Outsourcing is delegation--and, generally speaking, people don't like to delegate. David Master goes so far as to say, in Managing the Professional Services Firm:

Like all human beings, professional service firms could be a great deal healthier if they eliminated their bad habits. This chapter focuses on a single bad habit that reduces profitability, adversely affects motivation and morale, reduces a firm's competitive capabilities, and in addition prevents senior professionals from spending more time with clients and investing in the future of the firm.

This bad habit is called systemic underdelegation.

Imagine that a questionnaire was sent to each and every professional in your firm, top-to-bottom, asking the following single question:

What percentage of your professional work time is spent doing thigns that a more junior person could do, if we got organize and trained the junior to handle it with quality?

(Obviously, do not include in this calculation that work which the client insists you perform, since the client must get what he asks for.)

Imagine that each person answered honestly, and the responses were tabulated to calculate the firmwide average.

My research shows that, for the typical professional service firm, the firmwide averge is frequently as high as 40 to 50 percent, and sometimes more. This is equivalent to saying that, of the firm's entire productive capacity, 40 to 50 percent is consumed with a higher priced person performing a lower-value task. Obviously, this is not a wonderful situation. [p. 41-42]

In the US: You just need to pay a trivial amount of money to the government to incorporate.

In Argentina: In addition to the government fees, you need to put 12,000 pesos (about us$4,000) in the bank just for this - in a country where that's something like the average man's annual income!

One of the fundamental problems of outsourcing is, if someone is not by your side, how do you know what they are doing?

There are technological solutions (you can have them check in code regularly and review the code throughly). There are business process solutions (daily email reports, workflow checks on what everyone is doing).

The one that works the best, however, is trust. One of my employees reminded me of that just this morning: nothing compensates for really trusting deeply the people you work with, to do even the tiniest things well and, importantly, on-time.

The challenge of outsourcing is, of course, finding people you trust. And it's hard to do that.

DP uses a few processes to help us find people we trust. One of them is our insistence on "test projects" before we hire anyone, so we can get a sense of the quality of the programmer's work and his discipline as an employee. We have other methods, too, and they might be corporate secrets, or maybe I'll reveal them in future blog entries.

One of the basic challenges is, what happens when someone slips through, and you hire someone but start to have problems? Here are some strategies that are worth articulating at the very least (and I will examine later):

• The Jack Welch strategy is to make sure everyone always knows they're replaceable
• Always use pair programming and other sorts of redundancy, so that people can compensate for each other
• Never reward bad behavior: Be willing to fire people when necessary

More to come later...

Great point!

Your defense of outsourcing was pretty compelling, in all seriousness, and that's what piqued my interest. I'm more of a bleeding heart, but with a global rather than national bent, and I like the idea of design/programming jobs being available in developing countries. And if it benefits you, too, then all the better. A friend of mine was drawing a comparison between the argument against outsourcing and the argument against hiring non-whites in the States before the civil rights movement. White people being like, "Hey! Those are our jobs! They're getting taken by minorities and immigrants who'll work for less! No fair!" That sense of entitlement irks me.