Just simply wrong on many levels
You claim it isn't there by pointing out it's there? By claiming that the management is spread out so thinly that it can't be noticed? Uh huh. Yah. SO, by that logic, if you spread one manager over 12 'engagements' (departments) management is 'still there', but then would be cost effective. Yah. No failure gonna happen THERE.
CIO->Dr->Sr Mgr->Manager->Staff.
In this pretty damned standard org...the outsource will cut the bottom 3 and replace with outsourced staff. Now, the outsourcing company will have Dr levels engaged certainly...the "company" in this model should be able to manage the outsource with fewer.
Your continual insistance that there is a complete layer of management that makes the outsource non-competive does not mean it actually exists. It generally does not, and the reduction in internal staff to manage outsourced staff will more often offset any "additional" staff of the outsource.
And you STILL insist that a management hierarchy is MORE LIKELY to break in an outsource than it is in a traditional org. This is also conjecture and in my experience unsupportable by fact.
2. "These outsource providers are very big and very specialized and have damned good training programs. Their people are often much better at much lower payscales because they are hired younger and trained better." And when they 'bounce to higher payscales' they take that training with them - ore does it magically get transferred to new people via telepathy? Or are there always people in training (less effective) or do people work for free while they are training?
Generally, knowledge transfer is better in an OUTSOURCE because there is "planned obsolesence". And there are ALWAYS people in training to follow up. The great thing for the company is that these underlings are an available pool of resources that are not billed to the company, do not have a 30% benefit package payable by the company, etc. Those are costs that have to be borne and paid for out of the profit margin of the outsourcer. And before you challenge that "Aha, see the outsource costs more"...remember that it doesn't...which this study VALIDATES...just not at "published levels".
he fact that the people get paid less does NOT translate to less 'cost' for the company. PRICE does not translate to less 'cost' for the company - though it IS an element. Riddle me this, batman - if the outsourcer was such a good deal, why'd they put you on staff for a higher 'price', hmmm?
Simple payscale. The outsourcer pays less than the scale of their clients. Did I magically gain more experience by switching sides? No. Just shows that an outsource can get equal talent for less which is counter to your arguments.
3. This gives the company a 'stick'. Whether they use it or not, or wimp out and turn to outsourcing / offshoring and it's inherent disadvantages rather than fix a 'sick' IT department - may be the sign that the company as a whole is 'sick'.
Your logic doesn't follow. You've assigned "inherent disadvantages" that you have yet to prove actually exist anywhere but in your mind...and in fact you allow those to remain inherent advantages in Andrew's business case.
Remember that the company has basically NO SAY in the hiring or firing of outsourcing / offshoring companies employees.
I'll remember no such thing. I manage an outsource engagement...and have managed outsource relationships for 15 years. I absolutely have a say in the hiring and firing of the employees on my engagements. I don't care if the outsourcing company keeps non-effective personnel...but I don't have to pay for it and don't. I've also been involved in the interview process of each "direct report" in these engagements. I've said no several times...and that person has not been hired. So this is a mythical issue you have created.
There is far less incentive (positive or negative), the employees are less tightly bound to the company.
Are you operating under the notion that there is ANY loyalty left? There isn't. Change your notion.
Finally - your assertion is that the reason for outsorcing is empire-building ON THE PART OF IT. Funny - I've seen it where folks outside the department prosletyze outsourcing (and offshoring) as a way to 'cut costs' in order to make themselves look good - and then, as it fails, they blame what IT remains for the problems, thus cementing their OWN 'empire building'. To the company's detriment, I might add. YOU assert 'all too often IT gets involved in Empire Building'. I assert that this happens only a minority of the time. IT folks are usually far more interested in getting the job done than playing games, in my experience.
Simply put, we have different experiences.
