Tuesday, January 19, 2010

Risks of Outsourcing

In case you haven't heard, Google is thinking about leaving China because of alleged hacker attacks from China (Google hasn't publicly provided evidences yet). Depends on which side you are on, you either support Google's move or you are against it, but I am not taking side on this issue. Instead, I am specifically thinking about how Google's move might impact its customers and corporate clients.

Google has being pushing their online applications, gmail and other online collaboration applications, i.e, Google Docs to the corporate clients. Increasingly, more corporate clients are adapting the outsourcing strategy to outsourcing part of their in order to cut costs. Few have a good understanding how outsourcing can affect the businesses that are at the mercy of the outsourcing company. Using Google's pending move as an example, if Google decides to leave China and Chinese government decides to close traffics to Google.com in additional of Google.cn's abandonment. Google's customers will no longer be able to access their gmail and online collaboration application like Google Docs. How does this impact your business if you are an international company, or even a small company that have business in China (by the way, China is the 3rd largest economy in the world and is becoming the 2nd largest this year according to some predictions). That's a big part of international market. The question for the corporation is "Can you afford it?"

Just to clarify, I am not against outsourcing. I think it makes sense for corporations to outsourcing some non-essential IT to concentrate on their core businesses. It is essential to think through how and if you have any control your business after you decide to outsourcing. This is not an exclusive IT outsourcing issue. Even if you are outsourcing your production or have an operation in another country, you need to think about how much control you have over that part of your business and how reliable they are because political and business environment in another country can and will change. Often we take our technologies for granted, email, telephone, etc. But don't take them for granted since they could be at the mercy of the foreign government. I just read a report on Yahoo.com by AP titled "What Internet? China region cut off 6 months now" (http://news.yahoo.com/s/ap/20100119/ap_on_re_as/as_china_internet_blackout). You can read it yourself and see how business and people's life are interrupted. Can you tolerate it?

Outsourcing is not just let outsourcing company to deal with your issues; actually, you should prepare carefully before you decide outsourcing and have a strategy to deal with the unexpected problems that is out of your control so your businesses are not on death watch.

1 comment:

  1. I think as a company, this kind of thing is very tricky. Google's intent seems to be noble, but the result may ultimately be negative considering the political situation, and not just for the Chinese, as you point out. I hadn't really thought of that perspective before. Still, the real issue is the government and political situation, which is always risky when doing international business, no matter what company you use as an email provider or collaboration tool.

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