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What would a world without outsourcing look like?
Many have debated outsourcing and it's still a hot topic these days. I wonder if, given the economy we have today, can countries survive without outsourcing jobs offshore? I think that it's impossible not to outsource these days in a race to meet the demand for faster, cheaper and better products/services. How about you?
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4 Answers
This is about as loaded a question as one could ask given the state of the economy. I would think that answers from anyone on this board could range from "better" to "more expensive." I'll do my best to give an objective, non-emotional response to what is often an emotional topic. My response to this is that it would be a world with one less option in it. Outsourcing is neither good nor bad. It's a tool as well as an option. As with most human constructs, it's how it's used determines how good or bad it is.
Where I would argue is the assertion that outsourced = better or that outsourced = cheaper. Outsourcing that is not managed properly can often be more expensive. Outsourcing is not simply managing people remotely. It's negotiating a minefield of language differences (even when it's English spoken by both parties), cultural differences, time differences, and calendar differences (ever have the UK try to get an American on Thanksgiving? There is no corresponding holiday that celebrates the expulsion of the Pilgrims. It's just another Thursday for them... and vice versa. Many years ago, I procrastinated on contacting an overseas vendor and learned what 'Boxing Day' was the hard way). Outsourcing requires people that are capable of communicating clarity in situations that aren't all that clear. Clearly defining objectives, scopes of work, and deliverables are essential. If your outsourcing is going to be client/customer facing, you had better prepare your audience for the fact that their support calls are going to be bounced to Bangalore as well as the personnel in Bangalore that they are going to hear the word "Y'all" on the phone sometimes and to know what that means both literally and culturally.
Not outsourcing is definitely possible in a situation where not outsourcing = less customers lost or better, more efficient customer service. If those can be achieved via outsourcing, then it's definitely a viable option.
Outsourcing damages the economy. It may be cheaper to an individual business to outsource, but in the home country it means loss of jobs, income, tax revenue, and ultimately consumer spending that keeps it all going. It also means that money leaves the economy completely, and over time this means there is less money in the economy at large. How any of that can be good I have no idea!
Some level of outsourcing is happening all the time.
There are different levels of outsourcing in terms of size and scope. Most organizations, for example, use a firm like ADP or PayChex to handle their employee check processing. Or they use a firm to supplement or replace their HR department for the purpose of hiring top talent. Or they offload some aspect of their supply-chain or product delivery to a more specialized firm. Or they manage their legal issues and tax preparation via an outside entity.
Outsourcing is pretty much essential for any business, but especially for small businesses.
What people are usually complaining about when they complain about outsourcing, is "off-shoring" -- the act of outsourcing to a foreign country, primarily for the cost benefits.
I will agree that off-shoring, if done injudiciously, can have an adverse impact not only on the organization in question, but on an entire industry or even country. A world without off-shoring, or with less wholesale off-shoring, would be better off for many more people, IMO.
A world without any outsourcing at all? I cannot even imagine such a place. Almost every experience would be suboptimal (I'm almost inclined to say "mediocre") because everyone organization would be forced to handle every function internally, and that would prove to be a huge distraction where almost no one could gain the benefits of economy of scale without mega-mergers.
There might be more people employed in many places vs today, but there would be lots more inefficiencies as well, and higher cost all the way around.
The sweet spot is somewhere between absolutely no outsourcing of any kind vs "send all the work to the lowest bidder on Mars". And the sweet spot is not static...
-ASB: http://XeeMe.com/AndrewBaker
You must first address business strategy before answering this sourcing question. If there is a restricted supply of a key material and you want to own the market you probably want to own this source. If you have a process/science/technology that is the primary source for your research and development then you probably want to own this. If there is a supply risk that can be minimized by your ownership you will probably want to own this. If there is a commercial argument for owning a source then go ahead and own the source. All other items can be candidates for outsourcing.
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