Growing into Outsourcing

Another assignment in my Marketing/Econ class at UCO was to read The World Is Flat by Thomas L. Friedman.  Much has been written about this book and its lessons for business.  I read the book to see what I could pull out of it and apply immediately in my business.  Following are some thoughts I prepared for our class discussion…

One of the main points of the book is that the technological advancements of the last few decades have made distance immaterial. Fiber optic cables, hardware and software standardization and network topologies have combined to give businesses a toolset to outsource work to all corners of the globe. Friedman’s analysis of the high-tech call centers in India is a good example of how these technologies are allowing Western companies to take advantage of well-educated, English speaking tech workers at a fraction of the cost of domestic labor.

If “outsourceable” work is not readily available, firms should seek to utilize the technologies that made this trend possible. There are a host of tools that make distance obsolete - GoToMeeting, WebEx and NetMeeting allow collaborators from across the globe to share documents and hold conversations in real-time. The savvy manager will use these tools to unify virtual supply chains. For instance, an engineering group in the United States could take control of the PC of chip designer in Hong Kong to tweak a board design. This technology puts the two engineers side-by-side at the same drafting table, a feat that would have required thousands of dollars of travel and weeks of sunk time just a few years ago. Firms could also use a tool like GoView to record video files of actions taken on a desktop for review by sales agents. This type of training can unify a company’s message and ensure tighter marketing world-wide. Lastly, managers could use technology like Skype to interact in one-on-one video chats with colleagues, suppliers or clients that are literally half a world away. The immediacy of synchronous video conferencing is the next best thing to traveling halfway around the globe to meet with someone.

As firms become more comfortable with the implementation of these tools they can begin to outsource work. Managers should look for “individual contributor” positions that can be contracted out, such as industrial design or data analysis. The reliability of video conferencing and webinars can put these resources at the fingertips of the organization even if the workers aren’t in the same building. Once management is comfortable with the notion of outsourcing peripheral activities it can start to outsource integrated support functions, like first level tech support to some of the foreign firms that Friedman visited in India. This phased approach is low cost, low risk and provides the manager with a means to grow into outsourcing.