Although outsourcing is nothing new, the nature of it, primarily due to technology, is rapidly changing. While exactly what kinds of changes this will bring on the world is uncertain, they are certain to be dramatic over time.
Outsourcing and trade
Trade and outsourcing are different, but they interact with each other. In the past, most trade was driven by people simply exchanging goods. However, as transport and communications technology progressed, particularly in the 20th century, where goods are goods are produced has increasingly been influenced by firms outsourcing production. Manufacturing and the jobs it brings now shifts from country to country as firms look for the most cost effective places to produce. In many cases, this is necessary if the manufacturer was to survive. While this outsourcing was disruptive for many people, its direct effects, particularly in more service-related industries, was more limited.
New wave of outsourcing
The Digital Age is bringing great changes to outsourcing and greatly expanded its reach into new areas. There are several major game changers that have brought this about:
- Cheap and easy communications
- Ways to collaborate online and share large amounts of data at low or minimal costs
- The growth in software, apps, websites and other digital products, as well as ecommerce in general
- Cheaper computing and internet options that put connectivity into reach of far more people than was possible before.
All of this means that outsourcing is moving into new areas, most notably more services. It is no longer primarily manufacturing jobs that face outside competition. Most people are familiar with things like call centers being overseas, but overseas outsourcing is more pervasive than many people think, and most are far from realizing its full possibilities.
Now, everything from engineering work to taking orders at fast-food restaurants can be outsourced anywhere. In addition, as more of the economy moves online and more goods and services become digital, the possibilities can only grow. While a physical store has to be built by local workers, an online store can be made on the other side of the world. In another example, even teaching, at least to some extent, can be outsourced anywhere in the world. If courses are online anyway, why should it matter where the teacher is? Finally, it is increasingly easy to outsource entire business process of companies, from accounting to IT, to wherever they can be done at the lowest possible costs.
Outsourcing for all
What is perhaps the biggest game changer in outsourcing now is the way it has become accessible to virtually anyone with a little money and an internet connection. Freelancer websites, to include Elancer, make it possible to hire someone on the other side of the world, even for small jobs (the website Fiver specializes in five dollar jobs). Never before have individuals been able to employ others from around the world so easily to do things they either are not capable of or do not have the time to do.
Outsourcing advantages and disadvantages
Not surprisingly, this new outsourcing offers both promise and peril. Now, many of those in service jobs will face more competition, some from foreign countries, than they ever experienced before. This leads to the possibility of downward pressure on wages as well as jobs lost to other countries.
However, outsourcing will also offer new opportunities for people and businesses to get jobs done more efficiently and at lower costs. Entrepreneurs, in particular, now can utilize tools they never had before. In addition, more people can work from where they would like to and offer their talents to anyone in the world. They no longer need to be limited by geography and other factors that have nothing to do with their quality of work.
Limits to outsourcing’s transformative effects
While the effects of new forms of outsourcing have a long way to go before they are fully felt, there are limitations as to how far they will go. There are still advantages to doing things in-house, and problems with outsourcing tasks to include the loss of control and the difficulties that come with managing freelancers. Skills, infrastructure and education levels will be limiting factors on overseas outsourcing. Many of those overseas who would like to do freelance work simply do not have the language abilities, skills or access to make it practical to employ them. The pool of employable people will be at least somewhat limited until the skills and infrastructure can start to catch up.
Can outsourcing be limited?
It does not appear it will ever be able to practically limit these new forms of outsourcing, even assuming their overall effects are negative. Much of the work centers primarily on the movement of data, which is not practical to control, especially when it is done by individuals. Furthermore, any country that tried to limit it would be imposing higher costs and other limitations on its businesses. Finally, as the technology continues to improve, outsourcing will become even easier. All these factors mean increased outsourcing is something that people will need to adjust to whether they like it or not.
To better face the future, businesses and individuals need to understand and prepare for what outsourcing will bring. Only then, can they take steps to minimize the negatives and maximize its positive effects. The world is going to increasingly work together regardless of whether many people want it or not.