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Don’t Want to Outsource? Try Homeshoring instead

This could actually be a win-all for all. As a halfway compromise between on and offsite development, homeshoring can be the next big survival option for the downturn.

What is homeshoring?
Simply put, homeshoring is letting your employees work from home and save overhead costs. No salary cuts, no lay-offs, yet there is tremendous saving and the employee is happy too, as she keeps her job and saves time in commuting.

A lot of US companies are switching to this model. (For a full list go to Families and Work Institute website and read their 2008 Guide to Bold New Ideas for Making Work Work). Convergys estimates that its homeshorers (1200) are currently working for over half the Fortune 50 companies in the US and it estimates this number to triple by next year. A new IDC study “U.S. Home-Based Agent 20082012 Forecast: Homeshoring in an Underwater World,” also confirms that homeshoring is fast emerging as an attractive option for both companies and employees. The IDC study predicts there could be a compound annual growth rate of 19% in homeshoring between 2008 and 2012. Already, there are 112,000 home agents in the US, a number that is expected to grow to over 300,000 by 2010.

Just Imagine the Cost Saving One estimate shows that if US workers did telecommuting half the time, they could gain 2.5 workweeks of free time per year and save on average between $7,000 and $17,000 dollars annually. At the minimum, this implies a national saving of 8.9 billion gallons of gas and 452 barrels of oil (57% of our Gulf Oil imports).

For the employers’ perspective too, “Outsourcing applications through a software-as-a-service (SaaS) model can save projects between a quarter and 40%,” says Michael Osterman, a US-based analyst. This estimate is backed by Gartner’s SaaS Customer Relationship Management (CRM) Reduces Costs and Uses of Consultants report.

Where Does That Leave Indian Providers?
Obviously, homeseshoring cannot work in all situations. In most cases, it would still make sense for a company to go with an offshore agent, who is still the cheapest provider, which is a major consideration for jobs where skill requirement is low and there is less need for high touch cultural affinity.

Not surprisingly, a recent report from oDesk’s reveals that notwithstanding the economic slowdown, the level of outsourcing to India remains the highest in the industry in terms of new hires.

The data also reveals that currently there are some 27,454 homeshores in India (mainly freelance developers and programmers) who make an average of $12.52 per hour and enjoy a feedback score of 4.01, which matches, if not beats, the best in the industry.

However Before You Homeshore….
Carefully weight all the major pitfalls and benefits. For a detailed study of this aspect of homeshoring log on to a study conducted by Penn Sate University. A list of telework pros and cons (with data) is also posted at this site

All Said and Done…Offshoring Will Emerge in Many Forms “There is tremendous economic logic to outsourcing,” declares Thomas Friedman, a free market advocate and award-winning New York Times columnist and author of The World Is Flat and Hot, Flat, And Crowded. As long as this economic logic is there, “outsourcing will continue thrive,” he asserts, although it may over time take other forms, such as the homeshore model. Here it might be interesting to cite the case of Friedman’s own receptionist at The New York Times. “We don’t have her anymore. Instead, we have a machine that does her job. So, you see, her job didn’t go to India or Mexico: it went to a microchip.”

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