What continues to irk me is that industry
has become so focused on making its quarterly
numbers that it has taken its eye off the
long-term picture. We saw this financial
meltdown coming-and did nothing (wasn't the
Asian crisis of the '90s warning enough?).
We are seeing further deterioration of the
environment-and still do little. We saw the
U.S. automotive industry grind down to its
current predicament-and have done nothing.
And we are seeing the IT and business process
outsourcing industry rapidly develop across
the globe-and have blissfully ignored it
to meet these cost-containment targets.
And how to we respond? Bailouts. We're now
talking about bailing out the failing automotive
industry. How did it come to this? Years
of greed, a deterioration of our work-ethics,
and developing nations eager to get a taste
of what we have. It's as if we had a major
cardiac arrest and are now hoping we can
recover fully from open-heart surgery.
And this time when we do recover (and we will),
we simply have to make sure this never happens again.
Some will argue this is all about natural economics
of globalization and a free market-and they are probably
right. However, this time we have truly reached an
How the Outsourcing Landscape Will Change
in This New Economy
What is clear, is that shipping jobs offshore isn't
necessary very healthy for the rising U.S. unemployment
What's more, many offshore service providers are
now focused on taking on more high-value work activities
for their clients, in addition to routine transaction
work. For example, once you have your general ledger
run from a service provider in, say Chennai, what
is now stopping that provider taking on higher-value
accounting services, such as budgeting/forecasting
and business intelligence? That provider basically
owns and understands much of the revenue cycle of
that client; hence the natural next step is to move
up the process value chain.
And if your current provider won't move up the value-chain,
there is a proliferation of KPO providers willing
and ready to take on higher-value offshore work.
Moreover, while a firm may have been enjoying good
quality COBOL programming from Brazil, what's stopping
that provider offering systems architecture work
for their client, which is among the costliest onshore
The Global Battle for Jobs is Well Underway
President-elect Obama has recently stated that he
intends to give U.S. firms tax-breaks to source work
onshore. While he hasn't yet outlined exactly how
he plans to do this, it is likely that he initially
will provide benefits for buyers, as opposed to the
providers, to source work to onshore U.S. locations.
This is the opposite strategy of the Indian government's
STPI (Software Technology Parks of India) tax scheme,
which gives tax-breaks to new Indian organizations
(mainly suppliers) in the region of 10 percent to
20 percent for their first 10 years of inception,
designed primarily to bolster its software industry,
but also directly applies to its service providers.