Global Outsourcing Open Short Term Windows of Opportunity

Global outsourcing will continue to expand and shift to more attractive markets based on lower labor cost and the emergence of disruptive technologies that may make global outsourcing more enticing. Under these circumstances, companies should anticipate brief windows of opportunity before the technology and the labor markets shift making the original outsourcing decisions obsolete. Companies should design for long term strategic advantage that relies less on emergent technologies and low labor cost.

The article Deriving Mutual Benefits from Offshore Outsourcing discussed the 24 hour knowledge factory that leverages temporal and geographic dispersement of labor to the benefit of businesses. The motivations for such a paradigm will emerge out of a shift from short term economic drivers to the knowledge factory in the long term. These researchers studied numerous situations of varying degree between the art and science of knowledge production. They concluded that the 24 hour knowledge factory concept could produce new products and services with a swifter time-to-market, strategic and economic advantages, and will be used by increasing industries (Gupta, 2009).  The knowledge factory concept is an interesting concept as long as the knowledge is actionable or can be exploited for business advantage; reduced costs or increases in revenue. Other business advantage may include strategies of reductions in organizational latency, economies of scale, or increases in market share. 

This article Innovating or Doing as Told? Status Differences and Overlapping Boundaries in Offshore Collaboration, the researchers sought to understand the relationship between cultural, organizational, and functional boundaries to distributed teams. The study explored a variety of collaborative conditions and circumstances including the influential factors. The researchers also studied decision making processes concluding that many factors affected the outcomes. They offered four generalized facts for selecting a geographic location. The researchers conclude after their study that effective collaboration relies on managing good people effectively. The key challenge is to develop IT personnel to be effective in boundary spanning roles and to support them with proper authority and resources (Levina and Vaast, 2008). Exploitation of technology is a strategy in business that is often short lived yielding only short term gains before technological obsolesce sets in. The stronger approach is to understand large scale inter-boundary processes and seek to optimize these processes.

The article Innovative Organization: Creating Value Through Outsourcing offered framework for outsourcing decisions. The author recognized that there are hidden costs to outsourcing that impact the bottom line. He explores outsourcing problems before presenting the innovative outsourcing framework that involves reasons, timing, contract, accountability, lifecycle, and selection as factors in decision success (Tadelis, 2007).  Companies should develop a framework that is inclusive of all the factors affecting outsourcing is essential to sustainability.

The three articles reviewed present a clear picture that globalization and outsourcing are have gained critical mass and will continue to grow in the coming years. They present challenges, solutions, and opportunities to outsourcing. One common thread was complexity involved in multi-national outsourcing. This complexity arises out of numerous boundary factors to include cultures, legal, timeliness, and structures to name a few.  In terms of project management, the body of works indicate that the complexity of outsourcing requires change management specifically in terms of leadership, authority, information technology staff that is skilled in the challenges of outsourcing environments, and the proper resources to cope with the outsourcing challenges. As an organization implements outsourcing, change management must transition the organization from an internalized organic operation to a dispersed and decentralized operation across many boundaries. 

The article Deriving Mutual Benefits from Offshore Outsourcing presented an interesting notion of knowledge factories that create new opportunities for human employment and strategic advantage to companies. This may be a short lived benefit due to the exponential swiftness in which technology is advancing.  Computational technologies tend to be based on time profit models in which earning must be made in the short period following introduction or else the technology become obsolete very swiftly. The emergence of disruptive technologies is frequent and they could potentially nullify multi-national knowledge factories before they become entrenched causing workers to retrain in another field.  In conclusion, outsourcing will continue but not without a host of challenges. The sage approach is to weigh all the factors carefully then prioritize potential offshore locations based on strategic objectives and less on cost or technological advantage. Companies should anticipate a brief window of opportunity before technology and the markets shift making the original outsourcing decisions obsolete.

Project Management Commentary: Project managers juggling projects across international boundaries for projects that operate 24 hours a day cannot rely on tactile management methods. Instead, these project managers may discover they have to structure a framework that embraces pushing decision making down to lower levels and embraces quality management checks more frequently in decentralized geographically dispersed autonomous teams. Performance and quality incentives may need to be coupled to pay that increase earnings and promotions offering eligibility or improved consideration.  These programs may need to take into consideration local labor regulations. 

References:

Gupta, A. (2009). Deriving mutual benefits from offshore outsourcing. communications of the ACM, 52(6), 122-126. Retrieved from Business Source Complete database.

Levina, N., & Vaast, E. (2008). Innovating or doing as told? status differences and overlapping boundaries in offshore collaboration.  MIS Quarterly, 32(2), 307-332. Retrieved from Business Source Complete database.

Marchewka, J.T. (2009). Information technology project management: providing measurable organizational value. (3^rd ed.). John Wiley and Sons inc: United States. 

Tadelis, S. (2007). The Innovative Organization: creating value through outsourcing. California Management Review, 50(1), 261-277. Retrieved from Business Source Complete database.