Outsourcing Losing Out to Cheap Labor
Projects, once designated for outsourcing, can be bargains right now if done internally.A year ago, buildings began being shuttered, traffic began lightening and Wal-Marts began moving in. These are indeed gloomy times. There are thousands of unemployed IT workers nationwide, but Silicon Valley is surely suffering more. Here, everyone is in a frenzy seeking self-actualization. What were actualizing is that an employers market might make outsourcing projects relatively pricey, especially for large-enterprise companies. Thats one reason its difficult to understand how Loudcloud, one of the most famous IT outsourcing companies, manages not only to survive but also to thrive through last weeks acquisition by EDS. Loudcloud sold its managed services business to EDS, and Loudcloud will become a software company called Opsware.
The irony is that, as Loudcloud re-emerges as a Silicon Valley software company (and not a software and services company), it is outsourcing its operations to EDS, which is using the Opsware software. In the press conference announcing the agreement, Marc Andreessenthe sole reason that Loudcloud is famoussaid the deal with EDS "marries Silicon Valley innovation with ... enterprise validation. It shows the growing importance of automation that over time leads to utility computing."