Outsource Carefully

There are a lot of good examples and discussion about outsourcing.  One thing I think about relates to how do we determine what to outsource.  We have seen the criteria presented in class about costs, effectiveness, etc.  Outsourcing payroll is probably a pretty easy decision to make.  What about outsourcing functions that are closely intertwined with the company's core competency?  For example, I worked at a well established engineering firm here in Baton Rouge.  The company sends a sizable portion of its engineering design work to an office it has set up in Mumbai, India.  Clearly, this is done to cut cost and extend the workday as there is about a ten hour time difference.  The issue, however, is an intense difficulty to manage the work.  All drawings, like here in the United States, must be checked once completed.  The problem is that the quality of work is lower, and the work has to be redone more often than the drawings done in-house.  Managing the people is more difficult as well, and managers are sent from US offices to Mumbai for several months at a time to monitor the work.  While this is not outsourcing in terms of having a different company doing the work, it is some type of outsourcing.  I just find it strange that they have outsourced part of it's main function, engineering services, and have kept other things in house, such as IT and payroll.