The end of outsourcing?!

Sometimes I feel very lonely in my vision on the future of outsourcing. Maybe the problem lies in the generic usage of the term ‘outsourcing’, but this week A.T. Kerney published an article with the title ‘the end of outsourcing (as we know it)‘ . When I reflect on this, I think the title is somewhat misleading.

The article deals only with IT outsourcing and describes that we won’t need huge amounts of programmers working on software development in India anymore. Everything will move into the cloud and software will be available from the cloud. Now I think the title attracts a lot of attention and that might be the author’s main goal. But isn’t outsourcing about something much more diverse than IT? Isn’t it a much broader movement that will shift the way labor is organized worldwide?

Sometimes I feel very lonely in my vision on the future of outsourcing. Maybe the problem lies in the generic usage of the term ‘outsourcing’, but this week A.T. Kerney published an article with the title ‘the end of outsourcing (as we know it)‘ . When I reflect on this, I think the title is somewhat misleading.

The article deals only with IT outsourcing and describes that we won’t need huge amounts of programmers working on software development in India anymore. Everything will move into the cloud and software will be available from the cloud. Now I think the title attracts a lot of attention and that might be the author’s main goal. But isn’t outsourcing about something much more diverse than IT? Isn’t it a much broader movement that will shift the way labor is organized worldwide?

Sometimes I feel very lonely in my vision on the future of outsourcing. Maybe the problem lies in the generic usage of the term ‘outsourcing’, but this week A.T. Kerney published an article with the title ‘the end of outsourcing (as we know it)‘ . When I reflect on this, I think the title is somewhat misleading.

The article deals only with IT outsourcing and describes that we won’t need huge amounts of programmers working on software development in India anymore. Everything will move into the cloud and software will be available from the cloud. Now I think the title attracts a lot of attention and that might be the author’s main goal. But isn’t outsourcing about something much more diverse than IT? Isn’t it a much broader movement that will shift the way labor is organized worldwide?

Sometimes I feel very lonely in my vision on the future of outsourcing. Maybe the problem lies in the generic usage of the term ‘outsourcing’, but this week A.T. Kerney published an article with the title ‘the end of outsourcing (as we know it)‘ . When I reflect on this, I think the title is somewhat misleading.

The article deals only with IT outsourcing and describes that we won’t need huge amounts of programmers working on software development in India anymore. Everything will move into the cloud and software will be available from the cloud. Now I think the title attracts a lot of attention and that might be the author’s main goal. But isn’t outsourcing about something much more diverse than IT? Isn’t it a much broader movement that will shift the way labor is organized worldwide?

I see three main powers at work here:

1. IT outsourcing is the top of the iceberg

Somehow, driven by cost pressure and labor shortage, IT has been the ‘pioneer’ in international outsourcing. Companies have a long learning curve in mastering the skills needed to make offshoring work. IT outsourcing is by no means a simple business process. Outsourcing bookkeeping or other administrative tasks is simpler because it’s easier to describe what needs to be done. With the skills learned in IT outsourcing, the learning curve in having people from another country do other business processes for you will be much shorter. So companies will do just that: outsource any activity which can be done remotely with the use of an internet connection.

2. The transformation of companies into lean organizations with the lowest costs possible

The era of growing big multinational firms is over. Companies strive to focus only on their core strengths and outsource anything they can’t do well or prefer not to do. Companies will transform into an organization with an internal team doing what they do best and a network of external people around it. Value will be created by this network of people cooperating.

3. All that matters is the right person at the right price

Organizations have a core purpose, a reason for their existence. They need people to fulfill this purpose. And they prefer to have the right person to fulfill the responsibilities needed to produce the desired results. If I can chose between 2 people who are both ‘right for the job’ and one costs 50% of the other, which one will I chose? If a supplier offers me that he can do what I do myself more effective and at a lower cost, should I keep on doing it myself? Today, people have the mindset that a person should sit next to him in the office. Once people master the skills of outsourcing & offshoring, this mindset will change (and is already gradually changing). Offshoring will become a common way of fulfilling positions in a company and the bottom line will be to find the right person at the right price. Outsourcing in general will become natural for organizations and if an activity can be done better and/or cheaper by another firm, it will be done externally.

So the A.T. Kerney article might be right about the shifts in IT: (‘The outsourcing market is on the verge of experiencing its most massive transformation since the concept arose more than 20 years ago.’), but the impact of outsourcing and offshoring will be much bigger. It is not about IT, but about creating lean and profitable organizations with the right people at the right price.

I see three main powers at work here:

1. IT outsourcing is the top of the iceberg

Somehow, driven by cost pressure and labor shortage, IT has been the ‘pioneer’ in international outsourcing. Companies have a long learning curve in mastering the skills needed to make offshoring work. IT outsourcing is by no means a simple business process. Outsourcing bookkeeping or other administrative tasks is simpler because it’s easier to describe what needs to be done. With the skills learned in IT outsourcing, the learning curve in having people from another country do other business processes for you will be much shorter. So companies will do just that: outsource any activity which can be done remotely with the use of an internet connection.

2. The transformation of companies into lean organizations with the lowest costs possible

The era of growing big multinational firms is over. Companies strive to focus only on their core strengths and outsource anything they can’t do well or prefer not to do. Companies will transform into an organization with an internal team doing what they do best and a network of external people around it. Value will be created by this network of people cooperating.

3. All that matters is the right person at the right price

Organizations have a core purpose, a reason for their existence. They need people to fulfill this purpose. And they prefer to have the right person to fulfill the responsibilities needed to produce the desired results. If I can chose between 2 people who are both ‘right for the job’ and one costs 50% of the other, which one will I chose? If a supplier offers me that he can do what I do myself more effective and at a lower cost, should I keep on doing it myself? Today, people have the mindset that a person should sit next to him in the office. Once people master the skills of outsourcing & offshoring, this mindset will change (and is already gradually changing). Offshoring will become a common way of fulfilling positions in a company and the bottom line will be to find the right person at the right price. Outsourcing in general will become natural for organizations and if an activity can be done better and/or cheaper by another firm, it will be done externally.

So the A.T. Kerney article might be right about the shifts in IT: (‘The outsourcing market is on the verge of experiencing its most massive transformation since the concept arose more than 20 years ago.’), but the impact of outsourcing and offshoring will be much bigger. It is not about IT, but about creating lean and profitable organizations with the right people at the right price.

I see three main powers at work here:

1. IT outsourcing is the top of the iceberg

Somehow, driven by cost pressure and labor shortage, IT has been the ‘pioneer’ in international outsourcing. Companies have a long learning curve in mastering the skills needed to make offshoring work. IT outsourcing is by no means a simple business process. Outsourcing bookkeeping or other administrative tasks is simpler because it’s easier to describe what needs to be done. With the skills learned in IT outsourcing, the learning curve in having people from another country do other business processes for you will be much shorter. So companies will do just that: outsource any activity which can be done remotely with the use of an internet connection.

2. The transformation of companies into lean organizations with the lowest costs possible

The era of growing big multinational firms is over. Companies strive to focus only on their core strengths and outsource anything they can’t do well or prefer not to do. Companies will transform into an organization with an internal team doing what they do best and a network of external people around it. Value will be created by this network of people cooperating.

3. All that matters is the right person at the right price

Organizations have a core purpose, a reason for their existence. They need people to fulfill this purpose. And they prefer to have the right person to fulfill the responsibilities needed to produce the desired results. If I can chose between 2 people who are both ‘right for the job’ and one costs 50% of the other, which one will I chose? If a supplier offers me that he can do what I do myself more effective and at a lower cost, should I keep on doing it myself? Today, people have the mindset that a person should sit next to him in the office. Once people master the skills of outsourcing & offshoring, this mindset will change (and is already gradually changing). Offshoring will become a common way of fulfilling positions in a company and the bottom line will be to find the right person at the right price. Outsourcing in general will become natural for organizations and if an activity can be done better and/or cheaper by another firm, it will be done externally.

So the A.T. Kerney article might be right about the shifts in IT: (‘The outsourcing market is on the verge of experiencing its most massive transformation since the concept arose more than 20 years ago.’), but the impact of outsourcing and offshoring will be much bigger. It is not about IT, but about creating lean and profitable organizations with the right people at the right price.

I see three main powers at work here:

1. IT outsourcing is the top of the iceberg

Somehow, driven by cost pressure and labor shortage, IT has been the ‘pioneer’ in international outsourcing. Companies have a long learning curve in mastering the skills needed to make offshoring work. IT outsourcing is by no means a simple business process. Outsourcing bookkeeping or other administrative tasks is simpler because it’s easier to describe what needs to be done. With the skills learned in IT outsourcing, the learning curve in having people from another country do other business processes for you will be much shorter. So companies will do just that: outsource any activity which can be done remotely with the use of an internet connection.

2. The transformation of companies into lean organizations with the lowest costs possible

The era of growing big multinational firms is over. Companies strive to focus only on their core strengths and outsource anything they can’t do well or prefer not to do. Companies will transform into an organization with an internal team doing what they do best and a network of external people around it. Value will be created by this network of people cooperating.

3. All that matters is the right person at the right price

Organizations have a core purpose, a reason for their existence. They need people to fulfill this purpose. And they prefer to have the right person to fulfill the responsibilities needed to produce the desired results. If I can chose between 2 people who are both ‘right for the job’ and one costs 50% of the other, which one will I chose? If a supplier offers me that he can do what I do myself more effective and at a lower cost, should I keep on doing it myself? Today, people have the mindset that a person should sit next to him in the office. Once people master the skills of outsourcing & offshoring, this mindset will change (and is already gradually changing). Offshoring will become a common way of fulfilling positions in a company and the bottom line will be to find the right person at the right price. Outsourcing in general will become natural for organizations and if an activity can be done better and/or cheaper by another firm, it will be done externally.

So the A.T. Kerney article might be right about the shifts in IT: (‘The outsourcing market is on the verge of experiencing its most massive transformation since the concept arose more than 20 years ago.’), but the impact of outsourcing and offshoring will be much bigger. It is not about IT, but about creating lean and profitable organizations with the right people at the right price.