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another company. You aren’t moving all of your organization’s work to a contractor, and
you certainly aren’t moving your company’s core duties. However, some functions, such as
customer service, can be handled by a contractor.

While you don’t want to
Your headquarters send mission-critical work Outsource service
to another company, you provider
can outsource such efforts
as customer service and
technical support.

Monetary Savings
Outsourcing can save you a ton of money, or outsourcing can only allow you to break even,
at best—it depends on who you listen to. In 2005, professional services firm McKinsey &
Co. stated that offshore outsourcing can cut an organization’s cost by up to 55 percent. Not
shabby. But at the same time, Gartner reported that most customer-service outsourcing will PART III
fail and end up costing companies one-third more than keeping the employees in-house.
So who’s right and who’s wrong? Both. Your success (or failure) at outsourcing will
depend on how well you prepare, how well you select an outsource service provider, and
how well they’ll tackle your project.
But when done right, the cost savings are there.

Lost Jobs
Although you want to be ecologically responsible and save money, you don’t want to put
people out of jobs. And isn’t that all outsourcing is? It’s popular to hate outsourcing because
it costs Americans their jobs. But maybe not.
According to a study by the Information Technology Association of America (ITAA),
outsourcing—wait for it—actually creates jobs. In fact, ITAA estimates that by 2010, 337,000
jobs will be created, in addition to those lost to outsourcing—Information Technology
Association of America, 2005.
And according to a study conducted by economic analysis firm Global Insight Inc.,
more jobs are created because outsourcing lowers costs to U.S. companies, thus allowing
them to spend money on new workers. Additionally, it increases the efficiency of the U.S.
economy, resulting in higher wages.
The ITAA study also estimates that outsourcing will save companies $20.9 billion by 2008.

Environmental Impact
If one of your reasons for outsourcing is to lessen your environmental impact, you need to know
that the company handling your outsourcing isn’t being environmentally irresponsible. That’s
a concern for a lot of organizations, and more and more they are asking service providers to
follow more stringent environmental standards.