As the off-shore outsourcing landscape matures, the different attributes and skills required to satisfy all the demands of a complex enterprise may need to be acquired from different countries. It is becoming apparent that one country or one culture may have a certain set of marketable skills, where another country or culture may possess a totally different, but equally marketable, set of skills – making specialization in outsourcing IT a strategic practice.
Historically, U.S.-based workers who deliver IT services were considered expensive and over-valued. However, recent research suggests that U.S.-based workers are establishing a set of skills that allow them to compete with IT workers in other countries. For years, the ‘value’ of using IT workers in India, Malaysia, the Philippines, Russia, China, and other countries was considered greater than using workers with the same IT skillset in the United States. But, a global trend shows that specialization in tasks divided between a combination of onshore and offshore outsourcing providers yields optimal results.
GE Opened Outsourcing Opportunities for the World
General Electric and its controversial CEO Jack Welch are considered the pioneers of outsourcing IT jobs to foreign countries. Almost 25 years ago, in 1989, Welch met with Sam Pitroda, the chief technology adviser to India’s Premier Gandhi. During that meeting, Welch agreed to provide some support to India’s emerging high-tech sector. Pitroda convinced Welch that India had the IT skillsets GE needed and at a much lower cost than Welch was paying his American workers; he just needed more business. It didn’t take Welch long to do the math, and a deal was struck.
By 2005, India was bringing in more than $17 billion dollars from corporations seeking low-cost overseas talent to do everything from creating software to designing semi-conductors. Early investments made by GE in India gave their technology and business service sectors credibility and the cash they desperately needed to sustain India’s rise to outsourcing dominance. By 2008, 65% of all IT outsourcing was done in India. In a 2012 report by Standard Chartered Equity Research, it was estimated that India’s pipeline of outsourcing deals to be worth over $25 billion dollars.
As the World Changes
World-wide, the outsourcing landscape has been growing. India’s share of the outsourcing pipeline in 2012 ($25 billion) was just 12.5% of the more than $200 billion dollars world-wide that will be spent renewing contracts between 2012 and 2016. Although India’s outsourcing industry is growing, it is far from realizing the explosive growth it experienced 5 years ago. In 2013, there are 125 locations around the globe competing for IT outsourcing business, primarily outsourcing deals coming out of the US and Europe. This eroding of India’s outsourcing dominance has impacted their economy and sent Indian entrepreneurs looking for creative ways to recoup their once prominent position.
U.S. IT Workers Now Have Advantages
Although off-shore outsourcing remains in full swing, Hackett predicts that the migration of IT services from the U.S. and Europe to off-shore locations will continue to slow down and could stop altogether by 2022.
In a recent study, researchers found that U.S.-based workers ranked higher than off-shore workers in a number of key soft skill attributes such as understanding business, displaying initiative, and enabling product/service innovation. Buyers of outsourcing services recognize that these soft skills and contextual awareness add real value to business and IT services.
Off-shore outsourcing still provides exceptional overall value for technical skills like computer programming, engineering, and manufacturing. The attributes required to excel in these highly complex and labor intensive areas are usually more cost effective when purchased from off-shore providers. When enterprise buyers of outsourced IT services were asked what attributes describe U.S.-based workers compared to non U.S.-based workers they gave the following answers:
In all categories except one, U.S.-based staff was judged to hold more of a given soft skill attribute than the non-U.S.-based staff. The value of these attributes is somewhat related to the type of work being done. For example, if the work requires fluency in English, or an understanding of U.S. geography, or an understanding of the U.S. business environment, then those soft skills become much more relevant and valuable. Taken as a group, the six attributes listed in the table above represent the key soft skills needed for a worker to provide a contextual awareness and understanding of a product or service.
The New Way of Outsourcing
While U.S. based workers have cultural awareness and fewer language barriers than their off-shore counterparts, the possibility of not finding the IT expertise in specialized roles for all work-shifts can make off-shore outsourcing a necessity.
Secure-24 delivers outsourcing with a new approach. Rather than outsourcing a single help desk, which leads to many customers struggling with language and cultural barriers, Secure-24 leverages international teams that provide 24/7 technical support, adopting a “Follow the Sun” approach.
Headquartered in Michigan, we’re proud to offer clients this strategy, so customers never have to wait more than a few minutes to talk with an expert who understands their needs and expectations. Our help desk services based in the U.S. and off-shore give clients instant access to knowledgeable staff, without the long wait times, occasional misinterpretations or cultural barriers.
As companies are learning, the common challenges with offshore outsourcing are being overcome by onshore outsourcing with an overseas component. This ‘hybrid’ approach enables a customer to receive 24-hour service, by people who have a better understanding of each customer’s language and culture. This approach may be the most strategic and cost-effective way to use outsourcing services in the coming years.