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Outsourcing Providers Must Answer to a Higher Standard

Ara Trembly
Insurance Experts' Forum, April 12, 2010

Among the bromides fed to the kids of my generation was the sensible advice that “people who live in glass houses should not throw stones.” The whole vulnerability thing comes to mind because this is the very position offshore outsourcing providers find themselves in today with regard to their public image and, in particular, their performance. In this case, however, we might invent our own bromide—something to the effect of “people who live in glass houses should not do anything to upset those who are likely to throw stones.”

The likely rock hurlers here are those who purchase the outsourcing services—perhaps outsourcing their IT or customer relations functions—in order to save money (while also reducing workforce). Offshore outsourcers are under constant scrutiny because what they are doing is inherently controversial, and because if they don’t deliver great service with the promised savings, they are likely to be terminated by the companies (including some insurers) who hired them. So if you’re going to take U.S. jobs away, you had best be prepared to take a whole lot of heat if you mess up.

Several years ago, Forrester Research reported instances of data leakage in the Indian IT industry leading to account theft. “While this type of fraud is a universal phenomenon, massive media glare coupled with limited Indian government action to prevent further reoccurrence will further slow down offshore business process outsourcing (BPO) growth,” said Forrester.

Many Indian companies have since bolstered their security controls and business continuity measures in recent years, Forrester said in a more recent report quoted in Computerworld. “But the lack of executive support for security efforts, an over-reliance on technology controls and inadequate training and awareness undermine the effectiveness of such measures,” the analyst added.

And the media glare remains, in large part because of our lousy economy in which displaced IT workers in particular are hopping mad at having their jobs shipped overseas. If their “replacements” show themselves to be a security risk, those disenfranchised workers will be pointing the finger of blame squarely at the heartless so-and-so’s who fired them. For the outsourcing customer, the appropriate bromide might be: “If you’re going to export U.S. jobs, make sure your outsourcing provider doesn’t lay an egg, because there are plenty of folks just waiting to throw those eggs in your face.”

In the end, those who provide outsourcing services must answer to a much higher standard when it comes to security and results. Unless outsourcing customers can demonstrate that they received the same services with the same security that they would have had with U.S. employees, they will be in hot water, indeed.

Tread carefully, outsourcers.

Ara C. Trembly (www.aratremblytechnology.com) is the founder of Ara Trembly, The Tech Consultant, and a longtime observer of technology in insurance and financial services.

Readers are encouraged to respond to Ara using the “Add Your Comments” box below. He can also be reached at ara@aratremblytechnology.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

Comments (1)

You may not be aware, but there's actually a growing outsourcing "movement" right here in America. Companies can be satisfied by outsourcing providers who speak the same language, live the same culture, deliver quality work at significant savings and offer Intellectual Property protection that companies offshore don't, by the very fact that they, too, are located in America. American IP is not as secure in the courts of India and China as it is here. Their courts are not our courts, their laws are not ours.

This emerging industry is rural-based, where there is a lower cost of living...and a lower salary structure than urban areas. While a number of onshore companies have been doing rural outsourcing for a few years, most are regional or in niche businesses. One company I am familiar with, Rural America OnShore Sourcing (www.ruralamericaonshore.com), has the bulk of its associates working from home. They're in the process of expanding from coast-to-coast, and the National Broadband Plan's expansion will help get more Americans employed nationwide as well.

Bottom line, companies who outsource can enjoy additional securities, low prices and good work by having their work done in America. And people who live in rural areas will be able to find good jobs as this whole concept of rural outsourcing continues to grow.

Given this, there really are few reasons for anyone to have to offshore.

Posted by: wendy.hersh | April 19, 2010 1:57 PM

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