Anna Frazzetto's Blog

Digital Innovations and Technology Solutions

Why Infrastructure Is Not Offshoring Material

On his blog "Talking Offshoring," Mark Kobayashi-Hillary, the leading UK-based offshore journalist and consultant, makes an outstanding point on the ever-growing importance of infrastructure. His comments were inspired after reviewing recent Datamonitor survey results that said most of the Europe-based CIOs and IT Directors in the survey would rather outsource their infrastructure to Eastern Europe than to India.

While many pundits responded as though it was an blow to Indian offshoring or a boon to Eastern Europe offshoring, Kobayashi-Hillary said this: "Infrastructure has always been important, but in an era that is becoming dominated by virtualisation, services-oriented architecture, Web 2.0, software as a service, and any other acronym that basically means you need immense business flexibility, infrastructure is now absolutely critical."

His point was the greatest advantage of offshoring to India--low labor costs--is not one of the key factors in successful infrastructure. Rather the most important infrastructure success factors are reliability of facilities, power and connectivity. As Kobayashi-Hillary contends, it makes sense that CIOs would want their outsourced infrastructure facilities closer, within easy distance and in locations with the highest levels of reliable utilities and consistent, high-powered connectivity.

Many organizations have wrapped their arms around offshoring to the extreme. They not only look to offshore IT but also other business functions like HR, accounting and finance. The question for all businesses and business leaders (not just CIOs) is this: Does it make good business sense to offshore infrastructure? At this point in time and in my mind, Kobayashi-Hillary has it right. Infrastructure is not a labor-intensive function and the biggest advantage of technical offshoring today is high skills at much lower costs.

The value of reliable infrastructure grows everyday, and for U.S. businesses reliability, connectivity and security are strongest on our local shores. Domestic or very nearshore outsourcing is the best strategic choice for today because what is of greatest need and value--reliability, speed and security--is right here. People and process--what you are typically analyzing first and foremost in an offshore relationship--takes second fiddle in infrastructure outsourcing.