Consulting Firm Favors Homeshoring Over Offshoring

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Robert Kinsler of Dallas management consulting firm RWSMC says his firm believes outsourcing is not a panacea for business ills. He advises firms to conduct an activity analysis to get a handle on their costs prior to outsourcing. If outsourcing is cost effective, he recommends "homeshoring" over offshoring.

Robert Kinsler of Dallas management consulting firm RWSMC says his firm believes that outsourcing overseas is not a panacea for business ills. Says Kinsler, “With today’s technology, it’s possible for a business to have someone just about anywhere handling many business functions, but we believe it makes good sense to put the work where the customers are.”

Kinsler says that some large American companies have encountered unanticipated problems when they outsourced business processes overseas. “When the offshore work is poor quality, it causes rework or additional effort that actually creates higher costs than if it was done in the U. S. If you keep the work in the USA, you shouldn’t have any language problems, and the workers are familiar with U. S. business practices and customs.”

Kinsler advises companies thinking of outsourcing to consider the quality of the work needed and the caliber of the workers needed to perform it. He has run across some U.S. companies that are developing a niche in taking back work that went offshore but had problems. According to Kinsler, “These companies will help a business find U. S. facilities where their work is done outside of high-rent areas and is cost-competitive with offshore facilities.”

Kinsler also advises companies to use Activity-Based Costing (or ABC) to conduct an activity analysis of business processes or areas that are under consideration for outsourcing. “This enables them to compute their true costs, understand the business processes, and identify non-value activities,” says Kinsler. “An activity analysis can provide the basis for business improvement, which might eliminate the need for outsourcing.”

ABC is a costing analysis and decision support tool developed in the 1980s by an industry consortium to help large industrial firms improve their product costing and business processes, so they can compete successfully against much lower-priced competition. ABC involves analyzing the activities and processes that are required in order to accomplish the objectives of a firm and then assigning direct and supporting costs to those objectives in a rational manner. ABC has been used and improved for over 20 years now, and it is very useful for all types and sizes of businesses.

In closing, Kinsler says, “If you Homeshore, the work may be performed by some of your own customers. You are helping your country retain its economic strength. I know many small towns in West Texas and Southern Oklahoma that have educated, intelligent people who would be willing, if given the chance, to do quality work for salaries or wages less than you would have to pay in a large city.”

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Robert Kinsler
RWSMC
360-838-0943
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