The Next Generation of Outsourcing

Headnote

As outsourcing strategies evolve, key countries like Colombia are seeing plenty of action.

Outsourcing has evolved dramatically in recent years from providing tactical solutions such as data entry and call centers to more sophisticated services ranging from R&D, engineering, and software development.

And, while the perception may be that political backlash and risk avoidance are keeping many companies from pursuing outsourcing, the reality is that the practice is continuing to gain ground due to companies' ongoing quest to achieve higher cost efficiencies and performance goals.

The benefits of outsourcing don't stop there, however. According to Michael Corbett, chairman of the International Association of Outsourcing Professionals (IAOP), outsourcing has reached its "threshold moment" with its ability to drive global socioeconomic and technology progress.

During IAOP's 2011 Latin American Outsourcing Summit held in Cartagena, Colombia in late May, Corbett told WT100 that in addition to gaining cost efficiencies and performance, companies view outsourcing as a way to access the latest technologies and expertise. For instance, "Procter and Gamble expects an increasing percent of its research and development, particularly in new product development, to come from outsourcing partners," Corbett said.

Risk arbitrage is also a huge attraction. Companies are understandably hesitant to invest in new technologies or operations that might tether them to a particular geography, technology, or static supply chain. The key is being nimble and scalable, and outsourcing makes that possible.

Corbett also pointed out Peter Drucker's statement that "outsourcing is not just good business policy, it's good public policy" carries a lot of weight. When you consider that the top 200 companies generate 4 million jobs globally, two-thirds of them outside of the U.S., then you start to realize the socioeconomic impact of outsourcing, said Corbett.

Steve Rudderham, Vice President at Capgemini and a presenter at the conference, expanded on outsourcing's impact on multiple fronts. For the people of a particular region or country, outsourcing translates to higher wages, better education, and an overall better quality of life, while communities experience increased tourism and better safety and investment in local infrastructure, he explained.

"The telecom infrastructure also gets a major upgrade, which not only benefits business, but the entire society," Rudderham added.

Julia Santos, head of global business optimization and contracting for Johnson &...