This document discusses the problems with parasitic outsourcing, where work is outsourced through multiple levels of subcontractors rather than directly. This leads to increased communication overhead, reduced quality control and worker satisfaction, and profits being extracted by middlemen who add little value. The document recommends alternatives like hiring qualified individuals directly via open online profiles to reduce costs and improve quality over outsourcing through large corporations with many layers of subcontracting.

1. Parasitic Outsourcing
The REAL problem with outsourcing

2. Parasitic Outsourcing
Common opinions:
"Outsourcing robs jobs"
"Outsourcing reduces quality"
"Outsourcing increases delay"
True.
Can't argue against those.
But there is more.

3. Parasitic Outsourcing
Company A wants work W done.
But wants it cheap.
Enter outsourcing to Company B.
"Just one level of delegation"?
Nope!

4. Parasitic Outsourcing
Total Work =
Work W
+ Communication effort
+ Infrastructure effort
+ Decision making effort
+ Dependencies
+ More people, away from source

5. Parasitic Outsourcing
Enter sub-contracting to C
Work W ...
+ 2 x Communication effort
+ 2 x Infrastructure effort
+ 2 x Decision making effort
+ 2 x Dependencies
+ More people, further away

6. Parasitic Outsourcing
What about the money?
W costs to $100
2 employees = $50 each
A is not very happy
2 employees happy.

7. Parasitic Outsourcing
Outsourcing, one level:
1 middleman (agent/company)
2 remote employees.
$50 to middleman
$25 to 2 employees.
Middleman ONLY TALKS!

8. Parasitic Outsourcing
If middleman has a local clout,
5 remote contractors.
Still, $50 to middleman
$25 to 5 contractors.
Work quality = ?
5 contractors' morale = ?
Anyone happy?

9. Parasitic Outsourcing
Coordination = ?
Understanding of problem = ?
Motivation to work = ?
Customer? Workers? Users?
Exploitation.
Only Middleman is happy

10. Parasitic Outsourcing
Workers have multiple bosses.
Satisfaction = ?
Decision nodes double.
Mismanagement multiplies.
Middleman is CEO of shop that
hires contractors.
His tangible input? ZERO.

11. Parasitic Outsourcing
Alternatives?
Local Employees.
Direct over web.
VOIP / Collaboration / Video Conf
Open source - customization
Individuals over corporations

12. Parasitic Outsourcing
Two Problems: Trust and Quality.
Why trust only brands?
Why trust fat corporations?
Why not try individuals?
Ask contractors to prove quality.
Hire individuals with proven
abilities - open source coders.

13. Parasitic Outsourcing
"Open sourced HR"
Public, crowd-sourced hiring.
Coder profile on Ohloh / SF.net.
Social networking
Instant "mob teams" ("agile")

14. Parasitic Outsourcing
Public profiles.
Highly visible skills.
SourceForge marketplace.
Not trustworthy enough?

15. Parasitic Outsourcing
Ignorance of open source
=
Pay more for lesser quality.
Visit online developer
communities more often.

16. Parasitic Outsourcing
Outsourcing to corporations
=
more bloat & less quality
Don't do parasitic outsourcing.
Reduce middlemen.

17. Thanks!