In this week’s Trends Report, we explore a topic that without the internet would not have the prominence it does now. Similar to that topic, blogging, the subject of this week’s Thoughts, explores another hot topic that also owes its rise to prominence on the internet. Like blogging, this topic has gained much media attention, but unlike blogging, the topic of this Thoughts, outsourcing, tends to draw quite polarized views. It is also a topic that, up until this point, remained on the outskirts of our industry, but with our industry becoming more and more commoditized, those in it have more openly sought to consider outside labor. What was once mentioned with humorous, almost embarrassed undertones, e.g., “My team in India” is now spoken of as a matter of fact in conversation.
Among the first questions that come to mind when thinking about outsourcing is the why. The simple answer and certainly the expected one is money. Hiring oversees labor costs less, significantly less. For those in our space used to media arbitrage, the logic behind employing overseas talent is exactly the same. Rather than pay $3000+ per month for a basic content creator, you can hire a person who lives in another country for about a fraction that amount. For the price of one lower-end person in the states, you can hire almost a whole department overseas.
Among the most popular functions to farm out overseas are programming and back-office. This makes US companies very lucky – first because programming is a universal language allowing two people whose native languages differ to have a common ground. Secondly, given the consistent strength of our economy and culture, there exists a growing talent pool overseas who speak English. And as mentioned in the opening paragraph, the internet enables us to work remotely, sharing information without delay. We have entered the employment arbitrage age for white-collar jobs. Similar to the way we buy media, how well one can manage the opportunity will ultimately differentiate success from failure.
Perhaps the biggest challenge faced by those who chose to outsource is accountability. No organization operates best without clear accountabilities and strong leadership. With employees not present, how does one ensure their work gets done? Our industry most likely won’t shift its entire back-office functions overseas, but we have and more people will continue to test out overseas programmers. This can work given the project oriented nature of the work. With software development there exist clear deliverables – product specifications and timelines. Development overseas, however, means more specificity is needed in the requirements than many in our space are used to.
Almost equal with accountability, communication remains a major challenge. First there is the time difference. In most cases, outsourced employees work opposite hours from their employers. This means either adjusting one’s schedule or a company resource’s schedule to coordinate work flow, either that or expect long delays in getting work done. While you can give projects at the end of your day and have some work done when you return in the morning, the benefit gained from being able to work through problems in real time disappears. An additional challenge stems from the nature of the work, for example programming. While a universal language, working with code created elsewhere almost always comes with headaches. If you have ever had a programmer leave and another become the owner of that code, you know the challenge that by default describes the situation with programming done overseas. Even if the work being done overseas is content creation, expect hurdles and a learning curve to have the work done in a fashion that won’t require your time to revise.
Overall, outsourcing as a business trend will not slow in the near future. The influx of our money will increase costs, but for the foreseeable future, overseas workers will still come at a substantial discount. Ultimately, the decision to outsource will come down to the work that needs to get done and a company’s style. Some companies will not have the discipline to manage the work and provide clear enough direction. There is a value derived from having staff sitting nearby. Startups thrive because of the shouting distance principle – if there is a problem, you simply turn around and have another person aware of it and on it. When outsourcing, there is no shouting distance. That is why in the rush to save money; the cost associated with not having your staff nearby could end up greater. If you excel in process and management and have distinct projects with clear accountabilities, outsourcing might work for you
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