Curious to know of real reasons - maybe some internal politics? Or maybe they had issues with staff skills/retraining?
Aspiring manager decides to hitch his or her wagon to offshoring IT initiative. Manager hires consulting firm to handle details / take fall if it goes poorly. Switch-over normally goes well. Cost savings are demonstrated in year 1.
Manager gets promotion / bonus because of fine job he or she did. Consulting firm gets paid because they delivered. Offshore IT appears to be working well.
In year 2, company finds out there's an extremely frequent business interaction with IT that wasn't covered by the contract (because management lives in a land of abstracted rather than actual business processes). Offshore IT bills them an arm and a leg for it. Repeat this for every change request. Service also seems to degrade as new faces are substituted in on the offshore side (B team for A team).
In year 3, company needs to migrate to a new business system. Offshore IT (under current contract) is revealed as utterly incompetent for something this complex. Offshore IT will happily sign a new contract to make it happen, if company is willing to pay more.
In year 4, company is still attempting the migration. After signing the migration contract, offshore assigned more competent resources. However, it is revealed there is now no one left at the company with deep expertise in the system (the person who worked on it for 20 years was let go during the offshoring) to interface with offshore IT experts. And of course nothing was documented.
In year 5, the migration is still ostensibly underway but has generally been accepted as failing. The offshore IT initiative is now regarded as a more expensive boondoggle that delivered worse service.
The manager moved on somewhere around year 3.5, securing a better position based on his or her track record with successful IT offshoring. Which they are then asked to do for their new employer.
The consultants are also in strong demand, based on their track record of successful IT offshoring initiatives. Any problems that occured when they were no longer involved obviously can't be attributed to them.
Tl;dr - pump and dump with a department of employees and people's lives
I've lived this a couple of times. If given time, the newbs can usually figure it all out, on the companies time (and $$$), and at the expense of forward momentum in the market and customer good will. Oh that IE6 client? Yeah that REALLY has to change now.
But these costs are hard/impossible to quantify, and who wants to pay these high priced developers anyway?
We are left with two options: let the project fail due to incompetent resources and take the fall as the only remaining in-house IT staff; or waste time training the resources and proving that the offshore model works.
- It's attractive to management to displace accountability. As a CIO, you pay a vendor for an SLA, and have an entity to blame when you have a problem who isn't in your scope of responsibility, whom you can fire or otherwise penalize.
- You get to put the budget for maintaining the existing services in a box. Instead of keeping stuff running, you invest your time, energy and money on project work that is perceived to deliver new value.
- There may be undisclosed labor issues that you can't fix without firing everyone.
- "Cheaper" doesn't necessarily mean lowest cost. No C level type wants a smaller budget.
Think about why you pay Amazon for S3 vs. going out and renting a cage and buying a SAN. It's a similar thought process, with a similar affect on employment.
Engineers need to get smarter, learn something from marketing and management, develop and protect their ideas, and move on to new business strategies for themselves.
When you read about fucked up states of affairs in the Federal government and Fortune-500 companies, it's usually because of attitudes like this. The most successful companies use technology to make money, the run of the mill use technology to spend it.