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["Thomas A. Beckett" <thomas AT tbeckett.com>]

"Austin, Roger" wrote:
>  Outsourcing saves money if you can contract for services that you need
> without the long standing costs like benefits, retirement, office space,
> management staff, etc. You also can "manage" the contracts in a way that
> you can't manage in-house projects.

        If I may chime in a bit belatedly, I think Roger hits on an important
concept:  outsourcing human resources represents the commoditization of
labor.  It's converting personal services into fungible, interchangeable
units which can be bought and sold like pork bellies.  

        I'm presently reading *The Lexus and the Olive Tree* by Thomas
Friedman, about a quarter of the way into the book.  He describes the
process which took place in the 70s and 80s through which the financial
system transformed enormous debts, from home mortgages to international
loans owned by developing countries, debts could once have been held
only by a few large banks, were broken down into smaller pieces and sold
as investment securities which could be purchased by smaller
institutions and even individual investors.  

        At face value (I'm reserving judgment), this process liberalized the
financial system and forced both the banks and the debtors to become
more responsive to economic and political realities.  Friedman calls
this "The Democratization of Finance".  But it seems to me that at a
more fundamental level it was a process of commoditization:  breaking
big things down into little pieces that can be easily traded in the
service of capital.  

        So we see this process of commoditization with the outsourcing of
labor.  It started with janitors and other menial work and now extends
to hi-tech "talent" and, yes, even learned professions such as lawyers
and accountants.  Look at the explosion of staffing agencies, PEOs and
headhunters.  We also see it in the commoditization of audiences for
advertizing, where one can order up pairs of eyeballs in units of a
thousand (the trade term is "impressions", paid for "CPM" or
cost-per-thousand), broken down quite precisely by demographic factors
and purchasing history.  

        I'm not finished with this line of thought, all I can say for now is
that these observations leave me feeling rather uncomfortable. 
Uncomfortable with the relentless penetration of capital into every
facet of our lives.  

        Guess I'm just a firebrand waiting for a light.  

TaB


>  Directly hiring people has expenses over and above salary and fringe
> benefits. Some contract agencies have experience in work that you can't
> afford to keep on hand. They can develop methods for multiple projects
> that would take you years of heartburn to redevelop in-house.
> 
>  It works if you look at labor as a commodity such as getting the
> plumbing fixed rather than part of the core services of your business.
> (You don't have a plumber or painter on staff unless you have an economy
> of scale that makes it worth the costs.)
> 
>  I would question whether this is a good idea for IT services, but many
> people have decided to do it. They may not understand how to hire and
> manage geeks so they out-source. In theory, a staffing agency could have
> experts on hand to do a lot of different projects. The contracting
> business would not have to keep expert staff on hand and could "hire the
> plumber" for a specific job. (Sorry if I offended any contract people,
> but have you hired a plumber lately?)
>