“Impact sourcing results in a more engaged and motivated workforce for companies, and enables them to increase their global competitiveness.” — The Rockefeller Foundation
You need the work done and there are countries that are disadvantaged, war-torn or underemployed that have motivated, educated workers who can perform the work you need. It truly is the correct choice. Why continue outsourcing to developed countries or countries in which the vast majority of people already have access to the middle class?
Did you know that outsourcing to India is the number one reason it now has a thriving middle class? Are you aware that through outsourcing an entire generation was lifted out of poverty in both China and India? Do you know that when you outsource to a country, it can change the trajectory of people’s lives? In a 2003 speech, Anne Krueger, First Deputy Managing Director of the IMF stated that the impacts of globalization have benefited both India and China by lifting millions of people out of poverty since 1980 and putting tens of millions of people firmly into the middle class. In addition, China has seen their extreme poverty rate fall from 84 percent to about 10 percent largely because of trade, reports the Economist.
As the demand for independent talent grows, many organizations are using their own resources to directly source top independent talent without engaging third-party staffing agencies or consulting firms to perform recruiting functions. Direct sourcing affords many economic benefits such as avoiding high-priced staffing markups, decreasing overhead costs by hiring fewer full-time employees and filling project-specific roles with the right-priced independent talent.
But direct sourcing is only a small part of the picture. In order to compliantly utilize independent talent end-to-end, organizations must build a Direct Access program that encompasses finding, sourcing, engaging, paying and managing independent workers. Here are five best practices organizations should keep in mind when creating a Direct Access program to source and engage independent professional talent.
1. Drive Support from the Top Down
A lasting and successful Direct Access program begins with the right leadership support and sponsorship. This support must be driven from the top down by a senior business leader who has influence over the managers who will be sourcing and utilizing independent talent.
While a top-down approach is not the only method, attempting to build a Direct Access program from the bottom up is almost always a long and arduous path. Internal adoption is much slower and disjointed as the process relies on word of mouth and proof-of-concept in small groups.
Procurement has evolved to become more strategic and collaborative and has moved from an isolated, back-office function to a boardroom partner. While the procurement function must continue to drive hard savings, manage suppliers and mitigate risk, it must also pivot to look for opportunities to deliver future savings and innovation.
“Procurement is at an inflection point,” said Dr. Marcell Vollmer in a recent interview with SIG CEO Dawn Tiura. “Procurement needs to transform into a value-added function focusing on strategic tasks.” How can procurement teams do this?
For all the great advancements that technology brings, it requires people to manage the technology. Oxford Economics’ survey among procurement executives and practitioners found that the top three investment priorities include new talent recruitment, training/upskilling programs and procurement/supply-chain technology.
The relationship between buyers and providers can be a tricky one, especially when operating across multiple continents. Speaking during a podcast interview with Dawn Tiura, Sean Delaney, Vice President of Sales for cloud platform Determine, draws on his experience as both a buyer and provider to share best practices for relationships that are sustainable and strategic.
WORK ON YOUR SOFT SKILLS
Technical expertise is valuable, but your ability to establish a rapport with customers is important for sustainable relationships. “Candor is important because there's a large degree of personal credibility that buyers are putting on the line when selecting a vendor," says Delaney. "That needs to be understood as a seller and we need to make sure that we don't break that trust. That's our role.”
Situated in the southernmost part of the Brazilian state of Minas Gerais, nestled among green rolling hills, coffee plantations and dairy farms is the small town of Santa Rita do Sapucaí. A cursory glance shows Santa Rita as a charming town full of farms and churches but in reality, this picturesque little city has so much more to offer. In recent years, it has become known as “Vale da Eletrônica” or Electronics Valley because it is home to the highly respected technical school, Escola Técnica de Eletrônica Francisco Moreira da Costa and is also known as a hub for technological applications, from carpool and table service apps to toothbrushes with sensors that connect to children’s games. And Santa Rita isn’t the only city in Brazil ramping up their efforts.
Plagued by years of upheaval economically, Brazil is making a comeback and relying on the IT sector to help make their triumphant return. A $200 million joint investment with chipmaker Qualcomm, was welcomed in March by the federal government to build a semiconductor factory in the state of São Paulo where other major tech companies such as Samsung and Lenovo already have operations. Their hope for the investment is that this will be the first step for Brazil in becoming a noteworthy player in the manufacturing of high density semiconductors that are used in 4G and in the future, 5G devices, as well as IoT applications. The investment from Qualcomm is expected to bring in about 1,200 new jobs which only makes a tiny dent in solving Brazil’s unemployment rates—at 11% there is still a long way to go, but it’s a step in the right direction.
When most people think of Argentina, they probably think of the tango, wine, soccer fanatics or maybe the emotional play, Evita. What many may not know is that despite many setbacks and hardships, this country of proud and hardworking people has continued time and again to rise and become one of the leading exporters of products ranging from soybeans to software.
Until the arrival of the Europeans in the 16th century, Argentina was a sparsely populated country and most people lived either in small, walled towns that made pottery, grew potatoes and squash and used metal for their work, or belonged to hunter-gatherer communities. Despite the Spanish and British fighting for land and the breakup of the United Provinces into what is now Bolivia, Argentina and Uruguay, Argentina has continued to grow and develop its’ resources. The first railroad was introduced in the country in 1857 and by 1912 there were over 20,000 miles of railroad throughout Argentina, making it easier to export goods to other countries. Due to exports of wool, meat and grain, by 1900 Argentina was the richest country in Latin America and the seventh richest country in the world. At the same time, the population was booming due to a new wave of immigrants from Italy and Spain. Then Argentina, like the rest of the world, was deeply affected by the Great Depression and subsequently ruled by ineffective leaders and dictators throughout much of the next century causing Argentina to become largely indebted. After a severe recession in 2001-2002, the economy began to grow rapidly for several years. This growth occurred in part by making the peso equal to the US dollar, privatizing numerous state-run companies and using part of those proceeds to pay off debts.
Over the Easter weekend I had what ended up being a rather disturbing conversation with an old friend, which I thought sufficiently relevant to this space to share with you. This friend has very recently started a new job, working in an outsourced contact center providing advice to, and processing applications by, users of local (public sector) health and social services (I need to be relatively vague here, for obvious reasons...).
One of the main tasks she has to perform is vetting people who call looking to get access to one particular healthcare-related service. Due to the nature of this service, applicants are invariably over pensionable age (65, more or less, here in the UK) and suffering from illnesses or disabilities that restrict mobility - this is an important point: we're dealing with some pretty vulnerable people in (often serious) need. My friend has to take them through a survey and, at the end of the call, inform them whether or not they've qualified to receive this service.
The problem - one of the problems - is that certain responses to some of the survey questions can disqualify applicants outright. My friend explained some of these to me and, frankly, it's an outrageous situation. For example, applicants who say they're using certain medical apparatuses which haven't been prescribed by their General Practitioners (GP) won't qualify, even though these specific items are the kind of thing one might buy oneself, be given by relatives/friends/charities or procure in some other way simply because they're useful, rather than even considering going to the GP to be prescribed them.
Over the years, Mexico has had its fair share of negative headlines due to drug trafficking, violence and more recently because of the recent elections. Mexico is painted as a dangerous country that should be avoided. Unfortunately, this outdated, negative view is one that many Americans, as well as others around the world, still hold on to despite the fact that it doesn’t come close to matching the reality. Don’t believe me? Keep reading and I’ll see if I can change your mind.
It may be surprising to many that when it comes to producing talent in engineering, manufacturing and construction, Mexico ranks as the 8th highest in the world. When interviewed in June, former president Bill Clinton weighed in on the issue, “All we read about is the violence and the drug war,” said President Clinton. “The truth is that the previous president built 140 tuition-free universities. Two years ago, the Mexicans produced 113,000 engineers. We produced 120,000. They’ve had very brisk growth.” This growth that the former president mentions doesn’t seem to be slowing down any time soon either. From 2005 to 2012, the percentage of students graduating with degrees in engineering increased from 15.5% to 21.3% and is still continuing to grow steadily.
Because we're not short of positive perspectives on outsourcing: again, anyone attending even one SIG Summit would come away with plenty of evidence for its value, and the outsourcing community and media such as Outsource have more than enough material to make an overwhelming case for why the model has been a good - a great - one for organizations right across the size spectrum. But the benefits aren't confined to individual companies: a wealth of scholarly work has been carried out to demonstrate how, in direct opposition to the assertions of its detractors, outsourcing (even offshoring) is good for those very economies it is supposedly corroding.
A 2006 Harvard University study entitled 'The Politics and Economics of Offshore Outsourcing' articulates the truth of this superficially counter-intuitive position very nicely. Authors Gregory Mankiw and Phillip Swagel found that "outsourcing appears to be connected to increased US employment and investment rather than to overall job loss. Some US jobs are certainly lost to other countries. On the whole, however, firms involved with offshore outsourcing are not shifting net jobs overseas but instead are creating jobs both in the United States and in other countries... Outsourcing will create winners and losers, and the pain of dislocation will be real for workers and their families. Taken together, however, these conclusions suggest that offshore outsourcing is likely to be beneficial for the United States as a whole."
A recent episode of 60 Minutes investigating outsourcing and the increasingly under-fire H-1B visa program in the USA has prompted a good degree of debate on social media and elsewhere, about this always-controversial practice. As readers of SIG blogs (and indeed members of the sourcing and outsourcing community globally) will need little reminding, outsourcing and its practitioners present an easy target for anyone with an economic axe to grind looking for someone or something to blame for the perceived ailments of the American (or any other) economy, especially unemployment: those giving voice to the old lament that outsourcing (conflated, of course, with offshoring) "sends our jobs overseas" now also point to the H-1B visa and charge those companies not "guilty" of exporting jobs with the equally heinous crime of keeping them onshore but giving them to foreign workers instead.
Yet despite decades of such negative PR the model continues to prove an indispensable tool for organizations large and small. Earlier this month, to take just one recent example, Lloyds Banking Group in the UK announced plans for a £1.3bn ($1.6 bn) ITO deal with IBM which will see over 1,900 jobs transferred to the latter; the deal is intended to save approximately £760m ($948 bn) in costs, according to the Financial Times (which, incidentally, quoted the Lloyds Trade Union - "which is no longer recognized by the bank" - as writing to its members that "staff transferred to IBM will be kept on for a year but most would be laid off within four years and replaced by cheaper, offshore workers").