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Outsourcing was a hot topic during the late 90s. Dean and I both come from a heavy Information Technology background. Outsourcing was, and still is, a common practice in IT. Despite large corporations and small corporations alike having failed outsourced project after failed outsourced project, companies continue to out source their project overseas.

There is a fundamental flaw with the thinking of outsourcing: the focus is entirely on reducing costs. It doesn’t take an accounting genius to know that there are many factors that contribute to the bottom line of a business. Still, many executives (particularly in IT) believe that reducing the money paid to employees is the best way to improve the bottom line. I understanding the thinking here. Typically, employee wages are the single largest expense for a business.

Outsourcing is rarely a recipe for success. This doesn’t mean that it is always a failure. However, my experience is that only one of out scores of outsourced projects I’ve seen have been a success. There is a disconnect that takes place whenever a project it outsourced, and I’m not just talking about overseas to India.

Our federal government has gotten a taste of the outsource bug. That George Bush’s administration didn’t read the updates in countless magazines about the failure of outsource is no surprise. The un-Republican Bush Administration has repeatedly taken actions that are ridiculously outdated, such as financing a recession with federal debt. Their latest foray into outsources has produced the results one can expect from outsourcing: lower savings than promised and unpredictable costs that at not necessarily dollar related.