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The growth of outsourcing

What is outsourcing

By BloggerKhan

My profession is Management and Marketing and it revolves around outsourcing, ecommerce and marketing on the internet. Wise men say identify what you are passionate about and then see if ...

By BloggerKhan

Posted in | Tags : , ,

Outsourcing as we know it is obtaining goods and services from outside sources instead of internal sources. In this article, we will talk about outsourcing white collar or office jobs. The industrial / manufacturing jobs have been outsourced since the 1960s to lower wage countries. Outsourcing white collar jobs is a more recent phenomenon.

In the 80s, many large corporations started outsourcing IT functions and Call Centers to third parties to save costs. Due to union structures and employee moral, they did not want to cut salaries. Instead, they cut whole departments and the same functions were now being performed by third parties at a significantly lesser cost. Corporations saved money, the bottom line looked better and everyone was happy. This outsourcing was done primarily within the USA, that is, companies were outsourcing work to other companies within the USA with their workforce in the USA.

In the 90’s this trend started growing and once the internet started getting commercialized, even medium sized corporations started outsourcing. The 90’s also saw the trend of offshore outsourcing gaining momentum. Countries with a sizeable well educated population who could speak English but were available for hire at 1/10th the US rate were hard to resist and corporations invested heavily in setting up call centers in the Philippines, India, Pakistan and some in the Caribbean.

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Charts courtesy of oDesk

In the 2000’s as broadband internet connectivity became common in developing countries, a new wave of outsourcing started getting popular – the independent contractor. There are many people all over the world who are highly skilled at what they do and in addition to their full time jobs, want to pick up an assignment or two to make a little extra. They started flocking to portals like eLance, Odesk, Scriptlance etc. They found a hungry US clientele, the small business and the self employed who need highly skilled people for very small tasks but could not afford such skilled people even on a part time basis. Now they had a way of getting these tasks taken care of at very reasonable costs.

Telemarketing, credit card processing and IT services were and are the favorite outsourcing areas for corporations. Smaller businesses and the self employed focus more on graphics, videos, content writing and minor programming tasks. Research is another area that yields itself very well to outsourcing.

Both sides benefit from outsourcing. The client gets his job done at a lower cost. The contractor get’s an additional source of part time revenue. Many a time, the part time assignments turn into full time employments. Another technological improvement that is spurring outsourcing is web conferencing. Services like Skype and MeetCheap are so affordable that even the self employed can use them. Effective communication is essential to successful outsourcing as it is common for the two parties totally misunderstanding each other.

One bottleneck still exists and that is transfer of payment. While PayPal is the defacto leader in internet transactions, for various reasons, it does not work seamlessly for contractors in Pakistan, India and some other countries. That is where the bulk of the contractors are and it is a hindrance to more contractors joining the international community of freelancers.

Eastern Europe is also coming up strongly in the areas of programming and graphics work.

Whether you need freelancers to outsource work to or you are a freelancer seeking work, the first thing to do is get registered at an outsourcing portal. Register and go through the getting started videos / instructions. Start with small projects and soon you will get a hang of what to do and how best to take advantage of outsourcing.

Good Luck!

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