Fred Wilson, is a venture capitalist based in the United States who recently wrote about the merits of outsourcing.
I am a fan of outsourcing in general. I believe companies should develop those skills and functions that are their core competency and outsource the skills and functions that are not. I believe that the US should invest in outsourcing instead of demonizing it. I believe there is a lot of opportunity for economically weak regions of the US to use outsourcing to build their economies and grow.
But for startups, outsourcing is a tricky issue. You should not outsource those things that are core competencies or critical feedback points. If you don't have the skills on your founding team to do that work, go find people who do and either hire them or bring them onto the founding team.I am proposing a slight twist in the arrangement and provoking the status quo to propound the notion that NO, YOU SHOULD NOT OUTSOURCE.
In fact, YOU SHOULD SET UP YOUR CORE OPERATIONS HERE IN THE PHILIPPINES or in India.
Rather than "not outsourcing those things that are core competencies or critical feedback points of your company" you're going to bring those core competencies and critical feedback points here.
The equation is not so simple but in condensed form,
Developing nation labor costs and startup expenses = low
US labor costs and startup expenses = high
Developing nation cost of living = low
US cost of living = high
Income derived from purely web based business startups = High
Geography is irrelevant.
It sounds crazy to uproot your operations and transfer them to a developing nation, but so many have already done it that it's actually crazier that most companies are still bent on having the core of their operations in the US.
Web based startups could do more if their running expenses are kept to a minimum. It's a fulfillment of the observation made by Thomas L. Friedman in his book "The World is Flat".
Everything that you need to launch a web based startup is already here.
However, it is understandable why most US companies are reticent in doing so though many of their counterparts are already here! There is the fear of the unknown, lurking on the shoulders of every startup. There are notions of economic protectionism, patriotism and nationalism. There's family and home.
All of which are understandable and valid reasons.
Don't get left behind.