A cat has 9 lives... how many does outsourcing have?
Posted by Suman Sasmal, Vice President and Service Delivery Head - Application Development and Maintenance, Infosys
A cat has 9 lives, so goes the saying. I am not sure what a cat thinks of this, but the world of business would love to be like a cat!
And why not? Only 12% of the Fortune 500 companies has remained on the list every year since the list was introduced in 1955. And over 2,000 of them have appeared, disappeared and appeared again throughout their journey. Similarly, the average churn rate of FTSE 100 ever since the Index was created in 1984 is 14 per cent. Companies come and go off the list, to come back on it again. So, even if fierce competition or changing technologies drive companies off the list, many of them gather strength, adapt to situations and survive. Who said only cats have 9 lives?...
The world of outsourcing is no different. I am not talking about outsourcing companies who are on a particular list or have gone off it, but the art and science of outsourcing in itself and how it has evolved to stay relevant through the years!
Where did it all begin? Actually, it is as old as civilization. In the early days, people had to depend on each other. A farmer did farming and, for his other needs, had to depend on a barber, a builder, a merchant and so on. One could not do everything on his own. So, people outsourced needs that they couldn't fulfill easily themselves and engaged with specialists to obtain their services. No one called this phenomenon outsourcing then, but that was truly the purpose of it. Centuries later, outsourcing started developing during the Industrial Revolution, and companies used it to drive profits & good housekeeping and slowly it became mainstream.
The offshore variant of outsourcing appears to have been initiated during this period as well. Nandan narrates this in his book Imagining India..... "The whole argument for educating Indians in English was thus, in essence, to allow the British to offshore their governance jobs - replace British workers with Indian ones". This was in the context of introduction of English education in India by Lord Bentinck and Thomas Macaulay in 1835, when the East India Company's finances ran into trouble. As outsourcing matured and business went global with changes in political and economic climate, MNCs like GE and Texas Instruments engaged with companies in other countries (read India). That really got offshoring initiated. And then came the IT revolution, the famed Global Delivery Model (GDM) and the rest is history. We all know that. We breathe it every day, live in it and as professionals in this space, we would experience its evolutions throughout our lifetime.
The early days of offshoring meant physically carrying tapes to India and working on mainframes and delivering them back to clients. With easing tariff barriers and declining telecom costs, this soon got replaced by an ability to work directly on client's infrastructure remotely. This expanded the market, as more types of work could be accomplished. The processes matured, confidence grew, trust was built and the brand India was established. One thing led to the other and today, literally every possible component of the business value chain is getting outsourced. Be it software maintenance or infrastructure upgrade, application development or RnD initiatives, transformational business program to call center responses - all are getting delivered remotely. As NRN puts it - globalization is about producing where it is most cost effective, sourcing capital from where it's cheapest, sourcing talent from where it is best available and selling it where you make the most profits
With expanding economic boundaries and globalization of business, outsourcing implies global-shoring today. And the model depends on a seamless orchestration of several factors. Talents, telecom, infrastructure, technology, processes, locations, economic cycles, political climate, contracting model, legalities, industrialization and innovation, among many others. A change in any or more of them can trigger another change and this causes the outsourcing model to evolve on a continuous basis. With interaction models of the society changing, outsourcing destinations expanding with each passing year, outsourcing becoming outcome sourcing, millions of applications and billions of users, open source and crowd source becoming a norm, gamification-mobility-automation taking center-stage - the future of outsourcing is going to be very different. I believe the incremental change of this model, thus far, will get replaced by something game changing. An iTunes or a Facebook phenomenon is perhaps waiting to happen.