Source Superstore [2/7]: Growth of outsourcing is unstoppable

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The Source Superstore is now open!  To celebrate this opening, we’ve produced this seven-part publication which explores why, and how outsourcing is the most powerful and transformative business tool in existence today.  For this second part, we explore the unstoppable and explosive growth of outsourcing.

 

How and why outsourcing can transform your business

Don’t miss out on this seven-part publication which explores why, and how outsourcing is the most powerful and transformative business tool in existence today.

 

The frenetic growth of outsourcing

The growth of outsourcing (staff) is frenetic.  And unstoppable. The world is always searching for more efficiency, and outsourcing is a big part of that.  It is a progressive evolution, and we know well that nothing ever stays the same.

Outsource Accelerator recently published a white paper exploring the extent of the potential outsourcing market.  We explored how the the future of outsourcing will be happening in the SME/SMB space, and provided some very interesting numbers…

There are over 35 million  SME/SMBs across the high-cost English-speaking countries (Unites States of America, Canada, United Kingdom, Ireland, Australia, New Zealand, Netherlands, Norway, Singapore).  These SMEs collectively employ over 100m people and generate $12bn in revenues….

This represents a huge market, and a huge opportunity.  Currently, less than 0.5% of these SMEs outsource.

We argue that eventually – within 20-30 years – 100% of companies will outsourcing. Yes, 100%!

The reason for this bold hypothesis is that eventually, the concept of “outsourcing” as we know it now, will simply become, and become inseparable to, standard “employment”…

Flexible offices, flexible employment

Eventually, it will all just be called ‘employment’…. Regardless of whether you are sitting in the same office, maybe working from home, working remotely, working from another country, or sitting within an outsourcing service provider’s office….

The future of offices, office space and how that connects to the ‘workplace’ is all radically changing – and quickly…. The new co-working company, We Work is taking the office-space world by storm.  They represent the new frontier of flexible, remote, new age co-working space. The fact that they have received over $8b of investments from external funds, validates their hypothesis that traditional workplaces as we know them, will be tipped upside down…

Eventually, employment will become far more flexible…. It won’t matter necessarily where you are located, it won’t matter where you sit…. It will be more about whether you can get the job done, and for what price…. This might seem harsh, but it is a truer meritocracy….

You might also think that this remote working is a more of a pain for companies…. But really, people are overlooking to most significant benefit of this rise of remote work – it exponentially increases the size of the employment market.

If a traditional employer is sitting in a town of 100,000 people, then they really only have a potential workforce of maybe 50,000 to choose from.  This 50,000 might seem like a big number, but it pales in comparison to the worldwide job market. There are seven billion people on this planet. About 2 billion of them are actively online now, and in the next 10-20 years, were going to have another 2-4 billion people online.  

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Outsourcing and remote work, enables access to this world wide job market.  Remote resources allow the ‘progressive’ employer to access a potential candidate pool of 2 billion people now, with another 2-4 billion people coming soon…. Of course quality, reliability, and security are all critical issues, but this is true for any candidate, and of course these will continue to be determining factors when choosing an employee.  This won’t change, irrespective of where the potential employee is sitting. But the cost and quantity of skilled labour force, will change. Access to this almost infinite pool of people will generate more opportunities at a keener price.

 

Easier engagement

People increasingly expect easy engagement, easy terms, and limited complexity.  Outsourcing offers an incredible opportunity for businesses, but it has generally been a complex thing to get into.  This is why we have launched the outsourcing superstore – we are making outsourcing easy…

 

Technology interface

One of the biggest catalysts for the outsourcing, online, and remote ‘movement’ is the technology enablement.

Outsourcing is not really possible without cheap and effectively communications.  Prior to the internet, international communications were generally expensive. At the start of the internet, it too was expensive – if you consider the full infrastructure requirements.  But in the last 5-10 years the cost has become almost negligible. This factor alone enables incredible commercial opportunities. For outsourcing, it allows for workforces spanning the globe to communicate, work alongside each other, interact, and produce, like never before…

The last 5-10 years has brought technology which makes it increasingly easier for people to interact online.  Things like Skype revolutionised communications – both from a cost perspective, but also a interaction perspective…. Never before could you have have live, video interaction with anyone anywhere in the world…. Suddenly Sype came along, and you could.  Plus…. It’s completely free. Incredible.

The world has come along way since then though.  New software products make interacting with people, planning workloads and tracking efficiency easier than ever.  There are endless softwares on the market that makes remote work more trackable, transparent and efficient than ever….  These softwares are all supported in the cloud, offer one-click install, and mostly cost nothing, or very little.

Technology is quickly removing all geographical relevance of location-based work.

 

Platform approach

People are now so used to technology helping them with their research, search and purchasing requirements – yet there has been no easy interface for outsourcing research until now.  Outsource Accelerator provides the world’s most comprehensive outsourcing platform, We connect business in the West with the world’s best outsourcing suppliers.

 

Normalisation

A big aspect currently inhibiting remote working is the sense of normalcy… At the moment, outsourcing and remote work is a little uncommon…. Thus it feels a little unusual…. Society is gradually building new norms around these new workplace paradigms.  This will inevitably change with time though, as location-independent work options become more common, and eventually ubiquitous.

It wasn’t long ago that everyone thought it crazy that you would look at photos on a screen, and that you would read a novel from anything else other than a book…. Now, it is rare to ever look at hard copy photos, and more and more novels are being consumed on Kindles, iPads, mobile phones and in audio…

Remote working will not only become normalised, it will eventually be considered quaint, or retro, for everyone to go to ‘work’ to a central office, of a morning…

Network effect

The network effect of world trade has long been known…. It is a well accepted fact that big cities have more productivity and higher skilled output then small towns, and small towns have higher productivity and skills than tiny villages….  

In all of history there have been few major cities, which aren’t at the centre of some major trade route or port (New York, London, Cairo, Rome, etc)…. There have hardly been any major cities that have existed in isolation, and certainly none that have prospered directly as a result of that isolation…. Instead, the most prosperous cities, have been central world trade portals of their time….  

Equally, countries that are open to trade, with limited trade barriers have always performed better.  It is the closed countries (think Cuba, North Korea, Myanmar, China, USSR) that have underperformed…

Things that are networked have more efficiency, increased specialisation, and enhanced optimisation.  Networks can take advantages of a greater skill set, and a larger pool of skills, and higher levels of specialisation…. A group of 10 people can’t afford to specialise…. Whereas a group of one billion people, would produce a cross section of almost every specialisation known to man…

Increased connectivity and networking allow for greater advancement, evolution, and process efficiency…

And this is why the internet, and outsourcing will flourish – because it is an extension of the networking principles…. Outsourcing and remote work is increasing the networking between civilisation…. And these principles are enabled by the advancement of communications and technological connectivity.

 

Outsourcing is a win win

Some fear the ethical concerns of outsourcing, and globalisation.  For the reasons set out above and others, outsourcing is win-win proposition.

Outsourcing isn’t about having money, it isn’t about cutting jobs.  It is about finding the most efficient route to running an awesome, profitable business.  Running a successful business allows for more profits, more specialisation, more improvement, and increased growth.  A more profitable company benefits the employees within that business, and the community around that business. When a business is flourishing, expansion is likely, more taxes are paid, and the community, city, and country all benefit.

Equally, the outsourcing destination country benefits from outsourcing.  Their workforce has access to great jobs, a good work environment, and an opportunity for them to upskill, and connect with workers and opportunities in the West…. This is a symbiotic relationship that epitomises the network effect, and one where everyone benefits…

AI and outsourcing, the future of employment

A lot has been written about the future of outsourcing and employment in regards to the rise of Artificial Intelligence (AI)…  If you haven’t already realised, ‘employment’ as we know it now is being challenged from every angle.

Opinion is fiercely divided over the extent of the impact of AI and automation on the world.  Some people think that AI will take over the world, and render humans useless in as little as 20 years, whilst other people suggest little will change, and broadly functional AI is just science fiction…. Without doubt, process automation, AI, and algorithms will all have a big impact on productivity and employment over the coming decades…

There is a lot of concern for the outsourcing industry.  People suggest that these could be the first jobs to be removed, and as such, the industry has a finite ‘shelf life’…. This is an incredibly short sighted and simplified perspective.

Outsourcing is no more under threat from AI, as any form of employment.  Yes, it is likely that the low skilled jobs will be replaced by automation quicker than the higher skilled jobs – and outsourcing has a disproportionately high ratio of lower skilled jobs.  However, the outsourcing sector is quickly up-skilling, with the sector now offering literally any b business function possible. Outsourcing is no longer just call centres. Outsourcing can supply skilled roles for almost any role one business.  As mentioned above, there is less and less distinguishing ‘outsourcing’ from general ‘employment’.

Of course it is the responsibility of the employees, companies, community and countries to ensure that their workforce remains suitably skilled, relevant and valuable to the marketplace.  There is pressure to upskill, and perform… But this has always been the case.

It will be along time before highly skilled human jobs are replaced carte blanche by computers…. And even if they are, it will be jobs across the globe, across all industry types.  AI and automation is no more of a risk to outsourcing, than it is to employment generally.

Progress is inevitable, and it is likely that progress will being some pain, but an even greater amount of pleasure, and benefit.

 

Read the full seven-part publication

Don’t miss out on this seven-part publication which explores why, and how outsourcing is the most powerful and transformative business tool in existence today.

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