This was posted on the Pepsico board by Post ID: @10UacPcH
Many of these truths can be found in the outsourcing deal of Vz apps to Infosys.
Is outsourcing successful anywhere? I wonder if AT&T, Xerox, etc are all seeing the same
things, and if so, how these companies consider this a "win". Is cost savings at the expense of quality really the goal?
PepsiCo is learning that same lessons that Boeing is learning with outsourcing the 737 MAX Software build. You simply can’t apply assembly line mentality to IT managed services in this day and age. When misused, the outsourcing concept has two fundamental flaws. First, any activity that is not consistent and predictable will have frequent decision points. Productive and cost efficient decisions are dependent on the expertise and experience of the decision makers to best understand the variables involved. Second, pride of ownership is the core quality driver with both project and managed services. The application or process in question becomes a reflection of the integrity of those responsible for its existence and reputation. As PepsiCo releases the expertise, experience and true application “owners”, IT services becomes exposed to a greater risk with disengaged offshore resources. Rapid turnover of these resources and a strict concern for service metrics shifts the focus from quality to quantity. Over time the application stability and integrity will fracture and dissolve. Any costs saved with initial outsourcing will be lost 10 fold rebuilding and sustaining applications that are highly unstable. Application instability is actually vendor self serving, it serves the vendor’s primary objective to generate revenue. More failure requires more resources, this drives higher vendor engagement costs. PepsiCo IT employees focus on cost reduction, vendors are best served through services cost growth. PepsiCo is experiencing the symptoms all ready. The problem will essentially continue to become more severe as more IT staff are released. This is not really unfounded criticism, it is reality.