Platt Perspective on Business and Technology

Outsourcing as a business paradigm – 2

Posted in outsourcing and globalization by Timothy Platt on July 16, 2011

This is a second installment of a new series in which I examine outsourcing as a business paradigm, and how this fits into a larger, rapidly emerging context of ubiquitous computing and communications, and the global business framework that enables. See Outsourcing as a Business Paradigm – 1 in my Outsourcing and Globalization directory for Part 1.

I wrote in Part 1 of this series that outsourcing as traditionally approached can best be seen as an unstable business model and certainly from a global and macroeconomic perspective. And there is long term validity to that approach. That, of course, offers little comfort to any individual or to any community that sees jobs lost and businesses closed – factories whose business is moved out-of-country, and surrounding community-based businesses caught up in the ripple effects that radiate out from significant losses of local economic vitality.

In a real sense that is the story of outsourcing, and certainly as it impacts upon and shapes political discourse and government policy – and certainly where outsourcing leads to isolationism as an angry drawing back among those adversely impacted upon by this practice. But that is just one approach to understanding outsourcing and its impact on local and national economies, and my goal here is to take a somewhat different perspective on these issues.

As I said at the end of Part 1 I want to look at this from the perspective of some of the issues and approaches I take in my supplemental postings in the Guide to Effective Job Search and Career Development. The issues that come immediately to mind for me there, are in how ongoing changes in the economy are fundamentally changing the playing field for jobs and careers too.

• Outsourcing as currently practiced and traditionally defined is not taking place in an essentially stable economic environment, where businesses that outsource are simply looking to reduce operating expenses within larger stable business contexts. We are experiencing profound change, and both in what a business is and in how businesses relate to each other and connect together into larger networks. Basic business models are in a state of flux and businesses face profound uncertainties.
• This transition carries with it profound change as to what employment and full employment mean for the individual, and for many if not most industries, and it impacts on what it means to have a career, where individual employees can now expect to hold what amounts to a series of distinct careers in the course of their work life.
• This is a period when loss of employment from outsourcing can for many, mean loss of employability – without significant retraining, and without willingness and ability to shift to new types of career options such as consulting, temp work, and part time work as well as shifting to doing new and different types of work. And re-employment can also require relocation as well. This all serves to marginalize older workers and workers less able to make radical changes in what they do and can do and where they would do it.

Outsourcing is a disruptive process that churns the global economy and the global workforce. It can be damagingly disruptive to the individual and the local economy, while in effect forcing an increased rate of change towards development of a single global economy. And outsourcing is probably an inevitable part of the process of globalization, and as good an example of why disruptive emerging technology, and disruptive business models are called “disruptive.” But this simply raises questions.

• Can the process of change toward a more unified, tightly interconnected economy and global marketplace follow a path that is least disruptive of the individual and the local community and that would engender the least pushback and resistance?
• Can businesses gain the benefits of fiscal efficiency sought through outsourcing that also limit deleterious disruption for their employees in the process?
• How much of the gain from outsourcing can best be seen as strictly short term and what are the longer term consequences of outsourcing as traditionally pursued?
• What would be gained by moving to a less disruptive alternative to traditional outsourcing?
• And what would this alternative be, as a viable business model that would offer value in both the short and longer terms?

I am going to discuss these issues and a possible alternative to the traditional outsourcing business model in a third series installment.

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