It is said that ‘outsourcing is not a new phenomenon, as companies have scoured the globe for cheap labor unions for decades, manufacturing cars in Mexico and shirts in Malaysia.’ Outsourcing is an idea whose time had come in this globalized economy. The mechanics of such an activity cover entire infrastructures of human organizations, geographical societies, and technological hardware, and put these into a seamless and beneficial machinery. ‘They’re taking servers from the data center, consolidating some with virtualization, co-locating others through a third party and handing others off to cloud-hosting companies,’ for example.

But is there a downside to outsourcing? Is there such a thing as too much outsourcing? ‘Where do you draw the line between more expertise on the outside and core competencies on the inside? What happens when a server running 60 virtual machines crashes or the cloud provider has a hiccup and data gets lost and you don’t have anyone left internally who knows anything about the problem?’

‘Despite the pressure to remain competitive by cutting costs,’ there are risks involved in outsourcing. The key metric in any human organization is ‘what’s commonly described as critical mass inside departments. That critical mass is essential for doing more than just maintaining the status quo, which is often what happens when companies outsource too much. Growth requires a core of people who get together and discuss what needs to be done and how to get those things done, and it requires people to do the work.’ People, in immediately interactive environments where face-to-face interaction is present, are key to the success of human organizations. Physical proximity and accessibility are important in moving shared goals within the organization.

Most importantly, ‘there’s the immeasurable aspect of what happens when a company is no longer a culture but an amalgamation of outsourcing partners. They may add great efficiency into the business, but they generally add nothing to the long-term vision. Outsourcing can eliminate an entire interaction layer that is impossible to measure with objective tools. Cultures are inextricably linked to innovation and quality, and the less there is of the former the more the latter two will suffer in the long term.’

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Via Forbes.com