UXC Connect: Outsourcing versus offshoring...

Many businesses look to outsource their ICT infrastructure without a clear understanding of the potential benefits, which makes it difficult to accurately measure return on investment.

Outsourcing ICT is unlikely to reduce the actual costs of ICT operations as opposed to offshoring.

Outsourcing should be undertaken to improve the way businesses operate, while offshoring is often about transferring activities overseas to take advantage of lower wages.

“Offshoring can potentially reduce the costs of managing ICT infrastructure," says Ian Poole, CEO, UXC Connect, a business unit of UXC Limited, Australia’s largest locally owned IT services and solutions company.

"However, it is not an option available to all government enterprises, and is unpalatable or unacceptable for many Australian non-government businesses.

“While lower wages overseas mean that sending standard operational business processes offshore can reduce the cost of providing them, it can be unsuitable for ICT outsourcing.”

Four reasons to consider outsourcing over offshoring:

1. Data sovereignty:

Australia has recently followed the European Union in expanding its privacy legislation to increase security over personal data. Typical offshoring destinations lack similar protection over data.

In fact, some countries claim sovereignty over any data held within their jurisdictions, and no ‘back-to-back’ contracts or security audits of overseas data centers and related processes can overcome that.

2. Appropriate skills:

While standard business process and application development capabilities are available overseas, the skills involved in managing ICT infrastructure are less easily sourced.

Research into consumer acceptance of offshore contact centres has demonstrated significant preferences for support delivered from in-country, so offshoring is likely to reduce user satisfaction levels.

3. Distance:

If most of a business’ ICT infrastructure is kept in Australia, offshoring its support can reduce service levels to users.

In addition, Australia has secure and resilient power and communications networks, plus the option of placing core servers and storage within a wide choice of world-class Australian commercial data centers when commercial sense dictates.

4. Brand reputation:

Just as it is unacceptable for Australian governments at every level to offshore their operations, commercial organisations also risk damaging their brand with Australian consumers and business customers if they pursue an agenda of offshoring.