The 2016 Gold In Outsourcing Goes to…

Olympics 1960

For decades the Olympics were dominated by the U.S. and Russian teams. Lately, China has successfully fought to stay in the top 3, dominating weightlifting, diving, and gymnastics. China just might finish with the most gold medals in 2016. Meanwhile, the competition for the top spots in outsourcing hot! Which countries are on the rise? Which are winning the most contracts? Let’s take a look and see who will win the Gold in Outsourcing!   

The two nations that dominate the competition are India and China. Since the start of the 21st Century, both countries have been battling it out for the offshoring Gold. In this case, that “gold” isn’t just the top position. The global market for just IT outsourcing is estimated as being worth between $100 and $300 billion dollars. Now THAT’S real gold!

That’s also a pretty wide band of estimates. What do the judges have to say about that? Well, the IT outsourcing market is one of the most developed, existing long before outsourcing was a “thing”. It’s not just one market. Instead, there are multiple overlapping markets: pure outsourcing, jointly owned outsourcing programs and every other model you can think of. It is like comparing sprinting to marathon running, and deciding who you should keep on the list of top contenders. In any case, it’s a very big and growing list.

Here’s a list of some of the top contenders in outsourcing today…     

INFORMATION TECHNOLOGY: India takes the Gold. China takes the silver, performing just slightly behind India. After that, the Bronze is open. Malaysia, Thailand the Philippines or Vietnam might take the Bronze, but Brazil is also a contender. Brazil also has two special advantages for US projects. 

First, Brazil has many time zones that match the US, making day-time support far easier than it is for Asian competitors. Also, few of these countries have developed a late night culture. In India, even after decades of outsourcing, few people want to work late at night due to lack of transportation and places to eat. Women find it even harder, because of cultural resistance to women working at night. The cultural similarity between the US and Brazil can overcome many of the traditional drawbacks of offshoring.

MANUFACTURING: China wins the Gold hands down! But… the competition is tight for the silver and bronze. Countries like Vietnam are draining away outsourcing contracts from China by offering workers with even lower wages. Even China is now outsourcing a growing amount of its own work to Vietnam.

China’s greatest advantage is not that they are the biggest manufacturing outsourcer, it is that they are the world’s biggest manufacturer. This combination makes them an incubator for new ideas in manufacturing technology. To keep both titles, China needs to move from manufacturing and assembly work that uses the lowest cost workers to being manufacturers of high-end work that produces the world’s most productive workers.  

CALL CENTERS: The Olympic games have changed over time. New sports were added, and outdated competitions were removed. Baseball, club juggling, and tug-of-war were once top Olympic competitions. Call centers may go the way of Olympic tug-of-war, as automation enters its final stage. 

In the 1980s, technology replaced operators with “Press one for this and two for that”. That tech was replaced (and supplemented) with offshore operators, and then sales and support teams became part of these offshore centers.

Today, the technology in a call center starts with a computer that engages users in spoken conversations or text. Artificial Intelligence (A.I.) then takes over to understand what the user wants and uses a database of information to provide an answer (and more A.I. to go beyond simply regurgitating a set answer). 

By the next summer games in 2020, most offshore call centers will either have shut down or will develop a plan to shut down. The call center as we know it will soon be just another set of applications running on a server.

KNOWLEDGE WORKERS: Knowledge workers are sort of the Triathalon athletes of outsourcing. The triathlon covers the major forms of human powered movement: running, swimming, and cycling. Knowledge work covers the major forms of business decision making: analysis (legal and financial), argumentation (selection of the best options), and writing (news articles, legal documents, industry studies, management reports). 

Unlike previous waves of outsourcing, knowledge workers are higher paid positions, often including lawyers, financial analysts, bankers, reporters, managers, and writers. The Gold medal goes to… Artificial Intelligence and robots! Which country will win this competition? It m not be any country. Instead, this technology allows you to outsource from any location.

Work may return to the US, but knowledge work positions may be converted into a service. That service could be performed by traditional outsourcing firms, or a new generation of service providers may arise to perform this work. The replacement of knowledge workers is a tremendous outsourcing opportunity, but it is also a potentially disruptive technology that may shake up outsourcing.      

The players are out in the field and they are about to blow the starting whistle! Do you know your players? Have you chosen your winners? Some competitions are easy to call, and different specialties have some very strong players, but the rise of new technologies is slowly eroding the advantages that individual countries used to have. 

Competitions will always have winners and losers, but soon we may stop counting the winners by country. And that’s my Niccolls worth for today!

This entry was posted in Best Practices, Common Sense Contracting, Uncategorized and tagged , . Bookmark the permalink.

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