well worth the effort.

Outsouring Falling from Favor with World’s Largest Organizations