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").
Even when the typical charges are laid directly at organizations in such a manner, then, the advantages outsourcing provides outweigh the negative PR which can accompany it. The decision-makers at Lloyds clearly feel - as countless similar execs around the world have felt over the past few decades - that the interests of their company are best served by engaging a specialist provider to do work which has hitherto been carried out in-house - and they are clearly not alone: researchers from Global Industry Analysts project that by 2022 the international business process outsourcing (BPO) market is set to reach $262.2bn.
So, if outsourcing has proved to be so successful, and such a significant proportion of work globally is now being carried out by external parties, why does the model still attract such opprobrium? Partly it's a result of the aforementioned conflation of outsourcing and offshoring, and the emotional response many - especially those who may be struggling in a challenging job market, or with memories of having done so - feel to the "treason" of moving work beyond national boundaries; and at least partially it's because of the "water torture" effect of the constant drip-feeding of negative PR and public attacks on outsourcing by high-profile and/or powerful figures (i.e., "outsourcing is bad because everyone says it's bad") seeking easy wins; meanwhile the number of such speakers willing to take the opposing perspective (i.e., defending the model) is vanishingly small - at least, outside the outsourcing space and related conferences, publications etc.
That last point seems to me quite crucial. Those of us active in this space - especially anyone who's attended SIG events or other conferences, and/or has read blogs and articles posted here, on Outsource or elsewhere - will come into contact regularly with the kind of success stories that demonstrate extremely clearly the huge value that outsourcing can bring. We hear of the cost savings, the game-changing transformations, the partnerships with providers which open up whole new worlds of revenue generation and new methods of communicating with customers; we see time and again the hard evidence of how focusing on core competencies strengthens an organization while transferring non-core work to a partner can both improve the quality of that work (without the huge investments in technology such improvements often require) and free up money which would otherwise be lost to the buyer. Meanwhile, the "outside world" hears little or nothing of these achievements, which are drowned out by a cacophony of vociferous and passionate attacks on the heartless, evil corporations selling out the little guy.
Of course, not all success stories can be told. At least partly because of outsourcing's negative reputation, many businesses (and, even more so, many public sector bodies) are unwilling to allow their experiences to enter the public domain (an issue which I encounter regularly in my role as Outsource editor seeking just those stories; an occupational hazard, unfortunately). This is understandable - and it does make those successes we do hear about even more valuable - but it's a shame from the perspective of a model which, frankly, needs all the positive PR it can get.
Or does it? And, even if it does, what purpose would it serve? Stay tuned for more thoughts on this issue...
Jamie Liddell, Editor, Outsource
Jamie Liddell is the Editor-in-Chief of Outsource. He is a journalist with extensive B2B and consumer experience, particularly in the sourcing and international property sectors. A graduate of Cambridge University, Jamie worked as Chief Foreign Correspondent for property media company Blendon Communications before moving into full-time B2B journalism as launch editor of the Shared Services & Outsourcing Network. He took over the helm of the Outsource brand in April 2010 and has since overseen its transformation and evolution into the world's leading publication focusing on the sourcing, outsourcing and business transformation space.
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").
Even when the typical charges are laid directly at organizations in such a manner, then, the advantages outsourcing provides outweigh the negative PR which can accompany it. The decision-makers at Lloyds clearly feel - as countless similar execs around the world have felt over the past few decades - that the interests of their company are best served by engaging a specialist provider to do work which has hitherto been carried out in-house - and they are clearly not alone: researchers from Global Industry Analysts project that by 2022 the international business process outsourcing (BPO) market is set to reach $262.2bn.
So, if outsourcing has proved to be so successful, and such a significant proportion of work globally is now being carried out by external parties, why does the model still attract such opprobrium? Partly it's a result of the aforementioned conflation of outsourcing and offshoring, and the emotional response many - especially those who may be struggling in a challenging job market, or with memories of having done so - feel to the "treason" of moving work beyond national boundaries; and at least partially it's because of the "water torture" effect of the constant drip-feeding of negative PR and public attacks on outsourcing by high-profile and/or powerful figures (i.e., "outsourcing is bad because everyone says it's bad") seeking easy wins; meanwhile the number of such speakers willing to take the opposing perspective (i.e., defending the model) is vanishingly small - at least, outside the outsourcing space and related conferences, publications etc.
That last point seems to me quite crucial. Those of us active in this space - especially anyone who's attended SIG events or other conferences, and/or has read blogs and articles posted here, on Outsource or elsewhere - will come into contact regularly with the kind of success stories that demonstrate extremely clearly the huge value that outsourcing can bring. We hear of the cost savings, the game-changing transformations, the partnerships with providers which open up whole new worlds of revenue generation and new methods of communicating with customers; we see time and again the hard evidence of how focusing on core competencies strengthens an organization while transferring non-core work to a partner can both improve the quality of that work (without the huge investments in technology such improvements often require) and free up money which would otherwise be lost to the buyer. Meanwhile, the "outside world" hears little or nothing of these achievements, which are drowned out by a cacophony of vociferous and passionate attacks on the heartless, evil corporations selling out the little guy.
Of course, not all success stories can be told. At least partly because of outsourcing's negative reputation, many businesses (and, even more so, many public sector bodies) are unwilling to allow their experiences to enter the public domain (an issue which I encounter regularly in my role as Outsource editor seeking just those stories; an occupational hazard, unfortunately). This is understandable - and it does make those successes we do hear about even more valuable - but it's a shame from the perspective of a model which, frankly, needs all the positive PR it can get.
Or does it? And, even if it does, what purpose would it serve? Stay tuned for more thoughts on this issue...
Jamie Liddell is the Editor-in-Chief of Outsource. He is a journalist with extensive B2B and consumer experience, particularly in the sourcing and international property sectors. A graduate of Cambridge University, Jamie worked as Chief Foreign Correspondent for property media company Blendon Communications before moving into full-time B2B journalism as launch editor of the Shared Services & Outsourcing Network. He took over the helm of the Outsource brand in April 2010 and has since overseen its transformation and evolution into the world's leading publication focusing on the sourcing, outsourcing and business transformation space.