History of Outsourcing

Money is not an invention, instead it grew from man's need to exchange, the need to satisfy our desires with the least exertion. All exchange is of services or commodities. In primitive societies, or in any remote civilizations where better means were not readily obtainable, skins, shells, salt, beads, tobacco, tea, blankets, and many other commodities have been used as common media of exchange and common measures of value. Soon money became the standard, as it was easily exchangeable. Even back then services or commodities were bought over by the local equivalent of money. This too was outsourcing. First man alone could not do everything himself so he outsourced to the tailor or the cobbler and so on. Then as society grew more complex and so also the services available, societies outsourced or bought services from neighboring societies and finally as communication grew, from far off societies. With growing ease in communication and complex systems of service delivery Man could go out to every corner of the planet for procuring services. What could be bargained upon only at the local bazaar earlier can now be bargained for in any part of this planet. It seems like a natural progression, and when Man may one day set base on far off planets this inter-country servicing will extend to interplanetary outsourcing.

Outsourcing has clearly been in existence for a long long time, but it is only now that it is turning controversial with protests from people who feel cheated on jobs by foreigners. Nobody seems to have problems with the age-old system of outsourcing within the country. The entire hullabaloo is about international outsourcing. So what's the difference between a domestic outsourcing and an international outsourcing? Maybe none. The challenge is to get the benefits of the differences and take advantage of the similarities. That is how the outsourcing companies look at it, whereas opponents look at it as taking away the bread and butter from the countrymen and doling it out to foreigners. From a smart business solution it turns into a social and political issue.

Traditionally outsourcing has been part of the business process in every business activity one can contemplate and yet there is maximum furor in the IT sector in the United States of America. Could the reason's lie on the Dot-Com bust or the overall downturn in the US economy after 9/11. It looks more likely that both may be good reasons why companies based in the USA started to look for options and solutions offshore. A lot of investments drowned with these two catastrophes. Companies had to save themselves, it was a question of their own survival, which was uppermost on their minds, and they could not afford to think of their countrymen. Jobs were cut and would have to be cut in any case or perhaps the company would have to be totally shut shutdown, if losses were to be controlled. I t never seemed like a case where jobs within the US could be retained. In such a scenario companies had the only option of outsourcing their work to places where they could get more for less. Simple economics!

The onset of the Dot-Com had generated a lot of high paying jobs. Post the Dot-Com bust a lot of companies closed down or offered jobs at lower wages; inexperienced workers were no longer in demand. People who would have otherwise settled for lower wages or jobs in low key industries now had tasted blood and were no longer willing to go back to mundane and low paying jobs. Depression in the real sense set in. However some companies slowly recovered from the shock and reformulated its business strategy (read outsourcing) and finally started to break even or make profits. Relocation of work in developing countries gave a boost to the income of these lower economies and their workforce. Here less was more. News soon got around, the jobs were going out and the receivers were happy and coveted the jobs. The next question was why are we not getting these coveted jobs? Resentment grew. Soon they realized that these coveted jobs were not coveted from the American point of view; they only increased competition and caused job losses. This doubled the American's anger: one towards the servicing country, for playing spoilsport and another towards the companies, for manipulative standards. It also hurt their superior egos; the underdogs were pulling the carpet from underneath. Emotions like these became dominant voices and overruled any opinions on good business sense. "Simple Economics" turned to "Charged Emotions". Socialist countries opened their arms to the Capitalistic ideology and Capitalist countries started to demand Socialist approach. It's a changing world indeed and "Manthan"(churning/upheaval) is the necessary catalyst!

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Last Updated on : 20/06/2013