OUTSOURCING: Changing with the Times
Political, Barrack vs. Hillary
Times are changing, and so are our attitudes about outsourcing. We fully accept the notion that many jobs can be well done by populations other than our own. In 2004, the central theme among presidential candidates was the evils of outsourcing. There was a grand fear that “foreigners” were competing with us for “our” jobs. Today we are beginning to understand the advantages of business process outsourcing (BPO). BPO call centers in India and the Philippines can operate for a fraction of the cost of domestic call centers.
Concerns of job outsourcing have not completely left the political arenas. In fact one of Barrack Obama’s aids was quoted as referring Hillary Clinton as “D-Punjab.” These jobs are not changing the fact that global BPO is an ever strengthening industry. While politics are always the same, the burgeoning of this field is paired with a handful of changes.
In the past, jobs generally moved from wealthy countries to less affluent ones. Today, this is not always the case when outsourcing to foreign companies. While saving money is still the predominant reason companies practice job outsourcing, most providers are pitching performance. There is even an entirely new lexicon. Venders are now calling themselves partners; terms like labor arbitrage are being replaced with words like intellectual arbitrage. Even the term “outsourcing” is being swept under the rug. Not your typical subprime mortgage news.
TPI put out a report detailing the state of global outsourcing with some interesting data. Results indicated that number and value of contracts awarded during the first half of 2007 had declined since the same time in 2006. In fact, the total value of contracts awarded for job outsourcing was the lowest since 2006.
Arguably, some contend that TPI is low-balling the statistics. The numbers omit public deals, deals worth less than $50 million, and those renewed with out the use of an advisor. An independent market research firm suggested that the industry is stuck in a rut of single digit growth. Get Mortgage Leads
This slowdown has been making it harder for outsourcing firms to turn profits. The open market is driving prices down in this now competitive sector. Seasoned vendors are staffing in the same low cost locations as their offshore competitors. As we speak operations for Dell and IBM are being increased in the Philippines and India. An answer is to find cheaper locations for job outsourcing, but, this is often at the price of reduced quality and profits.
The market has driven BPO firms to offer more and better services. Firms are now doing statistical work and clinical trials for the pharmaceutical companies. A British firm has even began to help manage absenteeism by having nurses call employees who have been “out sick” for more than a day or two. Mortgage company news.
These trends have forced providers to act as double agents. BPO firms must also be consultants and industry experts to stay in the game. BPO providers are now gauged more qualitatively. Measures of call duration and frequency are now being replaced with measures of customer satisfaction.
Outsourcing companies are even revamping their pricing models. What was once based on mark-up over cost which is a risk to the client, or fixed cost for delivery which is a risk for the vender, is now being taken over by a gains-sharing strategy. Here, both sides benefit from efficiency and improved performance.
Diversity is of utmost importance. Outsourcing companies are spidering out into myriad locations in order to get the appropriate mix of qualities needed for a particular process. Domestic providers are ramping up their practices in low-wage sectors; whereas, providers in India are concentrating on sectors where buying decisions are made. Firms are locating their selves in areas with appropriate population. Sales oriented processes are usually put in areas where the population is fluent in English and technical operations are often located in areas with a population that can support specific intellectual needs.
The door swings both ways with mortgage company news. A large Indian firm is negotiating a deal with Atlanta Ga. to host their first software development department in America. This is not an isolated incident. Many firms are taking advantage of America’s skilled labor force. This is a direct rebuttal to the idea that outsourcing is taking jobs away from the US. This is a review of “External Affairs” originally appearing in The Economist July 28 2007. Telemarketed mortgage leads
